A PepsiCo employee claims that the beverage and convenience food company discriminates against smokers by imposing a health insurance surcharge that costs employees millions of dollars in unlawful paycheck deductions.
Krista E. Noel, of Ouachita Parish, Louisiana, accused PepsiCo of violating a federal labor law, in a class action complaint filed on Oct. 3 in U.S. District Court, White Plains.
“It is both unfair and unlawful,” the complaint states, “for entities like Pepsi to impose punitive health insurance surcharges on employees who use tobacco products.”
The global food and beverage giant is based in Purchase and employs about 134,000 people in the U.S.
A surcharge can be legal if it is part of a wellness program, according to the complaint. The health plan must give employees a way to stop using tobacco. The options must be communicated clearly. And the wellness program must genuinely promote health and not merely generate revenue.
Last year, employees and their domestic partners enrolled in PepsiCo’s health plan who had used nicotine products within the previous six months were charged a $900 annual nicotine surcharge. The products include cigars, cigarettes, e-cigarettes, smokeless tobacco, and vaporizers.
Noel says PepsiCo does enable employees to get the tobacco surcharge removed retroactively for successful completion of a tobacco-cessation program. But employees who did not complete the wellness program by Nov. 30, 2023 were not reimbursed.
That practice, she alleges, is discriminatory because it does not offer everyone the chance to get the full surcharge reimbursed.
Noel also claims that PepsiCo breached its fiduciary duty by depositing surcharges into its own accounts, rather than a health insurance trust account.
She is asking the court to declare the complaint a class action on behalf of all PepsiCo employees in the U.S. who paid a tobacco surcharge but were not fully reimbursed for participating in a wellness program.
She is demanding an accounting of all surcharge payments and restitution for unlawfully collected surcharges.
PepsiCo spokeswoman Andrea Foote was out of office and unable to immediately provide the company’s responses to the allegations.
