Restaurant Employee Lawsuit Is a Big Deal

insurance morguefile

Let’s start with some good news. The governor signed AB 72 giving some protections to individuals when a non-contracting individual health care professional provides services in a contracting health care facility. This new law will take effect in July 2017.

Kudos to the National Association of Health Underwriters for their work on this new law. Essentially it limits insured cost sharing for these covered services to no more than the cost sharing required had the services been provided by a contracting health professional. There is also a relief process provided in the bill if one falls victim to this situation. .

Some not so good news for those employers in the food service industry as well as retail, minimarts and the like. The lawsuit against Dave & Buster Restaurants has been allowed to proceed.

The suit alleges that the employer reduced hours mainly to avoid providing the required benefits under the ACA (Affordable Care Act, aka Obamacare).

According to an article by Jennifer Carsen, JD, (Legal Editor for BLR’s human resources and employment law publications), Maria Marin filed a lawsuit in federal court alleging illegal interference with her right to health care coverage protected by the Employee Retirement Income Security Act (ERISA).

The Southern District of New York denied Dave & Buster’s motion to dismiss the case, noting two meetings at the Times Square location in which company leaders stated, in so many words, that the ACA would cost the company “two million dollars” and that they would be reducing the number of full-time employees in an effort to avoid that expense. There was also evidence that similar meetings were held at other Dave & Buster’s locations.

“The critical element,” the court noted, “is intent of the employer—proving that the employer specifically intended to interfere with benefits.” As Marin “sufficiently and plausibly” alleged this element of intent, Dave & Buster’s motion to dismiss the case was denied. (Marin v. Dave & Buster’s et al., SDNY 1:15-cv-03608, 2/9/16)

This case could have serious ramifications for many employers. When the ACA was first approved, there was a scramble to try to find a way to deal with the increased costs. All manner of benefits professionals were discussing ways around this law. But in reality it all came back to the simplest solution. Reduce employee hours. This statement by Dave & Busters about reducing hours is not uncommon.

In reality, most companies of this type did the exact same thing. They simply decided to manage their employees’ hours to keep them under 30 hours per week. There are a few that actually simply raised the cost of their product to cover the cost of benefits. I have seen two interesting examples. One is in the San Francisco Airport where there is a placard at the check-out counter that states that you are paying about 2% more for your purchase so the employer can comply with the benefits law as well as the San Francisco minimum wage.

Rangoon Ruby Burmese Cuisine in San Carlos CA states on their tables that there is a surcharge on your purchase to offset the additional cost of benefits. However they give you an option to request that the surcharge be removed. I called the restaurant to see how often that might happen, but received no return call.

Food service employees now typically have two jobs with different entities in order to get the 40+ hours needed to provide a living income. This creates scheduling challenges for the restaurateur as well as the employee.

I must wonder “aloud” what the response would be in Shasta County if the restaurants provided benefits but gave the Rangoon Ruby option when you paid your bill.

In any event all groups of over 50 employees are facing big challenges as this year’s renewal season approaches. Looking at options such as offering multiple plans to meet the needs of a diverse work place is critical to the success of a benefits plan. Online enrollment and benefit management platforms allow the most efficient way for employers and employees to manage benefits. Blue Shield of CA will now be offering products on the Exchange that will create another option for small employers to consider.

Margaret R. Beck
Margaret Beck  CLU, ChFC, CEBS started her insurance practice in Redding in 1978. As an insurance broker/consultant,  she represents businesses and individuals as their advocate.  She assists in choosing proper products, compliance with complex benefit laws and claims issues once coverage is placed. All information in her column is provided to the best of her knowledge, subject to final regulation by the respective agencies. Questions to be answered in this column can be submitted to info@insuranceredding.com.  Beck's column is also published in the Redding Record Searchlight.
Comment Policy: We welcome your comments, with some caveats: Please keep your comments positive and civilized. If your comment is critical, please make it constructive. If your comment is rude, we will delete it. If you are constantly negative or a general pest, troll, or hater, we will ban you from the site forever. The definition of terms is left solely up to us. Comments are disabled on articles older than 90 days. Thank you. Carry on.

Leave a Reply

Your email address will not be published. Required fields are marked *