Costly Consequences of Violating Protected Rights (article)
One of the provisions of ERISA is intended to protect the rights of individuals for purposes of participating in employee benefit plans. Specifically, ERISA Section 510 prohibits discrimination against any employee with respect to compensation, terms, conditions, or other privileges of employment, as well as prohibits interfering with attaining any benefit or right the individual is entitled to under an employer-sponsored plan.
A recent lawsuit highlights the impact of violating ERISA Section 510. In 2017, a class action lawsuit was filed against Dave and Buster’s as a result of the company’s decision to reduce their employee’s work hours as a way to avoid the requirement of the need to offer health coverage pursuant to the Affordable Care Act (ACA). The ACA provides that an employer employing 50 or more employees must either offer adequate and affordable health coverage to employees working 30 or more hours or week, or risk the ACA’s employer shared responsibility penalties under IRC Section 49080H. The class action argues that ERISA Section 501 rights which protect against interference of attaining benefits were violated.
On December 7, 2018, the U.S. District Court for the Southern District of New York approved a proposed $7.4 million settlement with the employees affected by the company’s decision to reduce their work hours as a means to avoid offering health insurance.
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