Wednesday, April 6, 2016

The Risk of “Right Sizing” Your Employees

Employees of Dave & Buster’s, Inc. and Dave & Buster’s Entertainment, Inc., have brought a class action lawsuit against the corporation under Title I of the Employee Retirement Income Security Act of 1975 (ERISA)in a New York district court.  The class consists of over 10,000 employees who allege that their hours were involuntarily reduced by the corporation after the enactment of the Patient Protection and Affordable Care Act (ACA).  The class alleges that the reduction of hours resulted in either the loss of the corporation-sponsored ERISA health insurance plan or being presented with an inferior insurance plan. 

The ACA, which became law in 2010, required that employers, with one hundred or more employees, provide affordable, minimum-value insurance for its full-time employees effective January 1, 2015.   The employees, employed in 72 stores across the United States, believe that Dave & Buster’s implemented a nationwide “effort in 2013 intended to ‘right-size’ the number of full-time and part-time employees” to avoid the costs related to the requirements of the ACA.  

The named plaintiff in this case, Maria De Lourdes Parra Marin, worked as a full-time employee at Dave & Buster’s Times Square store since 2006, working approximately 30 to 45 hours per week.  Up until 2013, Ms. Marin was one of at least one hundred full-time employees at this store who received corporation-sponsored health insurance.  Employees at the Dave & Buster’s Times Square store were required to attend a meeting in which the store’s General Manager announced that compliance with the ACA would cost the corporation as much as 2 million dollars.  As such, the Times Square location announced that it was significantly reducing its number of full-time employees.  Ms. Marin’s hours were reduced to approximately 10 to 15 hours per week and as of 2014 she was no longer entitled for coverage under Dave & Buster’s health insurance plan.  In June 2014, a representative for Dave & Buster’s explained that Ms. Marin’s reduction in hours was a part of its nationwide “program in 2013 intended to right-size the number of full-time and part-time employees in [its] stores.”  Ms. Marin, and other Dave & Buster’s employees, allege that by converting their hours from full-time to part-time, the corporation has interfered with the attainment of their rights to participate in the corporation-provided health insurance plan and as such, are seek money damages under§510 of ERISA, 29 U.S.C. §1140.

While this is a suit founded in ERISA, which does not apply to public employers, it is of interest to private employers and may help create public policy on the issue.  For more information, reach out to one of Ancel Glink’s experienced labor and employment attorneys.