ACA LITIGATION MAY AFFECT EMPLOYERS

February 29, 2016

A New York district court will hear the first case on whether employers may reduce their employees’ work hours in order to avoid providing health benefits required under the Affordable Care Act (ACA).

 

The case is Marin v. Dave & Busters—a class action lawsuit claiming that the restaurant chain, Dave & Busters, violated federal law by intentionally interfering with its employees’ eligibility for health benefits.

 

The ACA requires applicable large employers (ALEs) to offer affordable, minimum value health insurance coverage to their full-time employees, or to pay a penalty. For this purpose, a “full-time employee” is defined as an employee that works, on average, at least 30 hours of service per week. In addition, Section 510 of the Employee Retirement Income Security Act (ERISA) prohibits employers and plan sponsors from interfering with an employee’s rights to health benefits under the plan.

 

According to the group of about 10,000 employees who filed suit, their hours were significantly reduced for the purpose of keeping them below the ACA’s “full-time employee” threshold.

 

On Feb. 9, 2016, the court rejected Dave & Busters’ motion to dismiss the case. This is the first case of its kind, and will set a precedent for other employers who are considering or have implemented similar strategies regarding their employees’ work hours as a result of the ACA.

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