Reducing Hours to Avoid Offering Health Coverage

Last year, a class action lawsuit was filed against Dave & Busters (D&B) alleging that D&B reduced the hours of its full-time employees to avoid offering them health coverage.  The Affordable Care Act requires employers with 50 or more full-time employees to offer affordable health coverage to full-time employees or pay a tax penalty. 

The Plaintiffs in Marin v. Dave & Busters, Inc. had been working full-time and were eligible for coverage in the company’s medical plan.  They allege that D&B “right sized” its workforce in an effort to save costs by reducing the number of employees eligible for health coverage. 

D&B filed a motion to dismiss the claim.  Last month, the Southern District of New York denied the motion to dismiss and allowed the case to move forward.  The lawsuit asks for relief in the form of lost wages and reinstatement in the company health plan.

This denial of the motion to dismiss is a wake-up call for employers considering revising employee hours to avoid penalties or the costs of offering health coverage. 

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