Healthcare Alert For Construction Industry: Employer Notification Deadlines
Under The Affordable Care Act
By Matthew DeVries and Ozair Sharif
In the past two issues, we discussed the legal significance of “insurance” in
the construction process. We were talking about faulty workmanship and
construction defects on a project. As we turn to business practices within your
company, let’s discuss another significant issue involving insurance—that is,
health care insurance!
Employer notification. On October 1, 2013, a deadline passed that
affected numerous businesses, including architectural, engineering, development
and construction firms. Why are we talking about a deadline that passed, though?
Well, as of that date, employers covered by the Fair Labor Standards Act (FLSA)
were required to provide a written notice to their employees that described
certain elements of the Health Insurance Exchanges expected to go into effect at
the beginning of this month. Employers were able to choose from a number of
options when distributing the notices, including a couple of notices published
by the Department of Labor (See models at
The good news is that you still have time to comply with the notification
process. The Department of Labor made clear in a recently published online FAQ
that there will be no fine or penalty under the law for failing to provide the
notice1. As a result, employers should make every effort to ensure current and
future employees are provided with the notification, even if they missed the
October 1 deadline.
Section 1512 of the Affordable Care Act amended the FLSA and required
notification of the health exchanges—the competitive online market for health
insurance where individuals may purchase health plans—be given to employees by
the October 1 deadline. While the requirement applies only to companies subject
to the FLSA, this includes a large category of employers and will impact many
private-sector employers and governmental entities.
Application to your business? The FLSA applies to
employers whose annual gross volume of sales total $500,000 or more;
governmental or public agencies; or
employers engaged in the operation of a hospital, an institution primarily
engaged in the care of the sick, the aged, or the mentally ill who reside on
If you fall within one of these broad categories, then a written notice must be
delivered to every employee, full-time and part-time, regardless of whether or
not they are provided with health benefits. Employers are not required to
provide a separate notice to dependents or other individuals who are or may
become eligible for coverage under the plan, but who are not employees.
How to give notice. Employers can comply with the requirement by choosing
from a number of options for distributing the notices.
sending the notice by First-Class U.S. Mail;
emailing the notice if all employees have a company email address and if the
Department of Labor
electronic safe harbor is met2;
attaching the notice to the paychecks of all employees; or
personally distributing the notice to all employees.
The notification is required to contain certain information, which will vary
depending on whether or not the employer offers health benefits.
Since the deadline has already passed, the notice should inform employees
that the Exchange went into effect October 1, 2013, and you can include a
description of the services provided by the Exchange, as well as the manner
in which the employee may contact the Exchange to request assistance.
The notice should contain an explanation of whether employees will receive
at least 60% coverage of essential health benefits through the
employer-provided coverage (if applicable), and whether employees will be
eligible for a premium tax credit if they purchase a plan through the
Employers will be asked to provide certain information about themselves,
including a contact person and Employer Identification Number (EIN), for
employees to use if they decide to complete an application for coverage on
Employees who purchase a qualified health plan through the Exchange will also
need to be informed that they may lose the employer contribution to a health
plan offered by the employer.
Lesson Learned. The intricacies and politics behind the Affordable Care
Act are too vast to address here. What remains important is that, as a business
in the construction industry with employees, you must comply with the various
notice laws under the Fair Labor Standards Act and other statutes. Even without
the risk of the imposition of a fine or penalty for lack of compliance, you
should make an effort to notify your current and future employees of their
rights to access the Exchanges. You must stay informed of your rights and
obligations so that you can make the best risk management and business decisions
for your company.
229 CFR 2520.104b-1(c)
the Authors: Matt is a member of the Construction Service Group and Ozair is
a member of the Health Care Service Group of Stites & Harbison, PLLC. Matt lives
in Nashville and is the founder of
www.bestpracticesconstructionlaw.com. Ozair lives in Louisville and
frequently writes on health care issues. You can reach the authors at
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