Dive Brief:
- Whole Foods Market Inc. requires workers who use tobacco products to pay a surcharge each paycheck, amounting to $780 annually, without meeting the requirements for an alternative option, according to a lawsuit filed Jan. 17 (Wilson, et al. v. Whole Foods Market Inc.).
- Three current and former employees alleged in the proposed class-action lawsuit that the food retailer requires those on the health plan who use tobacco to pay the surcharge but doesn’t give them a reasonable alternative standard to recoup the fee retroactively, in violation of the Employee Retirement Income Security Act.
- Employees can participate in a tobacco cessation program, but the surcharge will only be removed prospectively, the lawsuit alleged. A Whole Foods spokesperson said the company doesn’t comment on pending legislation.
Dive Insight:
“It is both unfair and unlawful for companies like Whole Foods to impose discriminatory and punitive health insurance surcharges on employees who use nicotine products,” the Whole Foods workers’ lawsuit said.
The lawsuit is one of many being filed against employers, according to law firm Fisher Phillips.
“A wave of ERISA class-action lawsuits is challenging tobacco surcharge programs in employer-sponsored health plans across the U.S.,” according to a Fisher Phillips analysis from last fall.
The cases focus on “potential fiduciary breaches, with plaintiffs arguing that surcharges added to tobacco users’ premiums are not compliant with federal laws,” including ERISA, the Affordable Care Act and the Health Insurance Portability and Accountability Act, per the law firm.
“These cases argue that tobacco surcharges linked to group health plan premiums disproportionately impact tobacco users by increasing their costs without providing sufficient means to avoid the surcharges. As a result, these lawsuits allege that these employers potentially violate ERISA’s fiduciary obligation to act solely in the participants’ best interests,” Fisher Phillips wrote.
To protect themselves, employers can conduct regular compliance audits; track ongoing litigation; provide transparent wellness program communications; focus on a health-driven program design; provide accessible alternatives; and offer continuous education for fiduciaries, Fisher Phillips recommended.