Sysco sued over alleged unlawful tobacco surcharge in employee health plans

Sysco class action overview:

• Who: Plaintiffs Julie Avalos and Randy Wolfe filed a class action lawsuit against Sysco Corp.
• Why: Avalos and Wolfe claim Sysco imposed a discriminatory and punitive health insurance surcharge on employees who use tobacco products.
• Where: The Sysco class action lawsuit was filed in Texas federal court.
• How to get help: If you worked for a company within the past six years and paid higher health insurance premiums due to tobacco or vape use, you may be eligible to join a tobacco surcharge lawsuit.

A new class action lawsuit accuses Sysco of imposing a discriminatory and punitive health insurance surcharge on employees who use tobacco products without making a reasonable alternative standard available.

Plaintiffs Julie Avalos and Randy Wolfe argue Sysco violated the Employee Retirement Income Security Act (ERISA) by charging a $23.08 biweekly “tobacco surcharge” under its Group Benefit Plan without offering a compliant wellness program that provides employees with an avenue to avoid the surcharge.

The ERISA requires wellness programs to offer a reasonable alternative standard to avoid surcharges, the plaintiffs argue in the Sysco class action lawsuit.

Avalos and Wolfe claim Sysco’s plan fails to clearly establish a reasonable alternative standard and does not reimburse surcharges to participants who satisfy the alternative standard.

In addition, the Sysco class action lawsuit alleges the company failed to disclose in all plan materials that participants have access to an alternative standard.

The plaintiffs argue Sysco’s actions violate federal regulations and deprive employees of benefits they are entitled to under ERISA.

Sysco tobacco surcharge disproportionately burdens low-income workers, class action claims

Avalos and Wolfe claim Sysco’s tobacco surcharge disproportionately burdens low-income and vulnerable workers who end up subsidizing their healthier colleagues.

The plaintiffs argue Sysco’s actions shift plan costs onto employees based on a health factor without satisfying the requirements needed to take advantage of ERISA’s safe harbor.

“Allowing entities like Sysco to exploit its participants and unlawfully extract millions of dollars annually from them without making available a compliant wellness program transforms the surcharge into a ‘subterfuge for discrimination’ and undermines ERISA’s purpose of protecting workers from health-based discrimination,” the Sysco class action lawsuit says.

Avalos and Wolfe want to represent a nationwide class of individuals who paid a tobacco surcharge in connection with their participation in a health or welfare plan offered by Sysco between 2014 and the time of judgment.

The plaintiffs are demanding a jury trial and requesting declaratory and equitable relief to prevent Sysco from continuing to profit from its alleged ERISA violations.

Similarly, JPMorgan Chase & Co. was recently sued over allegations it unlawfully imposed punitive insurance surcharges on employees who use tobacco products.

What do you think of the claims in this Sysco class action lawsuit? Let us know in the comments.

The plaintiffs are represented by Walker D. Moller of Siri & Glimstad LLP.

The Sysco tobacco surcharge class action lawsuit is Avalos, et al. v. Sysco Corp., Case No. 4:26-cv-00743, in the U.S. District Court for the Southern District of Texas.

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