Dave & Buster’s, a restaurant chain, is accused in a lawsuit of cutting employee hours to avoid having to provide insurance as required under the Affordable Care Act, thus violating the Employee Retirement Income Security Act (ERISA). Marín v. Dave & Buster’s was filed by a New York employee earlier in 2015.
Under the ACA, employers with 100 or more full-time employees – generally those who work 30 or more hours per week – were required to offer health insurance or pay a tax starting January 1, 2015. Restaurants, in particular, were concerned about ACA requirements because of the varying hours employees often work and the seasonal requirements of the industry.
At Issue: Section 510
Section 510 of ERISA prohibits discrimination against a participant or beneficiary of an ERISA employee benefit plan, which includes ACA-mandated insurance in this case. The plaintiff, María De Lourdes Parra Marín, filed the suit on behalf of herself and other employees whose hours were reduced, which resulted in a loss or reduction of health insurance. The suit claims Dave & Buster’s cut her hours so it would not have to offer her health insurance under ACA requirements. The suit also claims a general manager said the number of full-time employees would be reduced to avoid ACA provisions.
The class-action lawsuit could affect thousands of employees at the chain – and hold implications for other employers that are required to provide health insurance for employees.
“The implications of this case are important to employers, especially as the high cost of health insurance is driving them to cut staff and reduce employee hours across the board in order to save money,” says Louis Klein, a partner with the employment team at Foley & Mansfield.
“Employers typically have been able to modify the parameters of their workforce as business needs dictate,” says Jorge Leon, partner at Michael Best & Friedrich. “Marín v. Dave & Buster’s highlights the important balancing between an employer’s ability to control the parameters of its workforce and how employers design their benefit offerings.”
The case could potentially change employers’ traditional decision-making processes and could render certain changes an employer makes as an interference with employee rights under ERISA, he says.
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Klein says this is the first of what are likely to be many cases along these lines, and as employers wait for a verdict, he recommends they keep a careful eye on staffing and hours.
“While the case is pending and before implementing any cost-management decisions affecting employee hours, employers would be wise to carefully review these management decisions for potential violations of the ACA and ERISA 510,” Klein says.
Employers with more than 50 but fewer than 100 employees should pay attention to this case, as well. It’s important to remember that employers that have 50 or more but fewer than 100 full-time or full-time equivalent employees will have until 2016 before these same rules apply.
Mary Ellen Slayter is CEO and Founder of Reputation Capital Media Services. She has more then 15 years of experience writing about HR and financial services as a journalist and marketer. Any opinions expressed within this document are solely the opinion of the individual author and may not reflect the opinions of Ebix or its personnel.