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Macy’s continues to push back against a Department of Labor (DOL) lawsuit which aims to regulate a policy to penalize workers who smoke with higher health coverage costs.
The retailer renewed its attempts to dismiss the suit filed by the DOL, first filed seven years ago, spurred on by the Supreme Court’s overruling of the Chevron defense.
In June, the Supreme Court ruled that judges should no longer defer to agencies in interpreting ambiguous parts of statutes, limiting the power of agencies including the DOL and US Equal Employment Opportunities Commission (EEOC) during court proceedings.
Macy’s argues the department’s attempts to regulate the use of penalties for smokers in its health coverage plans are “mystifying.”
The case hinges on whether Macy’s is justified in continuing to penalize workers who have completed a quit-smoking programme but continue to smoke.
Why does the DOL believe Macy’s smoker penalty is ‘discriminatory’?
According to the DOL suit, Macy’s reportedly charged employees an extra $35 to $45 per month on their wellness and health coverage plan if they were smokers.
The retailer also allegedly did not fully waive these extra charges when a worker completed a ‘smoking cessation’ program—a course designed to help individuals who smoke quit by providing them with counseling, tools, guidance, and even medication like nicotine replacement therapy (NRT).
The DOL argues this was ‘discriminatory’ because there was no “reasonable alternative standard” for Macy’s staff who smoke to avoid paying the penalty.
Current regulations under the Employee Retirement Income Security Act (ERISA) do allow employers to charge workers who smoke penalties on their health coverage, but only if premiums can be waived in full following the completion of a smoking cessation program.
The DOL argues this rule applies whether or not the worker actually quits smoking following the course.
According to Bloomberg Law, this stipulation has prompted private lawsuits against many high-profile employers, including Walmart, Target, 7-Eleven, PepsiCo, Tractor Supply, and more.
What is Macy’s argument against the DOL?
Macy’s latest pushback against the department revolves around the interpretation of wording used within ERISA, which hinges the waiving of premiums for smokers on the “adherence to programs of health promotion and disease prevention.”
The retailer argues the DOL’s reading of the ERISA statute, including its definition of “adherence,” is flawed—and following the overturning of the Chevron doctrine, the agency’s interpretation should no longer be deferred to.
Workers who don’t quit smoking after the completion of a cessation ‘wellness’ program shouldn’t have their healthcare penalties waived, Macy’s said.
In the filings, Macy’s called for Judge Hopkins, who presides in the US District Court for the Southern District of Ohio, to make his own interpretation rather than following the DOL’s reading.
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“How the DOL can claim health promotion and disease prevention is improved by rewarding continued smoking is mystifying, but in any event, the DOL cannot abrogate a statutory condition imposed by Congress because it thinks it knows better,” Macy’s stated.
In court documents filed earlier this year, the DOL said Macy’s argument is “irrelevant.”
“Macy’s effort to conjure a statutory interpretation question over the meaning of the term “adherence” in ERISA section 702(b)(1) is nothing more than a regulatory dispute masquerading as a statutory one,” it said.
The DOL has two months to respond to Macy’s latest filings.
The impact of June’s Chevron ruling on HR, explained
In June, The Supreme Court made a major ruling – or rather, overruling – on a precedent dating back to 1984 that will curb the power of federal agencies, including labor regulators.
The original Chevron precedent had allowed agencies including the US Department of Labor (DOL), the Equal Employment Opportunity Commission (EEOC), the Occupational Health and Safety Administration (OSHA), and the National Labor Relations Board (NLRB) to fill in the gaps where laws were unclear with their own rules.
When such agencies wielded Chevron during court, it would be up to someone challenging the agency to prove that the statute was “unambiguous” – i.e. the existing law was clear and did not need interpretation from an agency – or that the agency’s interpretation was “unreasonable.”
In turn, this means it’s more difficult – or at least, will require more resources – for agencies like the DOL and the EEOC to defend workers when they deem companies to have violated regulations relating to pay and pensions, health and safety, pensions, or discrimination.
By one estimation, the precedent has been invoked in over 15,000 judicial decisions.
