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Health Care Reform Law Protects Employees from Employment Retaliation

  • February 27, 2013

Employers gearing up for full implementation of the Patient Protection and Affordable Care Act of 2010 (“ACA”) in 2014 should keep in mind section 18C of the Fair Labor Standards Act (“FLSA”), as added by the ACA. This provision protects employees against retaliation by employers (and health insurance issuers) for engaging in certain ACA-related protected activities. The U.S. Department of Labor issued interim final regulations on February 22, 2013, establishing procedures and time frames for the handling of retaliation complaints under section 18C, including procedures and time frames for submitting employee complaints to the Occupational Safety and Health Administration (“OSHA”) (see OSHA fact sheet), investigations by OSHA, appeals of OSHA determinations to an administrative law judge (“ALJ”) for a hearing de novo, and other appeals, including judicial review of the Secretary’s final decision. It also is important to note that section 18C(b)(2) provides that nothing in section 18C shall be deemed to diminish the rights, privileges, or remedies of any employee under any federal or state law or under any collective bargaining agreement. This means that a claim under this section would not preclude a claim under ERISA section 510, for example.

Under section 18C, an employer may not retaliate against an employee for receiving subsidized coverage under a qualified health plan through an Exchange. Certain large employers who fail to offer affordable coverage that provides minimum value may be assessed a tax penalty if any of their full-time employees receive a subsidy for coverage obtained through the Exchange. This creates an incentive for an employer to retaliate against an employee, and Section 18C is designed to protect employees against such retaliation. 

In addition, retaliation is prohibited for:

(i) providing information to their employer, the federal government, or the attorney general of a State relating to any violation of, or any act or omission the employee reasonably believes to be a violation of, title I of the ACA (such as prohibitions on annual and lifetime limitations and coverage of preventive services);

(ii) testifying or being about to testify in a proceeding concerning such violation; 

(iii) assisting or participating, or being about to assist or participate, in such a proceeding; or

(iv) objecting to, or refusing to participate in, any activity, policy, practice, or assigned task that the employee reasonably believes to be in violation of any provision of title I of the Act, including any of its implementing rules or guidance.

The procedures under the Consumer Product Safety Improvement Act of 2008 (CPSIA) apply to address complaints by employees about retaliation under section 18C. Key CPSIA procedures include:

  • Employees need to file complaints with the Secretary of Labor within 180 days of the alleged retaliation. 
  • Responsibility for receiving and investigating complaints has been delegated to the Assistant Secretary for Occupational Safety and Health (OSHA’s “Whistleblower” unit).
  • Within 60 days of receiving the complaint, the Secretary must give the complaining employee and the employer/issuer an opportunity to submit a response and meet with the investigator to present statements from witnesses, and conduct an investigation. 
  • The Secretary may conduct an investigation only if the employee has made a prima facie showing that the protected activity was a contributing factor in the adverse action alleged and the employer/issuer has not demonstrated, through clear and convincing evidence, that it would have taken the same adverse action in the absence of that activity. (A contributing factor standard is not especially high.)
  • If the Secretary finds there is reasonable cause to believe that retaliation has occurred, the Secretary may issue a preliminary order that requires the employer/issuer, where appropriate to: (i) take affirmative action to abate the violation; (ii) reinstate the employee to his or her former position together with the compensation of that position (including back pay) and restore the terms, conditions, and privileges associated with his or her employment; and (iii) provide compensatory damages to the complainant, as well as all costs and expenses (including attorney fees and expert witness fees) reasonably incurred by the complainant for, or in connection with, the bringing of the complaint upon which the order was issued.
  • At this point, if either of the parties does not request a hearing before an ALJ within 30 days of the Secretary’s award, the preliminary order becomes final and not subject to judicial review.
  • Before the Secretary’s order becomes final, the parties may enter into a settlement agreement that terminates the proceedings.
  • If the Secretary finds that the employee’s complaint is frivolous or that it was brought in bad faith, the Secretary may award the employer a reasonable attorney’s fee not exceeding $1,000.
  • Within 60 days of the issuance of a final order by the Secretary, any person adversely affected or aggrieved may file an appeal with the appropriate United States Court of Appeals.
  • In the event the Secretary does not issue a final decision within 210 days of the filing of the complaint, or within 90 days after receiving a written determination, the employee may file suit in federal district court and request a jury trial. The Secretary’s final decision is generally the decision of the Administrative Review Board. But the preamble to the regulations explains that because the purpose of this clause is to ensure a prompt response for complainants, if the Secretary issues a final decision even if the date of the final decision is more than 210 days after the filing of the complaint or within 90 days of the complainant’s receipt of the Assistant Secretary’s written findings, the complainant may not initiate an action in federal court.

Employers need to be prepared to respond to employees’ section 18C complaints. In particular, employers will want to be in a position to demonstrate clear and convincing evidence that it would have taken the same adverse action in the absence of the employee’s asserted protected activity. 

If you have any questions, please contact a member of the Health Care Reform Task Force or the Jackson Lewis employee benefits law attorney with whom you normally work.


©2013 Jackson Lewis P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

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