Federal Budget Agreement Addresses ACA, OSHA and Pensions

Author: Marta Moakley, XpertHR Legal Editor

November 6, 2015

President Barack Obama signed into law the Bipartisan Budget Act of 2015, which repeals the automatic enrollment requirement mandated by the Affordable Care Act (ACA), increases penalties under the Occupational Safety and Health Act (the OSH Act) and addresses employer premiums with respect to pensions. Although employers may welcome the repeal of the ACA automatic enrollment requirement, other provisions may raise concerns.

Automatic Enrollment

As passed, the ACA amended the Fair Labor Standards Act (FLSA) to require certain larger employers to automatically enroll new hires in the employer's health benefit plans and to continue the enrollment of current employees in those plans. However, the implementation of that requirement had been long delayed prior to its repeal in the Bipartisan Budget Act of 2015. Therefore, employers will have no further obligations in this regard.

OSHA Penalties

In contrast to the reduced employer requirements under the ACA, the budget deal ushers in the first increase for OSHA penalties in 25 years. The penalties were last increased in October 1990.

Title VII of the budget deal, entitled the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, accounts for an adjustment to "catch up" on the rate of increase over those 25 years. The adjustment will be calculated based on the difference between the October 2015 and the October 1990 Consumer Price Index (CPI). Based on current trends, the penalties for violations (whether willful, repeat, serious or other than serious) could rise by as much as 80% or more.

Following the initial adjustment, OSHA must implement annual cost-of-living increases based on the CPI.

Although the Budget Act allows for some discretion on the part of agencies regarding the implementation of the increases, these have been long advocated by Assistant Secretary of Labor for Occupational Safety and Health Dr. David Michaels. In October, Dr. Michaels testified before the House Committee on Education and the Workforce Subcommittee on Workforce Protections, stating: "The most serious obstacle to effective OSHA enforcement of the law is the very low level of civil penalties allowed under our law, as well as our weak criminal sanctions. . . OSHA's current penalties are not strong enough to provide adequate incentives." Dr. Michaels also advocated the indexing of civil penalties to increases or decreases in the CPI, which has been realized by the budget deal.

The increased penalties would be implemented by August 1, 2016, following the publication of a notice of proposed rulemaking with opportunity for public comment.


Title V of the Budget Act addresses pensions and related employer premiums. Specifically, the fixed rate premium employers pay to the Pension Benefit Guaranty Corporation (PBGC) per employee for single-employer pension plans would be as follows:

  • For plan years beginning after December 31, 2016, and before January 1, 2018, $69;
  • For plan years beginning after December 31, 2017, and before January 1, 2019, $74; and
  • For plan years beginning after December 31, 2018, $80.

The Act also provides for increases to the variable rate premiums employers pay if their plan is underfunded.

The amendments to fixed and variable rate premiums apply to plan years beginning after December 31, 2016.

The rise in PGBC premiums has concerned employers. In a press release, ERISA Industry Committee (ERIC) President and CEO Annette Guarisco Fildes stated:

PBGC premium increases . . . do nothing to encourage single-employers to continue defined benefit plans or improve benefits for retirees; in fact, the increases only work to further weaken the private retirement system.