Case About Reducing Hours Due to ACA Moves Forward

The U.S. District Court for the Southern District of New York has denied a motion to dismiss a lawsuit filed by an employee of Dave & Buster’s Inc. in New York City.

The lawsuit claims the company violated the Employee Retirement Income Security Act (ERISA) Section 510 interference of benefits provisions when it reduced full-time employees’ hours following passage of the Patient Protection and Affordable Care Act (ACA).

According to the court’s opinion, Dave & Buster’s argues that an employee has no entitlement, and thus no legally sufficient claim, to benefits not yet accrued, and that a “plaintiff must show more than ‘lost opportunity to accrue additional benefits’ to sustain a Section 510 claim.” However, U.S. District Judge Alvin K. Hellerstein noted that Maria De Lourdes Parra Marin alleges the company’s discrimination affected her current benefits, in addition to interfering with her ability to attain future benefit rights.

Hellerstein found that Marin sufficiently pled that the employer acted with an “unlawful purpose” when taking an adverse action against her. He noted that the critical element is intent of the employer—proving that the employer specifically intended to interfere with benefits. He found that Marin sufficiently and plausibly alleged this element of intent.

NEXT: Proof of intent to interfere with benefits

Hellerstein noted that in her complaint, Marin describes two employee meetings in June 2013 in which the Dave & Buster’s general manager and assistant general manager explained that the ACA would cost the company "two million dollars" and it was reducing the number of full-time employees to approximately 40 to avoid that cost. The complaint describes a nation-wide effort to lower the number of full-time and part-time employees, and that similar meetings were held at other locations.

According to the compliant, one employee from another location posted on D&B's Facebook page on June 9, 2013, that "[t]hey called store meetings and told everyone they were losing hours (pay) and health insurance due to Obamacare."

The complaint also alleges that a senior vice president of human resources responded to a query from the Dallas Morning News about the company’s reduced workforce by saying that "D&B is in the process of adapting to upcoming changes associated with health care reform."

In addition, a filing with the Securities and Exchange Commission (SEC) from September 29, 2014, stated that: "Providing health insurance benefits to employees that are more extensive than the health insurance benefits we currently provide and to a potentially larger proportion of our employees, or the payment of penalties if the specified level of coverage is not provided at an affordable cost to employees, will increase our expenses."

Hellerstein denied Dave & Buster’s motion to dismiss the suit, saying “accepting as I must that these factual allegations will be proved, the complaint states a plausible and legally sufficient claim for relief.”