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Affordable Care Act’s retaliation claims September 20, 2013
The Affordable Care Act (ACA) amends the Fair Labor Standards Act (FLSA) to add new anti-retaliation or whistleblowing provisions and an enforcement procedure. This amendment will become especially important starting 2014.
New categories of protected activity
The ACA creates five new categories of protected activity. One new category occurs when the employee has objected to or refused to engage in any act or policy “reasonably believed to be in violation” of “any provision of Title I of the Affordable Care Act.”
A second new category of protected activity is the employee’s receipt of a subsidy in the form of either a premium tax credit or a cost-sharing reduction. Subsidies become available in 2014. To receive either subsidy, an employee must have gone to an exchange and qualified for one of the subsidies. It is a full-time employee’s receipt of this subsidy, through an exchange, that causes an employer with at least 50 full-time employees (counting full-time equivalents) to be subject to a “shared responsibility” penalty or tax.
A third new category of protected activity arises when the employee has provided or is about to provide, to the employer, the federal government or a state attorney general, information that “the employee reasonably believes to be a violation….” of the ACA’s amendment to Title 29 of the United States Code.
A fourth category of protected activity exists when the employee has assisted or participated in, or is about to assist or participate in, a proceeding over “such a violation.” The regulation implies that a “proceeding” is one over an alleged violation of any provision of Title I of the ACA.
A fifth category of protected activity arises when the employee has testified in or is about to testify “in a proceeding concerning such violation.”
Acts qualifying as retaliation
The ACA prohibits an employer from discharging or in any manner discriminating against any employee because he/she has engaged in protected activity. Prohibited acts are not limited to ultimate employment decisions. The interim final rules define discrimination/retaliation to include not just discharge but also layoff, blacklisting, demotion, denial of overtime, denial of promotion, discipline, denial of benefits, failure to hire or rehire, threats, intimidating, a reassignment that affects prospects for promotions, and reducing pay or hours.
OSHA’s interim final rules use language incorporating some of the familiar burden-shifting framework. An administrative investigation will be discontinued unless the complainant establishes a prima facie case. The interim final rules also provide that OSHA will discontinue an investigation if the employer demonstrates by clear and convincing evidence that the same action would have been taken in the absence of the protected conduct.
For the purpose of the decision on the merits, the interim final rules adopt a two-step analytical framework. First, a violation will be found to have occurred if the complainant has demonstrated “by a preponderance of the evidence” that protected activity was a “contributing factor” in the adverse action. The parties may present direct evidence or indirect evidence about, among other things, falsity and disparate treatment. Second, if the complainant satisfies the “contributing factor” burden, “relief may not be granted” if the respondent demonstrates “by clear and convincing evidence” that “it would have taken the same adverse action in the absence of any protected activity.”
Administrative complaint procedure
The ACA adopts the pre-existing administrative complaint procedure used in the Consumer Product Safety Act. The Occupational Safety and Health Administration (OSHA) of the United States Department of Labor (DOL) has issued interim final rules adapting this procedure to ACA retaliation complaints. First, the deadline for the employee to file a complaint is 180 days after an alleged ACA violation occurs. The complaint is to be filed with OSHA.
Second, unless the complaint is dismissed, the DOL investigates, makes findings, and issues a preliminary order. Within 20 days of notice the respondent and complainant may submit a written statement, affidavits and documents and request a meeting with the DOL. After considering “information collected during the investigation,” the DOL will issue written findings about whether “there is reasonable cause to believe that the respondent has retaliation against the complaint…,” and these are to be issued “within 60 days of the filing of the complaint….” If the DOL has found that a violation occurred but the employer has demonstrated “by clear and convincing evidence that the employer would have taken the same unfavorable personnel action in the absence of that behavior, “then relief “may not be ordered.” Otherwise, the DOL’s finding of a violation must include a “preliminary order” granting relief.
The third part of the procedure entails objections, a hearing and a final order. Not later than 30 days after the date of notification, either party “may file objections to the findings or preliminary order, or both, and request a hearing on the record.” If a hearing is not timely requested, the preliminary order is “deemed a final order that is not subject to judicial review.” The filing of objections and a request for hearing before an Administrative Law Judge (“ALJ”) are prerequisite to judicial review. Not later than 120 days after the conclusion of the hearing, the ALJ must issue a “final order.” If the ALJ determines that a violation occurred, the final order may include: (i) “affirmative action to abate the violation,” (ii) reinstatement plus back pay, and (iii) compensatory damages.
The procedure’s fourth part is a petition to the Appeals Review Board. A party desiring judicial review must first file, within 14 days of the ALJ’s decision and order, a petition for review with the Appeals Review Board. The ARB may or may not accept the appeal for review, and that decision must be made within 30 days of the filing of the petition.
The complainant may file in federal court an action “for de novo review” if the DOL has not issued a final decision within (a) 210 days after the filing of the complaint or (b) within 90 days of the written determination.
If the Secretary has issued a final order, the complainant or respondent may file a petition for review with a federal court of appeals. The petition does not operate to stay the Secretary’s order.
Whenever a person has failed to comply with a “final order,” the DOL or complainant may seek enforcement by filing a civil action in United States district court.
Henry H. Robinson is a partner in the law firm of Kelly Hart & Hallman where he counsels and represents clients in all areas of labor and employment law and in healthcare law.