Employees of Campbell Soup. Co. have filed a class action lawsuit in a New Jersey federal district court, claiming that the company unlawfully charges smokers higher premiums for health insurance in violation of ERISA.
According to the employees, tobacco surcharges are permissible under ERISA only if they are part of a wellness program meeting strict criteria. More specifically, the wellness program must promote health and provide smokers with a reasonable alternative standard to avoid the surcharge, such as participating in a smoking cessation program. Employers must communicate the terms of the wellness program to employees and make them aware of their option to use the alternative standard under the program.
The employees claim that Campbell Soup failed to offer an alternate standard in its program as required by ERISA, and even if they did, they failed to communicate it to the employees. Furthermore, the employees allege that Campbell Soup failed to notify them that the program would accommodate the recommendations of employees' physicians.
Campbell Soup charges an extra $12.50 per week or $650 per year for health insurance premiums for smokers, whether they use cigarettes, cigars, e-cigarettes, or smokeless tobacco. The employer also charges higher premiums for voluntary life and disability insurance for tobacco users.
The employees explain in their suit that although Campbell Soup offers a "Quit for Life" tobacco cessation program, it does not meet the requirements for an alternative standard under ERISA. The program applies only prospectively, in that smokers must complete the program to eliminate the surcharges, and no mechanism for the retroactive removal of the surcharges is provided. However, the employees argue that ERISA requires participants to receive the full "reward" if they complete the alternative standard, which should include retroactive removal of surcharges via reimbursement or refund.
Campbell Soup is not the only corporation facing a court challenge to its tobacco surcharges. PepsiCo, Target, 7-Eleven, Walmart, Compass Group USA, Bass Pro Group, and Tractor Supply face similar suits in various federal district courts nationwide.
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