Tractor Supply Lawsuit Claims Tobacco Users Are Unlawfully Charged a ‘Discriminatory Fee’ for Health Insurance

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A proposed class action lawsuit against Tractor Supply Company claims the retailer has illegally charged employees who use tobacco an extra fee per pay period under its health plan.

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The 23-page Tractor Supply lawsuit was filed by a Pennsylvania resident who says she and other employees who use tobacco were required to pay an additional $30 premium per pay period, or $780 per year, to maintain health insurance coverage under the company’s plan. The case alleges that this “tobacco surcharge” violates the federal Employee Retirement Income Security Act (ERISA), which prohibits an insurer or medical plan from discriminating against a participant or charging an added fee based on a “health status-related factor,” including tobacco use, unless the charge is part of a legitimate wellness program.

The class action suit explains that for Tractor Supply’s tobacco surcharge to be legal under the ERISA, the company must offer a reasonable alternative, such as a smoking cessation program, that, upon completion, allows a plan participant to avoid the entire fee—either by receiving refunds for the tobacco surcharges they paid or not being charged at all. Per the complaint, the retailer must also inform participants that such an alternative exists for tobacco users.

Before 2023, Tractor Supply’s health plan materials stated that the only way to avoid the added surcharge was to be tobacco-free, the filing says. Since that year, the lawsuit relays, the company began allowing participants who use tobacco to dodge the fee by completing a cessation program called Quit Genius. However, an individual who completes the Quit Genius program cannot fully avoid the charge unless they have been tobacco-free for 12 months, the suit shares. According to the case, they can only duck the extra fee going forward and are not eligible for reimbursement of payments already made that year.

“As such, the company simply did not provide any alternative standard to its participants; instead, it required participants to meet the original standard—not being a tobacco user,” the case asserts. “Tractor Supply’s decision to charge a discriminatory fee without offering any form of a reasonable alternative standard is a plain violation of ERISA.”

In addition, the complaint contends that the retailer does not adequately notify employees that they can supposedly evade the $30 fee by completing the cessation program. In fact, Tractor Supply makes no mention of the opportunity at all in many of its health plan materials despite being required to do so under the ERISA, the filing claims.

The lawsuit looks to represent any plan participant in the United States who paid Tractor Supply’s tobacco surcharge at any time within the past six years.

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