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When a full-time employee qualifies for premium assistance to purchase coverage on an exchange his or her employer may incur a penalty under the play or pay mandate (see our Alert). Employers will know when their employees qualify for premium assistance because exchanges are required to notify the employee’s employer of the premium assistance and the potential for penalties. With the employer mandate becoming effective for most larger employers on Jan. 1, 2015, premium assistance notices from the exchanges are generating considerable concern (for information on handling such notices, please contact your Lockton Account Team). Today, we wanted to alert employers to a potential compliance trap associated with these notices that is hidden deep in the ACA: The Whistleblower Provision.

The ACA amends the Fair Labor Standards Act to prohibit employers from retaliating against employees who  either: report violations of the ACA’s insurance reforms, or receive premium assistance for coverage purchased on an insurance exchange.  An aggrieved employee can get the ball rolling by filing a complaint online. If a violation has occurred, the employer is potentially required to reinstate the employee, as well as provide back pay (with interest), compensatory damages and attorney fees.  These “whistleblower” protections are enforced by the U.S. Department of Labor’s (DOL) Occupational Health and Safety Administration (OSHA).  Although OSHA is typically absent from ACA issues, the agency is tasked with enforcing the anti-retaliation provisions of most federal laws, including the ACA. 

Interim final regulations explain the procedural hoops that apply once an individual files a complaint, but the rules do not explain the factors OSHA will consider in assessing whether retaliation has occurred.  For example, does an employee have a whistleblower claim if, after qualifying for premium assistance, his hours of employment are reduced so he doesn’t qualify as a full-time employee for purposes of the employer mandate?  The answer should be “no,” but the regulations are silent on this issue and employment actions are frequently misconstrued as retaliation.

One way that an employer might address this is to treat any premium assistance notice it receives from an exchange as if it were information about a disability (e.g., filing it separately from other HR records, not disclosing it internally except as needed, etc.). If possible, an employer might wish to insulate anyone who will make employment decisions about an employee from knowing whether the employee is receiving premium assistance. Given all the vagaries of retaliation claims, the best advice is that employers should exercise common sense when dealing with employees who have qualified for ACA premium assistance or who complain that an employer practice violates the ACA.  For employers that have existing anti-retaliation policies, those policies should be revised to address these ACA-related protections.