Nordstrom, LHC Group Settled Tobacco Surcharge Lawsuits
Employers now face litigation risk for charging extra insurance premiums to workers who use tobacco.
Updated on Sept. 22, 2026 in Nursing Jobs
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Nordstrom and LHC Group reached class action settlements regarding tobacco surcharges, impacting over 2,000 employees combined. The cases highlight rising legal risks for firms that charge higher healthcare premiums to staff who smoke.
Why it matters
More than 80 employers have faced accusations in recent years for penalizing employees for tobacco use, signaling a broader litigation trend. Operators should review how their benefit structures account for lifestyle surcharges to avoid similar legal exposure.
Nordstrom agreed to a $450,000 settlement, while LHC Group established an $800,000 fund, each benefiting more than 1,000 people. These settlements follow a string of litigation involving more than 80 employers accused of charging workers a biweekly tobacco surcharge.
The players
Nordstrom
A high-end retail chain operating department stores and off-price outlets across the United States.
LHC Group
A provider of home health and hospice services, operating in the healthcare delivery sector.
The details
The companies faced class action lawsuits after implementing additional healthcare premiums for employees who smoke. By charging a $20 biweekly surcharge, these employers sought to offset insurance costs, but now face settlements to resolve allegations regarding the legality of these penalties. Operators utilizing similar health plan incentives should ensure their programs comply with shifting employment litigation standards.
Timeline
September 21, 2026: Nordstrom and LHC Group finalized the class action settlement agreements.
Market Landscape
These settlements follow the pattern of increased scrutiny on wellness-based surcharges that has emerged across more than 80 recent labor cases. This shift suggests that standard health premium adjustments for smoking status are increasingly targeted as legal liabilities.
Owners should reexamine employee health plan structures that impose financial penalties for lifestyle choices. Consult with qualified counsel to determine if your surcharge policies align with recent judicial trends regarding employee benefit fairness.
The takeaway
The wave of litigation against wellness surcharges indicates that cost-mitigation strategies in health plans now carry significant legal risk. Operators should review their benefit handbooks with employment counsel to verify if tobacco-related surcharges meet current regulatory scrutiny.
Further reading
For more on evolving workplace benefits and compliance, visit our Nursing Jobs section.
Source note: This article includes information reported by Bloomberglaw.
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