H&W: Automatic Employee Enrollment Repealed!

On November 2, 2015, President Obama signed the Bipartisan Budget Act of 2015 which repealed the automatic employee enrollment mandate that was added by the Affordable Care Act as Section 18A of the Fair Labor Standards Act.  Specifically, Section 18A required employers that have more than 200 full-time employees and that offer enrollment in one or more health benefits plans to automatically enroll new full-time employees in one of the plans offered.

This repeal comes after a somewhat lengthy process of trying to formulate regulations and guidance on how to implement such a provision.  As background, in FAQs released December 22, 2010, the Department of Labor (“DOL”) stated that the automatic enrollment mandate was anticipated to go into effect once regulations were issued by the Secretary of Labor.  Accordingly, until regulations were finalized, employers were not expected to comply with the automatic enrollment provision.  These FAQs went on to say that the DOL “expects to work with stakeholders to ensure that it has the necessary information and data it needs to develop regulations in this area that take into account the practices employers currently use for auto-enrollment and to solicit the views and practices of a broad range of stakeholders, including employers, workers, and their families.”  The FAQs concluded the discussion stating they expected regulations to be finalized by 2014.

Then, on February 9, 2012, the DOL released Technical Release No. 2012-012 which stated that the DOL “has been working with stakeholders to ensure that it has the necessary information and data to develop regulations relating to automatic enrollment, and is sensitive to stakeholder concerns regarding the need for adequate time to comply with any regulations that are ultimately issued”.  However, it went on to say that they had concluded that automatic enrollment guidance would not be ready to take effect by 2014 and they reiterated the DOL’s view that, until final regulations were issued, employers were not required to comply.

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