News & Publications

Between a Rock and a Hard Place: How the ACA Exposes Employers to New Class Action Risks

Pension & Benefits Daily

Peter M. Panken, Frank C. Morris, Jr., Adam C. Solander, and August Emil Huelle authored an article in Bloomberg BNA’s Pension & Benefits Daily, titled “Between a Rock and a Hard Place: How the ACA Exposes Employers to New Class Action Risks.”

Following is an excerpt (See below for a PDF of the full article):

The Affordable Care Act (‘‘ACA’’) exposes applicable large employers to penalties if they do not offer employees who regularly work 30 or more hours per week health insurance that meets the ACA’s minimum value and affordable requirements. Given the high cost of health insurance, an employer could conclude that by scheduling employees for less than 30 hours it could avoid the ACA’s coverage obligations and save money. But how and, perhaps more importantly, why an employer executes such an approach may prove crucial in light of Section 510 of the Employee Retirement Income Security Act of 1974 (‘‘ERISA’’). Section 510 of ERISA provides that, ‘‘It shall be unlawful for any person to . . . discriminate against a participant or beneficiary . . . for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan . . .’’ (emphasis added). ...

Recently, the first case accusing an employer of violating ERISA Section 510 by reducing the hours of employees below 30 a week in order to avoid being required to provide health insurance under the ACA was filed in the U.S. District Court for the Southern District of New York (Marin v. Dave & Buster’s Inc. (91 PBD, 5/12/15)) ... It will likely be the harbinger of a flood of such litigation in the coming months and years. Employers should therefore take heed to protect against this litigation threat and consider carefully the allegations in the Marin complaint.