While many employers have focused on the requirements for health coverage, they must be mindful of the new whistleblower and anti-retaliation protections established by the Patient Protection and Affordable Care Act (the "PPACA"). Section 1558 of the PPACA amends the Fair Labor Standards Act to protect employees from retaliation for (i) reporting alleged violations of the PPACA or (ii) receiving premium tax credits or subsidies for participating in health insurance exchanges. This provision applies to both private and public employers and protects current and former employees as well as applicants for employment. Earlier this year, the Department of Labor, through the Occupational Safety and Health Administration ("OSHA"), issued an interim final rule that governs whistleblower complaints under the PPACA.
The first category of protected activity covers whistleblowers who report employer violations of Title I of the PPACA. Title I includes most of the substantive provisions regarding insurance market reforms such as the elimination of lifetime limits on benefits and pre-existing condition exclusions. The PPACA's whistleblower protections prohibit employers from retaliating against employees for reporting any suspected Title I violation.
The second category of protected activity covers employees receiving certain tax credits and subsidies. This category of protected activity relates to the employer mandate which becomes effective next year. Beginning in 2014, employers with 50 or more full-time employees (including full-time equivalents) must offer "minimum essential" health coverage to full-time employees and their dependents or pay a penalty (commonly referred to as the "play or pay" provisions). Full-time employees who (a) are not offered minimum coverage that complies with certain requirements or (b) are not offered any coverage are eligible to receive a federal subsidy or tax credits in order to purchase insurance through a health insurance exchange. Generally, employers are subject to a penalty if at least one full-time employee qualifies for a premium tax credit or subsidy. Under the PPACA anti-retaliation provisions, an employer cannot take adverse employment action based on the fact that an employee receives a tax credit or subsidy.
Prohibited Employment Actions
The whistleblower provisions apply the same standard for retaliatory conduct as under other whistleblower laws. As such, employers are prohibited from all forms of retaliation, including termination, discrimination, refusal to promote, intimidation, and reduction in pay or hours. Retaliatory conduct under the PPACA may not be obvious. For example, if an employer reduces an employee's hours worked to below 30 per week, such an action might be prohibited depending on the circumstances. The guidance issued by the Department of Labor specifically states that an employee's hours or pay may not be reduced for having received a subsidy to purchase insurance through an exchange. Thus, if an employee's hours were reduced because he or she received a premium tax credit, such action would constitute unlawful retaliation. It is unclear whether courts will construe these whistleblower provisions to apply to workforce restructuring in which an employer reduces an employee's hours below 30 in anticipation of the employer mandate.
If an employee perceives retaliatory conduct, he or she must report the prohibited conduct to OSHA within 180 days of the alleged violation. (The complaint process is similar to the procedure for filing charges of discrimination with the EEOC.) OSHA has authority to investigate the complaint, issue a determination, and seek relief on behalf of the reporting employee. In addition, an employee can seek judicial relief by filing a lawsuit in a court of competent jurisdiction. Possible remedies for retaliation include reinstatement, back pay, liquidated damages, front pay, punitive damages, and attorney's fees.
The whistleblower protections under the PPACA add a new level of protected activity that employers must consider before making employment decisions. Employers should update employment policies, train supervisors on the new rules, and consider the impact of the rules when developing a strategy to comply with the employer mandate.
Click here to view a copy of the interim final rule.
Click here to view a copy of the OSHA Fact Sheet.