Final ACA Whistleblower Complaint Rules Include Expanded Protected Activities

Practical Law Legal Update w-003-9181 (Approx. 7 pages)

Final ACA Whistleblower Complaint Rules Include Expanded Protected Activities

by Practical Law Employee Benefits & Executive Compensation

Overview of ACA Whistleblower/Retaliation Protections Under FLSA Section 18C

Under the ACA's employer mandate (see Employer Mandate Toolkit), large employers are subject to a penalty if a full-time employee receives a premium tax credit for ACA exchange-based coverage. OSHA has recognized that the relationship between an employee's receipt of a premium tax credit and an employer's potential employer mandate liability could create an incentive for employers to retaliate against the employee. FLSA Section 18C is intended to protect employees against this retaliation.

In addition to the tax credit and subsidy protections, Section 18C protects employees against retaliation because they:

Provided, or are about to provide, information to their employer, the federal government, or a state attorney general relating to a violation of, or an act or omission that the employee reasonably believes is a violation of, any provision of Title I of the ACA.
Testified, or are about to testify, in a proceeding about a violation.
Assisted or participated, or are about to assist or participate, in a proceeding about a violation.
Objected to or refused to participate in any activity, policy, practice, or assigned task that the employee reasonably believed was a violation of any provision of ACA Title I, or any order, rule, regulation, standard, or ban under Title I.

ACA Title I includes:

The prohibition on lifetime and annual dollar limits on essential health benefits (see Practice Note, Lifetime Limits, Annual Limits, and Essential Health Benefits Under the ACA).
The prohibition on pre-existing condition exclusions (see Practice Note, Preexisting Condition Exclusions and Rescissions Under the ACA).
Required first-dollar coverage of preventive services (see Practice Note, Preventive Health Services Under the ACA, Other Than Contraceptives).

(For more information on the ACA's requirements, see the Affordable Care Act (ACA) Toolkit.)

Prohibited retaliation includes discriminating, intimidating, threatening, restraining, coercing, blacklisting, or disciplining an employee regarding the employee's compensation, terms, conditions, or privileges of employment because the employee engaged in any of the activities described above.

Procedures and Timeframes for Section 18C Whistleblower Complaints

The ACA adopts the procedures, notifications, burdens of proof, remedies, and statutes of limitations in the Consumer Product Safety Improvement Act of 2008 (CPSIA) (15 U.S.C. § 2087(b); see Legal Update, Final Regulations Issued on the Consumer Product Safety Improvement Act of 2008's Whistleblower Provisions). These procedures include:

An employee's filing of a complaint with the Secretary of Labor (Secretary), which must occur within 180 days of the alleged retaliation.
An investigation and written findings by the Secretary, which may include a preliminary order requiring the employer (upon a finding of reasonable cause that retaliation has occurred) to take steps to correct the violation (for example, reinstating an employee to his former position, with compensation and backpay).
A 30-day period for the employer and employee to file objections to the findings or preliminary order (which stays any remedy in the preliminary order other than preliminary reinstatement), and to request a de novo hearing before an administrative law judge (ALJ).
Hearings by an ALJ and review of an ALJ's decision by the Administrative Review Board (ARB).
Judicial review of the Secretary's final decision.

The final regulations generally implement the CPSIA procedural framework as it has been interpreted in other whistleblower regulations and caselaw. For example, OSHA may conduct an investigation only if:

An employee makes a prima facie showing that Section 18C protected activity was a contributing factor in the adverse action alleged by the employee.
The employer does not demonstrate, through clear and convincing evidence, that it would have taken the same adverse action in the absence of that activity.

Absent a prima facie showing, an investigation must be discontinued and the complaint dismissed.

Also, an employee can file an action for de novo review of the complaint by a district court if there has been no final decision by the Secretary within:

210 days of the complaint's filing.
90 days after receiving a written determination (that is, the Secretary's written findings at the close of an OSHA investigation).

No Requirement to Post Section 18C Notices

Despite some commenters' requests that OSHA should require employers to post notices regarding Section 18C's protections, OSHA expressly declined to add this requirement. The agency observed, however, that posting of a notice regarding whistleblower rights is a common non-monetary remedy that OSHA may order in valid whistleblower cases.

