Former Nordstrom employees have filed a class action lawsuit against the Seattle-based retailer, accusing the company of violating federal law by charging a tobacco-use health insurance surcharge without following rules set by the Employee Retirement Income Security Act (ERISA).
The complaint, filed Thursday in U.S. District Court in Seattle, alleges that Nordstrom imposed a $40 monthly surcharge on employees and their dependents who used tobacco products but failed to comply with ERISA’s anti-discrimination rules for wellness programs.
According to the lawsuit, Nordstrom did not provide a legally required “reasonable alternative standard” that would allow employees to avoid or be refunded the surcharge after enrolling in a cessation program.
The plaintiffs argue that the surcharge unfairly penalized workers based on a health-related factor—tobacco use—without offering full reimbursement, clear notice, or equitable access to avoid the fees.
“Nordstrom’s Plan fails to clearly establish a reasonable alternative standard, did not notify employees that such an alternative was available, did not ensure that employees who complete the alternative received the ‘full reward,’ and unlawfully shifted costs onto employees,” the complaint states.
The plaintiffs say they were required to pay the surcharge during their employment to keep health insurance coverage.
They claim thousands of current and former employees nationwide could be affected.
While federal law allows for health-based incentives or penalties under wellness programs, those programs must meet specific conditions.
They must provide clear notice of a reasonable alternative standard, accommodate recommendations from a personal physician, and ensure employees receive the full benefit even if they qualify mid-year.
The lawsuit also alleges that Nordstrom failed to inform participants of these rights in its health plan documents until 2025 and never provided retroactive reimbursements to workers who completed cessation programs partway through the year.
Plaintiffs argue that the surcharges functioned as a revenue source for the company rather than a genuine health initiative.
The suit claims the collected fees were deposited directly into Nordstrom’s general accounts rather than a dedicated trust for health benefits, potentially violating ERISA’s fiduciary duty requirements.
In addition to the surcharge claims, the plaintiffs allege Nordstrom failed to provide plan documents they requested in March 2025, another violation of ERISA.
They seek restitution for the paid surcharges, class certification, and injunctive relief to prevent future violations.
KIRO 7 News has reached out to Nordstrom for comment.
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