May 27, 2020

May 27, 2020

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May 26, 2020

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Loose Lips Sink Ships: New Liabilities Under The Affordable Care Act

The Affordable Care Act (“ACA”) requires larger employers (50 or more full time equivalents) to offer “affordable” “minimum value” health care to employees workingthirty (30) or more hours per week or face the possibility of significant penalties in some cases.  Thus the cost of staffing with part time employees may be far less than paying for health insurance for workers working 30 or more hours.

At the same time, ERISA Section 510 (29 USC Section 1140) prohibits discrimination against an employee “for exercising any rights to which he is entitled under the provisions of any 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…”

In a June 15, 2015 article published in Pension & Benefits Daily, we indicated that Marin v. Dave & Buster’s, Inc. et. al. (S.D.N.Y.) will likely be the first of what may be many such cases under the ACA.   In this case, an employee who had been full time and working over thirty hours per week  had her hours reduced to below thirty the effect of which was that she would not qualify for health insurance. As a result, she brought a putative class action lawsuit alleging a violation of ERISA Section 510.  On February 9, 2010 Judge Hellerstein denied the Employer’s motion to dismiss, holding that allegations of intent to deprive plaintiff of health insurance would go to trial. Also of significance was his ruling that ERISA would allow an order requiring the employer to repay the employees if plaintiffs prevailed.

Marin had alleged that

  • Company officials told employees that complying with the ACA would cost the Employer over two million dollars and that they were reducing the number of full timers to avoid the liability;

  • That at restaurant meetings employees were told they were losing hours and health insurance;

  • That a Company official had told a newspaper that the employer was in the process of “adapting to upcoming changes associated with Healthcare reform;” and

  • The company reported in SEC filings that “Providing health insurance benefits to employees that are more extensive than the health insurance benefits we currently provide and to a potentially larger proportion of our employees, or the payment of penalties if the specified level of coverage is not provided at an affordable cost to employees, will increase our expenses.”

While defendants will properly argue that they have a right to make entrepreneurial decisions as to the necessary staffing and scheduling to provide the most economic labor cost (see Inter-Modal Rail Employees Assn. v. Atchison, Topeka and Santa Fe. Rlwy, 117 S.Ct. 1513 (1997)), employers should be wary of statements that suggest they are making staffing and scheduling decisions solely or principally on the basis of health care costs. Because of the potential for liability, some potential staffing patterns should be considered with an employer’s attorneys rather than non-attorney advisors. In addition, it may be that the Courts will recognize a difference between lowering hours of existing employees and setting new hire staffing patterns.

It is now clear that these and related issues will be developed over the next few years as more suits are brought and wend their way through the trial and appellate courts. In the meantime employers should be wary of what they say about healthcare issues, the ACA and benefit costs.

©2020 Epstein Becker & Green, P.C. All rights reserved.


About this Author

Peter Panken, Epstein Becker Green, labor attorney, employment lawyer
Member of the Firm

Peter M. Panken is a Member of the Firm in the Labor and Employment practice, in the firm's New York office. He represents management in a wide range of industries on all aspects of employment and union-related matters. He has been selected by his peers for inclusion in The Best Lawyers in America© (1989 to 2015) in the fields of Employment Law—Management and Labor Law—Management, as well as in The International Who's Who of Business Lawyers, Who's Who in America, Who's Who in the East, Who's Who Legal, and Who's...

Frank Morris, Health Care Attorney, Epstein Becker Law Firm
Member of the Firm

FRANK C. MORRIS, JR., is a Member of the Firm in the Litigation and Employee Benefits practices, heads the Labor and Employment practice in the Washington, DC, office, and co-chairs the firm's ADA and Public Accommodations Group.

Mr. Morris' experience includes:

  • Advising clients on and litigating employment, labor, disabilities, non-compete, confidentiality, benefits, information access and privacy, wage and hour, and general litigation matters in state and federal courts and administrative agencies

  • Representing health care related entities, retailers, restaurants, and other hospitality related businesses, governmental entities, builders, owners, managers, architects, and lenders in public accommodation issues, including website accessibility, under the ADA and in fair housing, fair credit, and related state and local law matters

  • Serving as an expert witness in ADA and Fair Housing Act matters

  • Representing clients with respect to social media, Internet, and e-mail policies and litigation

  • Representing and advising clients, including Audit Committees, in Sarbanes-Oxley, Dodd-Frank, and other whistleblower litigation and conducting investigations

  • Advising clients on the range of employment and labor issues related to acquisitions, mergers, and RIFs and defending claims arising from those transactions

Jeffrey H. Ruzal, epstein becker green, new york, fair labor, employment

JEFFREY H. RUZAL is a Member in the Labor and Employment practice, in the New York office of Epstein Becker Green.

Mr. Ruzal's experience includes:

  • Representing employers in employment-related litigation in federal courts and before administrative agencies

  • Representing employers in the defense of putative collective actions under the Fair Labor Standards Act and class actions under the New York State Wage and Hour Law

  • ...

Joshua A. Stein, epstein becker green, ada, labor, employment, law, litigation

JOSHUA A. STEIN is a Member of the Firm in the Labor and Employment practice and co-chairs the firm's ADA and Public Accommodations Group, in the New York office of Epstein Becker Green. Mr. Stein’s practice focuses on advising businesses on compliance with all aspects of the Americans with Disabilities Act (“ADA”), including the ADA Amendments Act of 2008, the 2010 ADA Standards for Accessible Design, and Sections 504 and 508 of the Rehabilitation Act of 1973 (“Rehabilitation Act”), as well as the Family Medical Leave Act (“FMLA”). He represents clients from numerous...