A Georgia woman has filed a federal class-action lawsuit alleging that Waffle House improperly charged tobacco-using employees a $92 monthly surcharge on health insurance. Corkeitha Hicks, who worked as a server at a Waffle House restaurant in Forsyth, Ga., said she paid the surcharge after enrolling in the company’s health plan.
The lawsuit, filed in U.S. District Court for the Middle District of Georgia, said this surcharge violates a provision of the Employee Retirement Income Security Act. ERISA requires that a surcharge of this type be part of a compliant wellness program offering a “reasonable alternative standard,” which means that employees should be able to avoid or be fully reimbursed for the surcharge for the full plan year. The complaint alleges that Waffle House’s “Quit for Life” program, offered through Optum, instead provided a full refund only to employees who completed the cessation program by September 30. Those who finished after that deadline could have the surcharge removed going forward but not retroactively.
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The restaurant chain also failed to adequately notify employees of their rights, according to the complaint, and Waffle House improperly kept the money collected through the tobacco surcharge instead of using it for the employee health plan.
“By retaining these funds, Waffle House earns interest on the withheld surcharges and reduces its own financial contributions to the plan,” the complaint said. “This practice constitutes self-dealing and violates ERISA’s fiduciary duty requirements. In sum, these practices demonstrate that Waffle House’s wellness program is an unreasonable, revenue-generating scheme disguised as a health initiative.”
The plaintiff is seeking class-action status for the lawsuit, which potentially could include all Waffle House employees across the United States who paid the tobacco surcharge at any point during the six years before the filing. Waffle House operates more than 2,000 locations in 25 states, the complaint said, employing thousands of workers who similarly may be affected. The total settlement could be as high as $5 million.
The lawsuit asks the court to order Waffle House to reimburse all employees who paid the tobacco surcharge during the relevant period, disgorge any profits the company earned from collecting the fees and issue a permanent injunction barring Waffle House from collecting the surcharge unless it brings the program into full compliance with ERISA.
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