The Dave & Buster’s restaurant-entertainment chain is on the hook for a $7.425 settlement after slashing employees’ hours to avoid providing them with health insurance as mandated by the Affordable Care Act (ACA, or Obamacare).
The ACA’s employer shared responsibility provision requires businesses with 100 or more employees to provide health insurance for all full-time workers, which is defined statutorily as anyone working at least 30 hours a week.
Dave & Buster’s, upon hearing of the mandate, decided to slash the working hours of some 1,200 employees to avoid the cost of providing health insurance.
Problem is, doing so was a violation of a provision of the Employee Retirement Income Security Act (ERISA), which prohibits anyone from interfering with an employee’s right to attain benefits.
Thus, in 2016, an employee filed a class action lawsuit in a federal district court in New York, alleging the company had violated her ERISA rights when it cut her hours from 35-to-40 down to an average of 17.43 per week.
Dave & Buster’s tried to get the lawsuit dismissed, but failing to do so, eventually agreed to settle for $7.425 million. This past week, a judge overseeing the lawsuit finally agreed to the settlement.
Thus, to avoid $2 million in health insurance expenses, the Dallas-based chain is now out nearly $8 million.
Meanwhile, in related news, food and beverage sales at Dave & Buster’s declined 5 percent in the latest quarter, which The Motley Fool attributed to diminishing foot traffic at the malls where the chain’s restaurants are mostly located. Revenue for virtual reality games was up 1.5 percent, however.
“Food and beverage comp sales were unfavorably impacted by the timing of our All You Can Eat Wings promotion, as well as a decline in special events, which is a higher mix of F&B [food and beverage],” interim CFO Joseph DeProspero said on the quarterly conference call.
The chain also announced it was reintroducing its $19.99 all-you-can-eat chicken wings special.