Employers who sponsor pension and benefit plans governed by the Employee Retirement Income Security Act (ERISA) will soon be subject to increased penalties for certain reporting violations.

The Department of Labor (DOL) in late June issued an interim final rule identifying penalties adjusted for inflation for a variety of reporting and filing violations. This article focuses on the penalties imposed by the Employee Benefits Security Administration (EBSA), an agency within the Department of Labor that administers the fiduciary, reporting and disclosure provisions of Title I of the Retirement Income Security Act. of Employees of 1974 (ERISA).

ERISA Violations Subject to Penalty

Listed below are some of the identified reporting failures that will lead to increased penalty provisions, as included in the interim rules.

• Failure to provide reports, including pension benefit statements, to certain train participants and beneficiaries. The current fine of $ 11 per employee will increase to $ 28 per employee.
• Failure to file or decline to file Form 5500 annual report. The current penalty of up to $ 1,100 per day will increase to a maximum of $ 2,063 per day.
• Failure to notify participants under ERISA §101 (j) of certain benefit restrictions and / or limitations arising under Internal Revenue Code § 436. The current fine of up to $ 1,000 per day will increase to a maximum of $ 1,632 per day .

Monetary penalties for multiple employer plans

Several of the increased penalty levels will apply specifically to multi-employer plans, with several examples listed below.

• Failure of a multi-employer plan to certify dangerous or critical status. The current fine of up to $ 1,100 per day will increase to a maximum of $ 2,063 per day.
• Failing to provide certain financial and actuarial reports of the multi-employer plan upon request. The current fine of up to $ 1,000 per day will increase to a maximum of $ 1,632 per day.
• Failure by a plan sponsor of a multi-employer plan in distress to adopt a fund enhancement plan or a multi-employer plan in critical condition to adopt a rehabilitation plan. The current fine of up to $ 1,100 per day will increase to a maximum of $ 1,296 per day.

As we’ve written in the past, there are approximately 1,400 active multi-employer benefit pension plans in the country. Collectively bargained and maintained by more than one employer in a related industry and a union, these multi-employer plans cover about 10 million participants. Employees in these plans traditionally work in industries such as building and construction; cinema, television and theater; retail food; manufacture of clothing; mining; trucking; and maritime.

Background to the DOL Increase in civil monetary penalties

The increase in monetary sanctions will take effect in August. The new sanctions program will apply to infractions that occurred after November 2 of last year and were evaluated after the beginning of August of this year.

Additional increases are expected in the future. The DOL will increase monetary penalties in mid-January annually, beginning in 2017. Future increases will require no prior notice or additional regulation.

The DOL’s actions are in response to the 2015 amendments to the Federal Civil Monetary Penalties Inflation Adjustment Act, which required federal agencies to issue an interim rule by July of this year.

The Employee Benefits Security Administration, which oversees ERISA, is just one of several divisions of the Department of Labor affected by this interim resolution. Other DOL agencies include:

• Employment and training administration
• Mine Safety and Health Administration
• Occupational Safety and Health Administration
• Division of hours and wages
• Office of Workers’ Compensation Programs

Full details on the changes to civil monetary penalties are available on the DOL and EBSA website.