A Georgia woman has filed a federal class-action lawsuit against Waffle House, Inc., accusing the restaurant chain of illegally charging tobacco-using employees a monthly health insurance surcharge in violation of federal law.
The complaint, filed June 23, in the U.S. District Court for the Middle District of Georgia, claims Waffle House collected what it calls an unlawful “tobacco surcharge” from employees enrolled in the company’s health plan — without properly complying with the requirements of the Employee Retirement Income Security Act, commonly known as ERISA.
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What the lawsuit claims
According to the complaint, Waffle House required tobacco-using employees to pay an additional $92 per month — or $1,104 per year — to maintain health insurance coverage under the Waffle House System Employee Benefit Plan. The surcharge was automatically applied as a default, meaning employees had to affirmatively opt out or risk having $23 deducted from their weekly paychecks.
The lawsuit argues that while federal law allows employers to charge tobacco users more for health insurance, those surcharges are only legal if they are part of a compliant wellness program that meets strict ERISA requirements. According to the plaintiff, Waffle House’s program fell short on multiple fronts.
The wellness program at the center of the case
At the heart of the lawsuit is Waffle House’s “Quit for Life” tobacco cessation program, offered through a company called Optum. The plaintiff acknowledges that Waffle House offered the program to employees — but argues the way it was structured and communicated violated federal law.
Under ERISA, a compliant wellness program must offer employees a “reasonable alternative standard,” meaning a path to avoid — or be fully reimbursed for — the entire surcharge for the full plan year. The complaint alleges Waffle House’s program only provided a full refund to employees who completed the cessation program by September 30. Those who finished after that deadline could only have the surcharge removed going forward — not retroactively.
“Participants who complete the program on or after October 1 will not be retroactively reimbursed for any premiums already paid during the Plan Year,” the complaint states, calling this a violation of ERISA’s requirement that participants receive the “full reward” upon satisfying an alternative standard.
Failure to notify workers, suit alleges
Beyond the program structure, the lawsuit also takes aim at how — or whether — Waffle House communicated employees’ rights to them. Under federal regulations, employers must disclose the availability of a reasonable alternative standard “in all plan materials” describing the tobacco surcharge.
The complaint alleges Waffle House’s enrollment guides and summary of benefits documents made no mention of the tobacco surcharge or the wellness program at all. It also claims the plan documents failed to include a required statement that a personal physician’s recommendations would be accommodated in developing an alternative standard for individual employees.
“These deficiencies deprive participants of the information necessary to fully understand and exercise their rights,” the complaint reads.
Self-dealing allegations
The lawsuit goes further, accusing Waffle House of mismanaging the surcharge funds it collected. The complaint alleges that rather than depositing the money into a trust account for the health plan, Waffle House funneled the surcharge funds into its own general accounts — earning interest on the money and reducing its own financial contributions to the plan.
“By retaining these funds, Waffle House earns interest on the withheld surcharges and reduces its own financial contributions to the Plan,” the complaint states. “This practice constitutes self-dealing and violates ERISA’s fiduciary duty requirements.”
The lawsuit characterizes Waffle House’s wellness program as “an unreasonable, revenue-generating scheme disguised as a health initiative.”
Who could be included in the class
The plaintiff is seeking class-action status for the lawsuit, which would potentially include all Waffle House employees across the United States who paid the tobacco surcharge at any point during the six years prior to the filing. The complaint notes that Waffle House operates more than 2,000 locations in 25 states, employing thousands of workers who may be similarly affected.
The amount in controversy is alleged to exceed $5 million.
What the plaintiff is asking for
The complaint 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.
The plaintiff is also seeking attorneys’ fees, interest, and other relief deemed appropriate by the court.
News4JAX has reached out to Waffle House for comment. This story will be updated when we receive a response.