Another End-Run Around ObamaCare that Employers May Try: Cutting Hours Down to Part-Time

By LAS

It is well for workers to be aware that if ObamaCare does in fact become the law of the land for group plans as currently scheduled, employers may try yet another end-run to get out of having to comply – a risky end-run, but nevertheless, they could be tempted to try it.

That end-run is to cut affected employees' hours to less than the mandated 30 hours-per-week work schedule which triggers qualification for benefits.

I am told that “countless” employers and advisors are seriously considering this game-playing, this strategy to undercut the unpopular (among corporations) costs of ObamaCare.

However, employees who face loss of eligibility for any benefit should know that this may trigger legal ramifications that could prove costly to the employer if he should try this strategy. 

Employees are covered by provisions of the ERISA law – specifically, Section 510 (which in turn refers back to Section 502).

The pertinent paragraph of ERISA Section 510 states:

“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 – or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan.”

Aha! We gotcha now, you think. Well, maybe – depending on how much of a junkyard dog your attorney is.

Now, this is not affected by a short-term cut in hours due to a slow period. Many industries have slow periods in the spring or summer, and then ramp up sharply for the fall or winter. This is true of retail, for example, or of the tire business.

BUT if the SINGLE MOTIVE for cutting hours is to deprive employees of qualifying for any employment benefit – which includes ObamaCare – then the company faces legal shaky ground and fines for doing so.

The company stands to be assessed penalties for violating ERISA law. The Department of Labor can assess these fines if the company is found guilty of violating ERISA law, and these penalties are assessed FOR EACH INSTANCE of such violation of the law. Put into other words, the company will have to pay for each employee affected by their shenanigans.

How do you go about exercising your rights under the ERISA law? First you have to start a civil action against the company complaining of the loss of your ERISA rights, or complaining of their retaliation for exercising your rights under ERISA.

Keep a little diary or journal for each day from the moment that the company announces that some employees will have a cut in hours. Keep copies of any newsletters or memos related to this action. Note how many hours a day you worked. Keep this and other pertinent papers together in a little file or large envelope.

And good luck!