Looming implementation of the Affordable Care Act's (ACA) so-called “play or pay” provision has large employers evaluating the alternatives it presents: “play,” by offering health insurance coverage to full-time employees; or “pay,” by absorbing the annual per employee penalty for not offering such coverage. Employers willing to “play” are looking carefully at cost management, plan coverage, and who will be covered. Employers opting to “pay” are taking a hard look at how they might reduce the penalties they may be facing because of the employer mandate. In weighing both of these options, some companies are also looking at ways to reduce the number of full-time employees to whom coverage must be provided.
Employers that reduce employee hours to reduce employer mandate penalties, however, risk violating the wrongful interference provision of ERISA. It prohibits employers from, among other things, discharging, suspending, disciplining, or discriminating against an employee for the purpose of interfering with the attainment of any right to which the employee may become entitled under an employee benefit plan.
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