Reducing Employee Hours to Avoid ACA Compliance May Raise ERISA Issues

The Affordable Care Act (''ACA'') requires that applicable large employers offer affordable minimum-value coverage to full-time employees and their dependents in order to avoid penalties (the "Employer Mandate").

Many commentators have observed that a strategy for minimizing exposure to penalties under the Employer Mandate is to minimize the number of "full-time employees," or the number of employers working 30 or more hours per week on average. A recent case, Marin v. Dave & Buster's, Inc., S.D.N.Y. 1:15-cv-36081, could have major legal implications for employers contemplating this type of strategy.

The Marin case was filed as a class action in May 2015 by employees of Dave & Buster alleging that the employer reduced its number of full-time employees to avoid costs associated with providing ACA-compliant healthcare coverage and this interfered with their rights under the Employee Retirement Income Security Act of 1974 ("ERISA"). On February 9, 2016, the District Court for the Southern District of New York in Marin denied a defense motion to dismiss the claim under ERISA.

Marin is the first case to address whether a workforce realignment allegedly done for the purpose of avoiding the Employer Mandate constitutes an ERISA violation. While there have not been any final findings on the merits, companies contemplating such a strategy should pay very close attention as this case progresses.

A document outlining more details and observations from the Marin case can be found here. As always, please do not hesitate to reach out with any questions, comments or concerns.