A new class action lawsuit claims restaurant chain Dave & Buster’s cut workers’ hours to avoid providing them health insurance as required under the Affordable Care Act.
The lawsuit, filed in federal court in New York, proposes a class of about 10,000 Dave & Buster’s employees who allege the company moved them to part-time status in 2013, eliminating their health insurance coverage in the process.
The employees claim this action violates section 501 of the Employee Retirement Income Security Act (ERISA), a federal law governing employee health and pension plans.
The employees allege that Dave & Buster’s reduced worker hours to avoid the ACA’s so-called employer mandate, which requires employers with 50 or more full-time employees or full-time equivalents to provide ACA-compliant health insurance coverage for those employees and their dependents, or face financial penalties.
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One worker saw her hours go from more than 30 per week to around 17, according to the complaint. Dave & Buster’s then dropped that worker from its health plan because she failed to work enough hours to qualify for coverage.
The complaint cites a portion of the company’s recent filings with the Securities and Exchange Commission, in which the company expresses concerns that ACA compliance would increase corporate expenses. Those same filings indicate Dave & Buster’s payroll and costs have decreased.
The plaintiffs attribute that decrease to the company forcing employees to part-time status to avoid complying with the health care law.
Section 510 of ERISA makes it unlawful for any person to discriminate against any participant or beneficiary for exercising a right under ERISA or an ERISA benefit plan. The plaintiffs allege that by reducing employment hours, Dave & Buster’s interfered with the attainment of a right under ERISA—in this case, the right to be eligible for health insurance as part of the company’s employee benefits plan.
The lawsuit is believed to be the first of its kind to test the limits of how far employers can go in avoiding their obligations under the ACA. It comes as the Department of Labor, the federal agency in charge of enforcing employer workplace obligations, targets other employer wage theft practices such as intentionally mis-classifying workers as independent contractors.