In order to minimize their exposure to the Employer Shared Responsibility mandate, some employers are contemplating reducing employees to below 30 hours a week to reclassify them as part-time. While avoiding ACA penalties, this strategy may cause other headaches for employers.
According to ERISA §510 (29 USC §1140) the anti-interference section 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 … “
An argument can be made that systematically reducing hours for a significant portion of the workforce to avoid the ACA is an unlawful ERISA interference. Having said that, employers sometimes do reduce hours for business-related reasons and that would not appear to be objectionable under ERISA.
It is important to have a detailed analysis laying out all of the options available before making significant changes to a companies benefits and/or workforce. This is critical especially in the current environment where the rules are being amended on an ongoing basis.
http://www.law.cornell.edu/uscode/text/29/1140
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