Restaurant worker says employer cut hours to avoid providing health benefits

The Employment Retirement Income Security Act, commonly called ERISA, sets standards for private sector pension and health care plans and establishes protections for employees who participate in the plans. Section 510 of ERISA specifically prohibits interference by employers in employees’ receipt of benefits, including health insurance.

What is believed to be a first-of-its-kind lawsuit was recently filed under Section 510 of ERISA, alleging that the Dave & Buster’s restaurant chain slashed employees’ work hours in order to avoid meeting insurance requirements under the Affordable Care Act. The ACA mandates that large employers provide health care benefits to employees who work 30 or more hours a week.

The suit, which was filed in New York, seeks class action certification, with a proposed 10,000 workers included in the class. The lead plaintiff alleges that Dave & Buster’s cut her weekly work hours from 30-plus to 17. She says other employees were subject to similar treatment, resulting in the elimination of their health insurance coverage.

You can read more about the suit in a recent article in Bloomberg.

Since passage of the ACA, it has been predicted that employers would switch employees from full-time to part-time in order to avoid requirements under the law. This kind of attempt at cost-cutting can be challenged, however, under Section 510 of ERISA, and cutting work hours in this manner could expose employers to liability, and employees may be entitled to compensation.

For more on federal and New York State employment laws, please see Serrins Fisher LLP’s wage and hour law overview.

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