DOL sets 2021 penalties for health and welfare benefit plan violations

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Employers violating Department of Labor (DOL) regulations — including employee benefit, wage and hour, mine safety, occupational safety and health, and workers' compensation rules — could face stiffer penalties in 2021, thanks to new inflation adjustments. The higher rates apply for penalties assessed after Jan. 15, 2021, for violations occurring after Nov. 2, 2015. DOL rarely assesses the maximum and often waives penalties entirely for failures due to reasonable cause. But the penalty threat is an important enforcement and deterrent tool.

2021 adjustments for health and welfare benefits. The year-over-year inflation increase for 2021 is 1.182%. Annual inflation adjustments are based on the percent change between the October Consumer Price Index for All Urban Consumers (CPI–U) preceding the date of the adjustment, and the prior year’s October CPI–U; in this case, the percent change between the October 2020 CPI–U and the October 2019 CPI–U. The following chart shows the 2021 and 2020 maximum (and in some cases, minimum) penalties for certain health and welfare plan violations assessed after Jan. 15.

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Katharine Marshall
by Katharine Marshall

Principal, Mercer’s Law & Policy Group

Dorian Smith
by Dorian Smith

Partner, Mercer’s Law & Policy Group

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