Interaction of Claims Under Section 18C and ERISA Section 510

OSHA agreed with commenters that it is possible for an employee to have claims under both Section 18C and ERISA section 510 (29 U.S.C. § 1140; see Practice Note, ERISA Litigation: Interference with Protected Rights (Section 510)). In this context, OSHA noted that:

Section 18C's whistleblower protections do not replace protections that a whistleblower may have under ERISA Section 510.
Whistleblowers may bring claims under either or both statutes if their action is protected under both provisions.

Procedurally, however, an employee must file a Section 18C complaint with OSHA within 180 days of the alleged adverse action to pursue the claim in district court or before the DOL.

Section 18C "Employees" Include Former Employees and Job Applicants

Consistent with its interpretation of who is an employee under other statutes it administers, OSHA takes the view that the term "employee" for Section 18C purposes includes former employees and job applicants. According to OSHA, Section 18C's broad statutory protection of "any employee" from retaliation, and its inclusion of a cause of action against "any employer" for retaliation, suggests that it does not matter whether the parties have a current employment relationship.

Expanded Scope of Section 18C Protected Activity

In a change from the interim final regulations, OSHA expanded its rules to provide that an employee has "received" a premium tax credit or subsidy when:

A premium tax credit is allowed on the individual's tax return.
An ACA exchange finds the employee eligible for advance payment of the credit or for a subsidy.

OSHA believes that Section 18C's protections extend to employees who seek information from their employer regarding employer-sponsored health coverage (that is, as an employee's first step in attempting to obtain advance payment of the credit for exchange-based health coverage). In OSHA's view, an employer could develop a retaliatory motive for Section 18C purposes based on an employee's inquiry regarding employer-provided health coverage, in anticipation of applying for advance payment of the credit or a subsidy through an exchange.

Also, an employer retaliates against an employee when the employer threatens to take action if the employee engages in Section 18C protected activity.

As a result, OSHA believes that an employee's inquiry to an employer to gather information needed to apply for advance payment of the credit for exchange coverage could trigger Section 18C if the employee can show that the employer's belief that the employee received a premium tax credit (or its desire to prevent the employee from taking further action to obtain the credit) contributed to the employer's action against the employee.

Reductions in Hours

As another component of Section 18C protected activity, OSHA takes the view that an employer cannot reduce an employee's work hours in retaliation for engaging in Section 18C protected activity. The government uses the example of an employer that reduces the hours of an employee that it knows or suspects of receiving a premium tax credit or subsidy. This may be a Section 18C violation if:

The employee's receipt of the premium tax credit or subsidy was a contributing factor in the employer's decision to reduce the hours.
The employer cannot show by clear and convincing evidence that it would have taken the same action in the absence of the protected activity.

Procedural Considerations

In its guidance, OSHA addresses various procedural issues involving Section 18C complaints. For example, in a discussion of an employee's burden of proof in filing a Section 18C complaint, OSHA indicates that this burden is met if an employee demonstrates that adverse action occurred either:

Shortly after the Section 18C protected activity.
At the first opportunity available to the employer, thereby creating an inference that the protected activity was a contributing factor in the adverse action.

Documenting and Allocating Awards of Backpay

In discussing available remedies for Section 18C violations, OSHA noted a change under which employers will be required to submit documentation to the Social Security Administration (SSA) so that backpay may be allocated to the appropriate period. According to OSHA, requiring the reporting of backpay allocation to the SSA will help ensure that employees subjected to retaliation are made whole. For example, improper allocation of backpay could impact an employee's eventual monthly benefit.

Practical Impact

Employers will want to note the expanded scope of Section 18C protected activity under OSHA's final regulations, some of which may be triggered at earlier points in the employment relationship (or, under OSHA's interpretation, before the employment relationship even begins).

Almost as an aside, and as part of a discussion of how employees should make Section 18C complaints, OSHA notes that it has published an on-line complaint form on its website (see Legal Update, OSHA Releases New Online Complaint Form for Whistleblowers). It is possible that this avenue for filing Section 18C complaints, coupled with follow-through by OSHA, could result in increased complaints against employers.

Other issues addressed by OSHA in the Section 18C context include:

When the 180-day period for filing a Section 18C complaint may be tolled (for example, if an employee files the complaint with the wrong agency).
What is considered a "contributing factor" to an employer's alleged adverse action.
Regarding remedies, the calculation of interest on backpay.
OSHA's potential involvement in prosecuting a Section 18C case in an administrative proceeding before an ALJ.

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