Complaint Alleges ERISA Violation to Avoid ACA Requirements
Contact the experienced employment law attorneys at Maya Murphy, P.C. today at (203) 221-3100 or JMaya@Mayalaw.com.
Since the Affordable Care Act went into effect changing the law to require many employers to provide health insurance to employees who work 30 hours or more per week or pay a penalty, some companies have been cutting hours to avoid that expense. However, doing so could leave your business open to an Employee Retirement Income Security Act violation charge.
An employee at Dave & Buster’s restaurant filed a complaint alleging that the company discriminated against her and other employees in violation of the ERISA by cutting hours to skirt health insurance requirements mandated by the Affordable Care Act.
The employee, who had worked full-time clocking between 30 to 45 hours per week at the Dave & Buster’s Times Square location, had received health insurance through the company under an ERISA employee welfare benefit plan.
In June 2013, store managers allegedly told employees that the company would reduce its full-time employees from more than 100 to 40 to avoid ACA costs. The employee claimed that beginning in June 2013, her hours were reduced to an average of 17.43 per week. She said she also was notified at that time that because she had become a part-time employee, she was no longer qualified for health insurance through the company’s benefits plan. She argued that Dave & Buster’s actions curtailing her hours amounted to discrimination against her “for the purpose of interfering with the attainment” of her right to participate in the employee benefit plan.
Dave & Buster’s moved to dismiss the employee’s complaint, arguing that her theory of liability failed as a matter of law. A district court denied Dave & Buster’s motion, holding that the employee stated a plausible and legally sufficient claim for lost wages and the reinstatement of benefits.
The court noted that the employees described several meetings in which management stated that the ACA requirements imposed under the law would cost the company $2 million, and that the company would be reducing full-time employees to avoid the cost. A Securities and Exchange Commission finding seemingly corroborated the employees’ allegations.
Although Dave & Buster’s argued that employees have no entitlement to benefits not yet accrued, the court found that employees presented evidence that the restaurant acted with an “unlawful purpose” that took adverse actions against employees by allegedly deliberately interfering with benefits.
If you feel you would like to explore your employment law options, contact the experienced employment law attorneys today at 203-221-3100, or by email at JMaya@mayalaw.com. We have the experience and knowledge you need at this critical juncture. We serve clients in both New York and Connecticut including New Canaan, Bridgeport, White Plains, and Darien.
Source: Marin v. Dave & Buster’s, Inc., et al., No. 1:15-cv-03608-AKH (S.D.N.Y. Feb. 9, 2016).
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