Government required notices to employees have the potential to bankrupt a company. Every business has its primary money making activity. Oil companies produce oil; car dealers sell cars; shipping companies ship things. You get the picture. Unless your business is administration, you don’t make money by filing paperwork. But it’s a necessary evil.
Take the case of Shephard v. O’Quinn in Tennessee. Shephard, a terminated employee of O’Quinn did not get his COBRA notification. Courts sanctioned O’Quinn $90,860 in statutory penalties at the $110 per day maximum for not providing an election notice. O’Quinn later filed for bankruptcy.
Every business has required notices for special events, like COBRA notices at termination of employment. Then there are the annual notices such as Qualified Default Investment Alternatives or QDIA notices for retirement plans. This notice has a significant effect on an employer’s effort to reduce the liability of offering a retirement plan.
The Department of Labor recently recognized the burden that all of these notices put on companies and offered a little relief. 401k fee disclosures were due to be distributed to employees on August 30, 2013. Department of Labor Field Assistance Bulletin No. 2013-02 extends that deadline until February. This extension was intended to allow employers the opportunity to coordinate the delivery of other notifications.
Employers would be wise to review the list of notices they are required to distribute to employees and distribute as many notices at one time as possible. The Department of Labor’s requirements for electronic delivery are very narrow and to avoid any potential problems, employers should either hand deliver or mail notifications to employees. It is very important to gain verifiable proof of delivery, get a signature.