Patient Protection and Affordable Care Acts Adds Employee Retaliation Protections

Employers addressing the variety of new obligations imposed by the Patient Protection and Affordable Care Act (“PPACA”) should also be aware of the PPACA’s whistleblower protection amendment to the Fair Labor Standards Act (“FLSA”).  The U.S. Department of Labor published its interim final regulations governing the employee whistleblower protection of Section 1558 of the PPACA, which added section 18C to the FLSA.  This new provision protects employees against retaliation from employers (and “health insurance issuers”) for reporting potential violations of the PPACA’s consumer protections or affordability assistance provisions.  The interim final rule establishes procedures and time frames for employee complaints to the Occupational Safety and Health Administration (“OSHA”), investigations of complaints, and appeals.  

The PPACA allows employees to receive tax credits or cost-sharing reductions while enrolled in a qualified health plan through an insurance exchange, if their employer does not offer a coverage option that is affordable and provides a basic level of value (i.e., “minimum value”).  Certain large employers who fail to offer affordable plans that meet this minimum value may be assessed a tax penalty if any of their full-time employees receive a premium tax credit through an exchange. Thus, the relationship between the employee’s receipt of a credit and the potential tax penalty imposed on an employer could create an incentive for an employer to retaliate against an employee.  Section 18C is designed to protect employees from this retaliation.

Section 18C protects an employee from retaliation for providing information or participating in proceedings regarding any conduct the employee reasonably believes violates Title I of the PPACA.  Rights protected under Title I of the PPACA include, for example, coverage of preventative services at no cost, lifetime dollar limits on coverage, and a prohibition on denial based upon pre-existing conditions.   Section 18C also protects employees who object to or refuse to participate in any activity, policy, practice, or assigned task that the employee reasonably believes violates Title I of the PPACA.  

The interim rule notes that Section 18C adopts the procedures, notifications, burdens of proof, remedies, and statutes of limitation under the Consumer Product Safety Improvement Act of 2008 for whistleblower complaints and that OSHA’s Whistleblower unit is responsible for investigating complaints.  

The key procedural requirements include:

• Employees must file complaints with the Secretary of Labor within 180 days of the alleged retaliation. 

• Within 60 days of receiving the complaint, the Secretary must give the 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 alleged adverse action 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 the protected activity. 

• If the Secretary finds reasonable cause to believe that retaliation has occurred, it may issue a preliminary order that requires the employer/issuer to: The parties then have 30 days to file objections to the preliminary order and/or findings and request a hearing before an Administrative Law Judge (“ALJ”) or, if no objection is filed, the preliminary order becomes final and is not subject to judicial review.

  • take affirmative action to abate the violation; 
  • reinstate the employee to his or her former position together with the compensation for that position (including back pay) and restore the terms, conditions, and privileges associated with his or her employment; and 
  • provide compensatory damages to the employee, as well as all costs and expenses (including attorney fees and expert witness fees).

• The ALJ must hold the requested hearing “expeditiously” and issue a final order within 120 days of the conclusion of the hearing.

• Employers are entitled to a reasonable attorney’s fee not exceeding $1,000 if the employee’s complaint is deemed frivolous or was brought in bad faith.

• 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.  

Finally, the interim rule stresses 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, and the rights and remedies in section 18C may not be waived by any agreement, policy, form, or condition of employment.  Therefore, an employee may still bring claims under other laws and regulations protecting the employee from retaliation including, for example, Section 510 of ERISA.

It is now increasingly important for employers to carefully assess any conduct by an employee that could be deemed protected by Section 18C before taking adverse action and, as always, have a clear record of the employee’s conduct that led to the adverse action.  Because an employer may avoid a Secretarial investigation under Section 18C by showing, “through clear and convincing evidence,” that the employer would have taken the same adverse action in the absence of PPACA protected activity, such a record is crucial. 

Scott P. Moore

Read the Full Newsletter: Labor & Employment Law Alert March 22, 2013