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Dave & Buster’s to Pay $7.4 Million for ACA Avoidance

A federal judge has tentatively approved a settlement between Dave & Buster’s and a class of employees arising out of allegations that the company tried to avoid its Affordable Care Act (ACA) obligations. Under the ACA, employers with at least 50 employees are required to offer ACA-compliant insurance coverage to employees that work a minimum of 30 hours per week. A group of employees from Dave & Buster’s alleged that the company reduced their hours to less than the required 30 following the passage of the ACA.
The Employee Retirement Income Security Act makes it unlawful to retaliate or discriminate against a participant for exercising any right to which he or she is entitled under the provisions of an employee benefit plan or for the purpose of interfering with the attainment of any right to which the participant may become entitled under the plan. The employees from Dave & Buster’s claimed that the company discriminated against them “for the purpose of interfering with the attainment” of their right to health insurance under the health plan because they had qualified for health insurance prior to the ACA going into effect. In fact, the employees claimed that management explicitly stated that their hours would be cut to avoid the ACA. Dave & Buster’s tried to have the case dismissed but the court found sufficient evidence to allow the suit to continue. The proposed settlement agreement also precludes management from taking retaliatory action against the employees for the purpose of denying them health coverage.