Thursday, 25 February 2016
Class Action lawsuit alleges Dave & Buster's reduced hours to avoid ACA

The Affordable Care Act (ACA'') exposes applicable large employers to penalties if they do not offer full-time employees health insurance that meets the ACA's minimum value and affordability requirements. One strategy for minimizing exposure to penalties under the employer shared responsibility provisions of the ACA is to minimize the number of "full-time employees," meaning the number of employees working 30 or more hours per week on average. Employers can accomplish this by reducing the number of hours employees work so that they will not be considered to be "full-time" as defined by the ACA, which will require coverage to be offered to fewer employees.

In May 2015, a class action was filed by employees of Dave & Buster's asserting that the employer interfered with their rights under the Employee Retirement Income Security Act of 1974 ("ERISA") by reducing their work hours to below 30 in order to avoid the ACA's employer mandate. Marin v. Dave & Buster's, Inc. (S.D.N.Y.) involves potentially 10,000 employees whose hours were involuntarily reduced by Dave & Buster's from June 2013 to the present and whose reduction in hours resulted in either the loss of coverage under the company's health plan or a change to a less robust benefit option.

The employees allege that this practice violates ERISA section 510, which bans employers from discrimination regarding employee benefits. Specifically, employers may not "discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled or may become entitled under an ERISA plan."

On February 9, 2016, the court in Marin denied a defense motion to dismiss the claim under ERISA.  The court found sufficient evidence that a store manager and assistant manager at the company's Times Square location announced at a staff meeting that work hours were cut because the employer determined that, without limiting the work schedules of its staff, the ACA could impose as much as two million dollars of new expense in 2015.  The store's number of full-time employees fell from over 100 to about 40.  That evidence was enough, said the court, to satisfy the requirement for proof of a specific intent to interfere with benefits.

Some observations:  (1) the court's refusal to dismiss the claim does not mean that the employees will ultimately be successful on their claim-based on existing case law, the employees may find it difficult to assert that they are "entitled" or "may become entitled" to welfare benefits under ERISA, as nothing in ERISA requires employers to offer group health insurance; and (2) MB&W has been advising its clients for years to consider "grandfathering" existing employees who are already eligible for coverage during a move to reduce employee hours.  It is hard to imagine that a newly hired employee who is never eligible for benefits under the employer's ERISA plan could mount a successful ERISA section 510 claim.  Also, it is important to note that the employer's public statements about the reasons for dropping hours were apparently used against it.  Employers implementing these programs should be very careful about the way in which they communicate the changes and the reason for the changes.

In any event, this is an important case for employers to watch, especially employers who may have taken similar actions or are thinking about taking similar steps to address their employer shared responsibility obligations under the ACA. We encourage employers to reach out to qualified ERISA counsel before taking this approach.

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If you have questions about this or any other matter concerning Business Benefits Contact Us Here or Call Us: 615.345.0365

Posted on 02/25/2016 2:24 PM by David Johnson
Tuesday, 16 February 2016
HR Technology: Human Capital Management Technology - Webinar Invitation

Benefits Advisors Network

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Virtus Benefits Monthly Webinar Series

HR Technology: Human Capital Management Technology


February 24, 2016

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Anne Burkett

Benefit Technology Resources

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© Copyright 2015 Benefit Advisors Network. Smart Partners®. All rights reserved.


Posted on 02/16/2016 12:37 PM by David Johnson
Tuesday, 9 February 2016
Do You Have Employees Collecting an ACA Subsidy?

Last week David had his article published in the Nashville Business Journal. You can see the article here, but for those not subscribed we wanted to share this with you here:

Over the past few years, you have deployed extra resources and money to navigate and comply with the complexities of the ACA; however, if you have an employee that claims they were not offered affordable, minimum value coverage, they could get coverage on the exchange and with a subsidy.

For applicable large employers, this is another headache prompted by playing by the rules. Say it ain't so!

Here is what you need to know.

  1. If an employee received an advance premium tax credit (APTC) in 2015, you will not be notified. Per an FAQ released by the Center for Consumer Information and Insurance, the notification program will not be implemented until 2016, yet the IRS can determine the employer is still responsible for the annual $3,000 employer shared responsibility payment for this period. Do not fret as the IRS shares the employer will have the right to respond.
  2. If an employee receives an APTC in 2016, you should be notified although there is no guarantee. The notification program will be rolled out in phases. Triggering the notification is contingent upon the employee receiving an APTC and providing the Federally Facilitated Marketplace (FFM) with your current address.
  3. When you are notified, it will be via the mail. From this time, you will have ninety days to appeal to the FFM. The form to do so will be available on If successful, the employee will be "encouraged" to correct their information or potentially face a tax liability.

Perhaps we are now coming to realize the complexities with the ACA are greater than originally thought and both sides of the aisle are growing closer to simplifying it.

Contact Us

If you have questions about this or any other matter concerning Business Benefits Contact Us Here or Call Us: 615.345.0365

This is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.

Benefit Advisors Network and its smart partners are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.

© Copyright 2015 Benefit Advisors Network. Smart Partners®. All rights reserved.

Posted on 02/09/2016 10:37 AM by David Johnson
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