Engineering and construction giant Zachry Holdings Inc. has become the latest San Antonio employer sued over tobacco-use health insurance surcharges, adding to a growing wave of litigation challenging employee wellness programs under federal benefits law.
The proposed class action complaint alleges Zachry Holdings, which operates as Zachry Group, unlawfully imposes a tobacco-use surcharge as part of its health insurance plan in violation of the Employee Retirement Income Security Act, or ERISA. The lawsuit alleges the surcharge is discriminatory.
Filed by Jerry Griggs, a former Zachry employee, the lawsuit seeks reimbursement of tobacco surcharges paid by employees, repayment of profits allegedly obtained through the program, attorneys fees and other relief. It does not specify how much in damages is being sought or how much employees allegedly paid.
Zachry's employee health plan covered more than 13,000 active participants at the end of 2024, according to the complaint.
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The lawsuit was filed last week in federal court in San Antonio, about three months after a similar lawsuit was filed against Whataburger Restaurants LLC and its employee benefit plan. The plaintiffs in both cases are represented by the Siri & Glimstad law firm.
Similar lawsuits have been filed against other employers, including Sysco Corp., PepsiCo, Tractor Supply Co., Whole Foods Market Inc. and 7-Eleven Inc.
Courts have reached differing conclusions, with some judges allowing the lawsuits to proceed while others have dismissed them at the pleading stage.
Austin attorney Walker Moller, who represents Griggs, didn't immediately respond to a request for comment.
A Zachry representative said it doesn't comment on active litigation.
Unlike the Whataburger lawsuit, which challenges the design of the company's smoking-cessation program, the Zachry complaint alleges the company failed to provide or adequately disclose a compliant wellness program that would allow employees to avoid the tobacco surcharge. According to the complaint, employees were given no reason to believe they had any option other than quitting tobacco or continuing to pay the surcharge.
Zachry's lawsuit comes as Whataburger is mounting a defense against the lawsuit filed against it in June.
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In a motion to dismiss filed last week, Whataburger argues its health plan complies with federal law because it gives tobacco users until Sept. 30 each year to complete a smoking-cessation program or another physician-recommended treatment plan. Employees who do so receive refunds of surcharges already paid during the year. Those who completed the program after Sept. 30 no longer had to pay the surcharge, but they did not receive refunds for earlier payments, according to the filing.
Whataburger also argues federal law requires only one annual opportunity to qualify for the reward and does not require employers to refund surcharges paid before an employee completes a cessation program.
Other courts have allowed similar lawsuits to proceed. Last month, 7-Eleven and the plaintiffs informed a federal judge in Dallas that they had reached a settlement in principle after the company failed to win dismissal of the case. A lawsuit against Whole Foods Market also remains pending in Austin after Senior U.S. District Judge David Alan Ezra declined to toss it in January.
Elsewhere, courts have ruled for employers. The plaintiffs in a lawsuit against Target have appealed after a federal judge dismissed their case, while a judge in New Jersey dismissed a similar lawsuit against Campbell Soup without prejudice, allowing the plaintiff to file an amended complaint. The plaintiff has since done so.
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This article originally published at Zachary Holdings facing class action lawsuit over tobacco surcharges in employee health plan.