A class action lawsuit has been filed outside of federal courts in New York against restaurant and gaming chain Dave & Buster’s. The reason? Cutting employees’ hours to duck mandatory health care coverage. Under the Affordable Care Act, employers with at least 50 full-time or equivalent employees are required to offer health care coverage to those employees who work a minimum of 30 hours per week, considered “full time” under the ACA. An apparent loophole to that mandate might seem to be the ability to reduce hours of employees, so that they may fall below the required minimum work hours.
However, DB is learning it is not that easy. See Marin v. Dave Buster’s, Inc., S.D.N.Y., No. 1:15-cv-036081. In that case, the Plaintiffs accused DB of purposely cutting their hours in an effort to deliberately avoid the ACA mandate. In doing so, these employees lost their full-time status, thereby losing the opportunity to get healthcare benefits. Further, the Plaintiffs alleged that management advised during at least two separate meetings that the ACA mandate would present an added cost to the company in excess of two million dollars. The Plaintiff alleged that this conduct is a direct violation of Section 510 of The Employee Retirement Income Security Act of 1974 (ERISA), a federal law that protects employees and the healthcare and pension benefits to which they are entitled while employed.
While the fate of the verdict is still unknown, this case serves as a cautionary tale for other employers who may attempt the same maneuvers in order to avoid the mandate set forth by the Affordable Care Act. It should also be noted that tactics such as these may threaten employee morale. And in the case of Dave & Buster’s, it’s clearly not always all fun and games.