To satisfy new requirements, the U.S. Department of Labor haspublished an interim final rule that provides inflation adjustmentsto monetary penalties for violations of the Employee Retirement Income SecurityAct.

According to the agency, in 1990, the Federal Civil MonetaryPenalties Inflation Adjustment Act required federal agencies toadjust civil monetary penalties for inflation; subsequentamendments enacted in 2015 updated those requirements, includingone for “catch-up” adjustments through October of 2015.

The rule just issued by Labor Department provides those catch-upadjustments for penalties enforced by the various agencies in theLabor Department, including the Employee Benefits SecurityAdministration. The catch-up adjustments apply to penaltiesassessed after Aug. 1, 2016, for violations that occurred afterNov. 2, 2015, the date of the 2015 Inflation Adjustment Act.

ERISA Title I violations that occurred on or before Nov. 2,2015, and assessments made on or before Aug. 1, 2016, forviolations occurring after Nov. 2, 2015, will continue to besubject to the civil monetary penalty amounts in the department’sexisting regulations in 29 CFR part 2575, or as established bystatute if the penalty amount was never adjusted by regulation.

Beginning in 2017, the Labor Department will adjust the newERISA Title I penalty amounts annually for inflation no later than Jan.15. For example, by Jan. 15, 2017, the Labor Department will adjustpenalty amounts to reflect any increase in inflation from October2015, to October 2016. The Employee Benefits SecurityAdministrationwill post any changes to ERISA Title I penaltyamounts on its website. Annual inflation adjustments are notsubject to notice and rulemaking.

Those adjustments are quite a jump. Failure to furnish pensionbenefit statements, for instance, to former participants orbeneficiaries will go from the current level of up to $11 peremployee to up to $28 per employee, while failures to file annualreports will rise from the current penalty of up to $1,100 per dayto up to $2,063 per day.

Not all the penalties have risen by such a large margin, butthey will doubtless serve as incentive not to incur them.