Updated Civil Penalties for Certain Compliance Violations

Updated Civil Penalties for Certain Compliance Violations

On January 14, 2021, the DOL released its Federal Civil Penalties Inflation Adjustment Act Annual Adjustments for 2021 with updated penalties for certain violations. Notable updates include a $2,259 per day penalty for failure or refusal to properly file a plan annual report (Form 5500), a $120 per day, per employee penalty for failure by an employer to inform employees of CHIP coverage opportunities (each employee constitutes a separate violation).

As per the IRS Reasonable Cause Regulations & Requirements, there is a $280 per return penalty for failure to provide either a correct information return or payee statement. Full information regarding return penalties is available here.


Increased Penalties for Certain Compliance Violations

As a means of enforcing laws, federal government agencies including the Departments of Labor, Treasury and Health and Human Services, and the Equal Employment Opportunity Commission, have authority to adjust civil penalties attributable to compliance failures.As a general rule, the DOL and EEOC announce their respective adjusted penalties in January of each year.The 2021 amounts were announced on 1/14/2021.

Failure or refusal to file annual Form 5500[1]

Up to $2,259 per day

(indexed for 2021)

Failure to file Form M-1[2]

Up to $1,644 per day

(indexed for 2021)

Failure to provide Summary of Benefits and Coverage (SBC)[3]

Up to $1,190 per failure

(indexed for 2021)

Failure to notify employees of Medicaid Premium Assistance and CHIP coverage opportunities[4]

 Up to $120 per day, per employee

(indexed for 2021)

Failure to file a correct information return

(Examples: Forms 1094/1095 and W-2)[5]

  • Avg. annual receipts/3 years =$5M: $280 per return (cap of $3,426,000 per calendar year)
  • Avg. annual receipts/3 years =$5M: $280 per return (cap of $1,142,000 per calendar year)

(indexed for 2021)

Failure to provide correct payee statement

(Examples: Forms 1094/1095 and W-2)[6]

  • Avg. annual receipts/3 years =$5M: $280 per return (cap of $3,426,000 per calendar year)
  • Avg. annual receipts/3 years =$5M: $280 per return (cap of $1,142,000 per calendar year)

(indexed for 2021)

Failure to comply with protections afforded under Genetic Information Nondiscrimination Act (GINA)[7]

Up to $120 per day of noncompliance

(indexed for 2021) 

Failure to post the Family and Medical Leave Act workplace posting[8]

Up to $178 per each separate offense

(indexed for 2021)

Failure to post the EEOC workplace posting, “Equal Employment Opportunity is the Law[9]

$569 per violation

(indexed for 2020)




[1] ERISA Section 502(c)(2)

[2] ERISA Section 502(c)(5)

[3] PHS Act Section 2715(f), as incorporated in ERISA Section 715 and 29 CFR 2590.715-2715(e)

[4] ERISA section 502(c)(9)(A) and (B), 29 CFR 2575.1-3

[7] ERISA section 502(c)(10), 29 CFR 2575.1-3

[8] 29 CFR 825.300(a)(1)

[9] No announced penalty change yet for 2021. 85 FR 15374 https://www.federalregister.gov/documents/2020/03/18/2020-05225/2020-adjustment-of-the-penalty-for-violation-of-notice-posting-requirements


The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

Updated Civil Penalties for Certain Compliance Violations https://www.cbiz.com/Portals/0/EmployeeBenefits/Images/Civil Penalties for Compliance Violations.jpg?ver=2021-02-03-181807-433The DOL released their updated penalty amounts for failure or refusal to file annual reports ($2,259 per day), failure to inform employees of CHIP coverage opportunities ($120 per employee per day), and a host of additional violations. The IRS stated their penalty for failure to provide a correct information return or payee statement ($280 per return). See the list of penalties here.2021-02-03T20:00:00-05:00The DOL released their updated penalty amounts for failure or refusal to file annual reports ($2,259 per day), failure to inform employees of CHIP coverage opportunities ($120 per employee per day), and a host of additional violations. The IRS stated their penalty for failure to provide a correct information return or payee statement ($280 per return). See the list of penalties here.Regulatory, Compliance, & LegislativeEmployee Benefits ComplianceNo