Dave & Buster’s Settles Claims It Illegally Cut Workers’ Hours

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Carmen Castro-Pagan

Dave & Buster’s Inc. agreed to pay $7.425 million to settle a lawsuit that accused the Texas-based restaurant and entertainment chain of illegally reducing its workers’ hours to deprive them of health-care benefits.

The settlement, if it gets court approval, would end a two-year lawsuit brought by an employee who alleged that her hours were reduced from approximately 40 a week to less than 30, which left her ineligible for health benefits. According to the lawsuit, Dave & Buster’s reduced its workers’ hours to prevent them from continuing to receive health benefits under the company plan.

The settlement could provide relief to approximately 1,200 class members, according to documents filed Nov. 17 in the U.S. District Court for the Southern District of New York ( Marin v. Dave & Buster’s Inc. , S.D.N.Y., No. 1:15-cv-03608, memorandum of law in support of plaintiff’s motion for preliminary approval of class action settlement 11/17/17 ).

The case is noteworthy for being the first Employee Retirement Income Security Act lawsuit that alleged an employer, in response to the employer mandate of the Affordable Care Act, intentionally interfered with workers’ benefits by cutting their hours to make them part time. How many full-time workers a company has plays in to whether the mandate requires them to provide those workers with health coverage. The employee brought the case pursuant to an ERISA provision that prohibits employers from taking an employment action with the specific intent to interfere with benefits.

Last year, a federal judge in New York declined to dismiss the lawsuit, holding that there was enough evidence to support the workers’ claims that the company acted with an “unlawful purpose” when it reduced the hours of hundreds of employees and thereby made them ineligible for health benefits.

In her motion seeking court approval of the settlement, the participant also asked the court to conditionally certify the class.

Abbey Spanier LLP, Conover Law Offices, and Frumkin & Hunter LLP represent the proposed class. Paul, Weiss, Rifkind, Wharton & Garrison LLP represents Dave & Buster’s.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com

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