Cutting employee hours to avoid ObamaCare mandate = “retaliation”

The Affordable Care Act, otherwise known as ObamaCare, sometimes gives employers an incentive to reduce the work hours of employees so that they will not meet eligibility thresholds for costly health insurance. Lawyers for employees have responded by arguing that this reduction of hours constitutes “retaliation” under ERISA and is itself unlawful. Now a Southern District of New York federal court seems to have bought the theory, at least to the extent to denying a defense motion to dismiss. [R. Pepper Crutcher, Balch & Bingham on Marin v. Dave & Buster’s, Inc.]

17 Comments

  • Under the principle of “retaliation” one could argue that anything a company or person does to avoid or reduce taxes (the Supreme Court did say that the ACA is a tax) payable under a new law constitutes “retaliation”. Attorneys need to vigorously oppose this possibility.

    • “Under the principle of “retaliation” one could argue that anything a company or person does to avoid or reduce taxes”

      Since the employee did not cause the tax, how can the avoidance of that tax be “retaliation” against the employee? A basic principle of retaliation is that it has to be in response to something the person being retaliated against did.

      • Yes, agree. I’m thinking of unintended consequences and the likelihood of overly aggressive prosecutors and regulators to twist such a precedent to attack in other situations.

  • Apparently retaliation does not require an event upon which the retaliation is based upon. Now my head hurts.

  • Does that mean keeping someone from working overtime for time and a half is also retaliation?

  • Actually, I think there is a decent case for retaliation.
    1. Employee works full-time without benefits.
    2. The law states that an employer cannot take action against an employee due to the cost of benefits.
    3. Employer tells employee that, since all full-time employees must have benefits, it will reduce employee to part-time.
    4. Employer actually reduces hours.

    So, we have an employer explicitly stating it took an action detrimental to an employee because of the cost of benefits. Under the law, it is likely a clear case of retaliation.

    Is it a good law? That is debateable.

    In answer to Kurt: yes, it could be retaliation. However, since the right to work overtime is not protected by ERISA (or any other law that I can think of, (and in the absence of a labor agreement or a violation of some other law, e.g., Title VII)), I would not think there is a cause of action.

    • The issue is that “retaliation” has always been taken to mean negative employer actions in response to things that the employee themself did. Like, whistleblowers, or “didn’t want to sleep with the boss”, that sort of thing.

      The idea that an employer could be guilty of retaliation against someone who isn’t an employee rather extends the idea of retaliation. Like, if a store owner decides that nobody ever comes in after 8 PM so he’ll cut back hours, is he guilty of retaliation?

    • So who do they sue when the employer can’t make a profit because of the extra costs? *Under this logic, that’s retaliation when he lays off all his employees and shutters the business.*

      “The law states that an employer cannot take action against an employee due to the cost of benefits.” Amazing that a single sentence can wash away economics so easily – why didn’t our Congress think of this sooner. Why, we can wipe out the deficit in seconds…

    • “The law states that an employer cannot take action against an employee due to the cost of benefits.”

      Please cite the specific law that says an employer can not reduce employee hours or head count if employee benefits are too expensive.

      Are they required to go bankrupt first?

      Are they prohibited from going out of business?

      • MattS, I was quoting Allan’s #2 – I don’t know the source for that assertion either.

        • Apparently, the law in question is found at 29 U.S. Code § 1140

          “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, this subchapter, section 1201 of this title, or the Welfare and Pension Plans Disclosure Act [29 U.S.C. 301 et seq.], or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan . . .”

        • @CarLitGuy

          I was responding directly to Allan, not to you. In fact at the time I submitted my reply, neither your reply nor Density Duck’s reply had made it past moderation yet.

  • Next up, laying people off after a minimum wage hike is retaliation.

  • Not hiring more employees because you can’t afford them is retaliation, too.

  • “discharge, fine, suspend, expel, discipline, or discriminate against” I do not see reduce hours for all non-management employees listed. My daughter is a “full time” employee, but her average hours for the past 12 weeks back in january was 36.78… This pay period she’s got the full 80 plus another 8 in ot (ain’t inventory great?). So were they retaliating against her for 12 weeks or was there some financial factor that lead to them cutting hours for everyone? Either a thing is permitted or it isn’t… After all, the employers involved aren’t standing behind them with firearms saying “you will not seek other employment”.

    • But read the second clause “or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan..”

      To emphasize, I am not defending the law. I am just pointing out that, under the law, the case is not a slam dunk for the employer.

      In this country we have many barriers to entry into the market, whether it be licensing, paying the minimum wage, or offering benefits.

  • It says “right to which such participant may become entitled under the plan“, not “under the law”. The plan here refers to the companies existing benefits plan. If the pre-ACA plan did not include health benefits, cutting hours to avoid the obligation to provide health benefits would not affect any right the employees had under “the plan”.