The U.S. Department of Labor (DOL) has significantly increased a number of civil monetary penalty amounts (CMPs) that may be assessed by the DOL's Employee Benefits Security Administration for violations of Title I of the Employee Retirement Income Security Act of 1974 (ERISA).
These increases were made in response to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the "2015 Act"), which requires the DOL, as well as certain other federal agencies that impose civil monetary penalties subject to inflation adjustments, to adjust: (1) their respective CMPs, as necessary for inflation; and (2) the new CMP amounts for inflation every January thereafter, in each case pursuant to the methodology prescribed by the 2015 Act.
The newly increased CMP amounts (the "New ERISA Title 1 Penalties") were set forth in a DOL interim final rule (IFR).1 The New ERISA Title 1 Penalties apply to assessments made by the DOL on or after August 2, 2016, for associated violations occurring after November 2, 2015 (the date of enactment of the 2015 Act).
This WSGR Alert highlights the New ERISA Title 1 Penalties that clients likely will find most relevant.2 A table showing all of the New ERISA Title 1 Penalties may be found in Appendix 1 of the IFR. The DOL also has published a fact sheet3 that describes the New ERISA Title 1 Penalties. As mentioned above, beginning in January 2017, the DOL may further adjust the New ERISA Title 1 Penalties annually to account for any inflation.
New ERISA Title 1 Penalties of General Applicability
New ERISA Title 1 Penalties Applicable to 401(k) and Other Retirement Plans
New ERISA Title 1 Penalties Applicable to Health and Other Welfare Plans
Takeaways for Employers
The New ERISA Title 1 Penalties serve as important reminders to employers who sponsor benefit plans that are governed by ERISA and/or other plan fiduciaries who are responsible for the administration of such plans that they should ensure their plans' compliance with ERISA's requirements or else risk being assessed these considerable penalties.5
1 The IFR may be found at https://www.gpo.gov/fdsys/pkg/FR-2016-07-01/pdf/2016-15378.pdf. Once the
applicable 45-day comment period on the IFR lapses, the DOL intends to publish final regulations.