Employee lawsuits can center on a variety of issues: wrongful discharge, discriminatory hiring practices and more. To respond to this exposure, employment practices liability insurance (EPLI) protects companies and their directors, officers and employees against lawsuits or claims filed by employees, former employees and employment candidates.

Most agents are familiar with these policies. But the landscape for potential litigation continues to increase in the wake of various Affordable Care Act (ACA) provisions.

Are you confident your clients are covered?

Recently, an employee of Dave & Buster’s Inc. in New York City filed a lawsuit claiming the company violated the Employee Retirement Income Security Act (ERISA) Section 510 interference of benefits provisions when it reduced full-time employees’ hours following passage of the ACA.

As reported by Plan Sponsor magazine, Maria De Lourdes Parra Marin filed the suit on behalf of herself and all other U.S. Dave & Buster’s employees whose hours the company reduced beginning June 1, 2013 in order to avoid the ACA’s employer mandate, which penalizes large employers that do not provide health benefits to employees working at least 30 hours a week. The ACA institutes a penalty for employers with more than 50 full-time equivalent (FTE) employees that do not offer minimum essential coverage to substantially all FTEs—triggered if one employee goes to a federal or state health plan exchange and qualifies for a subsidy. The penalty is $2,000 per FTE, minus the first 30 FTEs.

According to the complaint, fewer hours resulted in either loss of coverage under the company’s health plan or reduction to inferior coverage for Marin and other employees. Claiming that Dave & Buster’s reduced Marin’s hours from 30-45 hours per week to 10-25 hours per week, the lawsuit alleges that a general manager of Dave & Buster’s stated during a meeting Marin attended that the ACA’s provisions would cost the company as much as $2 million. To avoid that cost, the company planned to reduce the number of full-time employees at Marin’s store. The lawsuit assumes that Dave & Buster’s held similar meetings across the country.

ACA requirements will lead to more employees complaining about hour reductions or job loss when their companies make adjustments to stay under the 50-employee threshold. Agents must remind their clients that given the complexity of federal and state labor laws, they may find themselves facing a lawsuit—the cost of which can be significant, in terms of both defense and remedy.

Note that for your customers, Big “I” Markets offers a trusted provider of EPLI coverage. Log in to Big “I” Markets and search for “Employment Practices Liability”—the same specialist that works with many Big “I” state associations on unusual agency E&O risks provides this product as well. EPLI is also available through the Travelers Wrap+ product with private company D&O and related coverages. For your own E&O insurance, seek the counsel of your Big “I” state association, which can add coverage to your E&O policy or help you seek a stand-alone policy.

Plaintiff attorneys may very well ramp up their promotional efforts to generate more litigation. Make sure EPLI coverage is on the agenda for your next client meeting.

Dave Evans is a certified financial planner and an IA contributor.