The United States District Court for the Southern District of New York has found that a complaint filed against Dave & Buster’s (D&B) has enough merit that a motion to dismiss the case should be denied. The case involves reducing the hours of employees in order to avoid the cost of providing health benefits to full-time employees.
Maria De Lourdes Parra Marin filed a complaint against her former employer, D&B, for acts of discrimination in violation of section 510 of the Employee Retirement Income Security Act (ERISA). The Plaintiff worked 30 to 45 hours per week at the D&B Times Square location from 2006 to 2013 and received health insurance under the D&B health insurance plan.
According to the Plaintiff, in June of 2013, in response to the enactment of the Affordable Care Act (ACA) in March of 2010, the D&B Times Square store managers told employees that compliance with the ACA would cost as much $2,000,000 and that to avoid the costs, the location planned to reduce its full-time employees from more than 100 to approximately 40. The Plaintiff alleged that D&B reduced her hours after June 1, 2013 to approximately 10 to 25 hours per week. The Plaintiff then received a letter from D&B, dated March 10, 2014, informing her that she now had part-time status and her full-time health insurance coverage would terminate on March 31, 2014. The Plaintiff alleged that the reduction in her hours caused a loss of full-time status, a reduction in pay, from a range of $450 to $600 per week, to $150 to $375 per week, and the loss of eligibility for medical and vision benefits.
The Defendants moved to dismiss the complaint. The statute provides that:
It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan…or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan…
The Plaintiff alleged that she was a full time employee and entitled to health care coverage at the time of her reduction of hours. The complaint alleged that the Defendants intentionally interfered with her current health-care coverage.
The court said that the Plaintiff has put forward factual allegations supporting her claim that the employer had the specific intent to interfere with her right to health insurance. The complaint described two meetings in the Times Square location in June 2013 in which the D&B General
Manager and Assistant General Manager described that the ACA would cost the company $2,000,000 and that they were reducing the number of full-time employees to avoid that cost. The complaint described a nationwide effort to lower the number of full-time and part-time employees, and that similar meetings were held at other locations. One employee from another location posted on D&B’s Facebook page on June 9, 2013 that they called store meetings and told everyone they were losing hours and health insurance due to Obamacare.
The Defendants argued that an employee has no entitlement, and thus no legally sufficient claim, to benefits not yet accrued, and that a plaintiff must show more than lost opportunity to accrue additional benefits to sustain a 510 claim. However, the court pointed out that the Plaintiff alleged that the Defendants’ discrimination affected her current benefits, in addition to interfering with her ability to attain future benefit rights. The court said the Plaintiff’s claim arose from the employer’s unlawful motivation.
Therefore, the Defendants’ motion to dismiss the case was denied.
This case is still in the very early stages; however, it should serve as a warning to any employer considering cutting hours for employees who already have health benefits.