Industry News
Smokers Sue Employers Over Health-Plan Tobacco Surcharges: ADT and Mondelez Face New Suits
If you use tobacco and pay more for your employer's health insurance because of it, a fast-growing line of federal lawsuits may concern you directly. Since late 2024, more than 50 class actions have been filed against U.S. employers over tobacco surcharges, and more than 30 of those arrived in 2026 alone, according to tracking by Groom Law Group cited by Insurance Business. The two newest targets are security company ADT, sued in Florida federal court on October 22, and snack maker Mondelez, sued earlier in October.
What the Lawsuits Claim
Federal wellness rules allow an employer to charge tobacco users more for coverage, but only if the plan offers a "reasonable alternative standard," typically a cessation program, that lets the employee avoid the surcharge, tells participants about that alternative in plan materials, and gives the "full reward" to anyone who completes it. The complaints allege that plans skipped one or more of those steps and then kept the money.
The ADT complaint, Roth v. ADT LLC, says the company charged tobacco-using employees an extra $100 a month without offering the required alternative and without refunding employees who completed a program. ADT had not responded publicly as of the week of October 26. Workers at Hard Rock made a similar claim over a $15 weekly fee. Other defendants named across the wave include Target, Nestlé, Amgen, PepsiCo, Progressive, Campbell Soup, Waffle House, and Compass Group.
Courts Are Split
The results so far cut both ways. On July 22, 2026, federal judges in Minnesota and New Jersey dismissed cases against Target and Campbell Soup, ruling in both that the "full reward" requirement guarantees parity going forward, not a retroactive refund, and questioning whether the Labor Department's notice regulations go beyond the statute. Courts in Ohio and Missouri have also dismissed cases.
"The practical takeaways: Check your plan documents for a tobacco surcharge and for a stated alternative, such as a cessation course. If there is a surcharge but no alternative is described, that is the fact pattern these suits are built on."
But on October 16, a Missouri federal court went the other way, granting summary judgment to plan participants on all six of their claims and sending the case to damages briefing, where the plaintiffs are seeking roughly $47.8 million on five claims plus another $37.6 million that the employer argues is duplicative, Mealey's reported. In late 2025, five of six rulings on motions to dismiss went against employers, according to a January update from Encore Fiduciary.
Settlements are also setting benchmarks. Sedgwick Claims Management agreed in May to pay $3 million to a class of about 5,000 employees who had paid a $1,300-a-year surcharge, roughly 24 percent of estimated damages. Bass Pro and Performance Food Group each settled for about $5 million. Appeals are pending in the First, Second, Sixth, and Seventh Circuits, so the rules will likely be clarified by appellate courts in 2027.
The Employer View
The ERISA Industry Committee, which represents large plan sponsors, has warned that broad class certification could pressure employers to settle even defensible claims and lead some to drop wellness programs or raise costs for all workers. Employers also argue that surcharges are explicitly permitted by federal law and that most plans do offer cessation programs, even if the paperwork was imperfect.
What It Means for Tobacco Users
Surcharges of $50 to $150 a month are common, so the money at stake for an individual smoker or nicotine pouch user can exceed $1,000 a year. If you complete a cessation program mid-year, ask in writing whether the surcharge is refunded for the months already paid. That "full reward" question is exactly what the courts disagree about.
Plaintiffs' firms are openly soliciting employees of large companies, and the statute allows per-violation penalties without proof of financial loss, which is why filings keep multiplying. None of this changes the health picture. Tobacco products and nicotine are addictive, and cessation programs exist because quitting is hard. According to a Major Cardiology Review: Every Nicotine Product Impacts Heart Health, and the litigation is about whether plans followed the rules when they charged more, not about whether the surcharge itself is lawful. Users of alternatives like ZYN Smooth Nicotine Pouches or ZYN Chill Nicotine Pouches should remain aware of how their employer classifies these products.
The Bottom Line
A niche benefits-law dispute has become one of the busiest class-action categories in the country, and two July dismissals did not slow it down. With an $85 million damages fight now underway in Missouri and four federal appeals courts preparing to weigh in, tobacco users should expect their employers to tighten up cessation-program disclosures, and some may see refunds or settlement notices in the year ahead. For more information on industry regulations, you can read about the FDA Tobacco Center Resets Playbook or browse our Tobacco Guide: Pipe Tobacco, Wraps, Cigarillos & Pouches — All Articles.