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May 11 — A new class action accuses restaurant chain Dave & Buster's Inc. of cutting workers' hours in order to avoid providing them with health insurance under the Affordable Care Act.
The suit—which appears to be the first of its kind—was filed under Section 510 of the Employee Retirement Income Security Act. This section prohibits employers from interfering with employees' receipt of ERISA-governed benefits like health insurance.
Attorneys have long predicted that companies may respond to the ACA's employer mandate by moving their full-time workforces to part-time, which could in turn expose them to class action suits under ERISA Section 510.
In this suit, a proposed class of about 10,000 workers alleged that Dave & Buster's moved them to part-time status in 2013, eliminating their health insurance coverage in the process.
The New York-based worker leading the litigation effort alleged that the company slashed her weekly hours from more than 30 to about 17 in order to avoid the ACA's employer mandate. The mandate penalizes large employers that don't provide health benefits to employees working at least 30 hours per week.
According to the worker, Dave & Buster's then dropped her from its health plan, because she failed to work a sufficient number of hours. Because of this reduction in hours, she also saw her weekly wages cut nearly in half, she alleged.
In the complaint, the workers quoted from the eatery's recent filings with the Securities and Exchange Commission, pointing in particular to passages in which the company voiced concerns that ACA compliance would increase corporate expenses.
Citing these SEC filings, the complaint also alleged that the company's operating payroll and benefits costs decreased slightly as a percentage of total revenue during the period in which these changes were implemented. According to the complaint, the SEC filing attributed this decrease in costs to “decreased hourly and management labor costs offset by increased incentive compensation expense and unfavorable health insurance claims experience.”
The lawsuit was filed May 8 in the U.S. District Court for the Southern District of New York by Judith L. Spanier and Natalie S. Marcus of Abbey Spanier LLP, New York; Bradford D. Conover and Molly Smithsimon of Conover Law Offices, New York; and William D. Frumkin and Elizabeth E. Hunter of Frumkin & Hunter LLP, White Plains, N.Y.
Dave & Buster's didn't immediately respond to Bloomberg BNA's request for comments.
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Text of the complaint is at http://www.bloomberglaw.com/public/document/Marin_v_Dave__Busters_Inc_et_al_Docket_No_115cv03608_SDNY_May_08_.
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