US casino workers allege wage cuts for smoking, sue Penn National Gaming

At least 1,500 casino workers in Missouri, Kansas and other states will take part in a class action lawsuit against Penn National Gaming Inc., alleging their wages were illegally reduced because they smoke. In a ruling Tuesday, U.S. District Judge Stephen Bough in Kansas City granted the workers certification as a class for their lawsuit, moving them a step closer to recouping their money. 

The lawsuit was originally filed in Platte County Circuit Court in March 2020 by three casino workers, on behalf of similarly situated workers. PNG moved it to federal court a month later.

The lawsuit also alleged that PNG operated an illegal tip pool and unlawfully deducted from workers’ gaming licenses. Those claimants have also been certified as a class, by agreement of the parties. 

At issue in Tuesday’s ruling is whether the casinos’ health plans, which included a $50 monthly tobacco surcharge for smokers, violated ERISA, the federal law governing employee health plans. That is because the plaintiffs claim PNG did not notify plan participants of an alternative way to avoid the surcharge.

While workers could avoid the surcharge if they completed a smoking cessation program, they were not reimbursed for the surcharges they were hit with before completing it. According to the workers, that violated ERISA’s requirement that outcome-based wellness programs must give participants notice of a “reasonable alternative standard” to qualify for a discount or rebate. 

The class certified by Bough consists of all workers who participated in PNG’s group health plan from 2016 to 2020 and had a tobacco surcharge deducted from their wages. The class is thought to consist of at least 1,500 members.

As reported by KCUR, Alex Ricke, an attorney with Stueve Siegel Hanson in Kansas City, which represents the workers, said not a single PNG employee who has completed a tobacco cessation program over the last five-plus years has successfully avoided the surcharge: “Part of the reason something like a notice is so important here, especially if you're legitimately concerned about your employees’ health, is you want them to complete the tobacco cessation program”.

George Hanson, another attorney with Stueve Siegel Hanson, said he believed Bough’s ruling was the first of its kind involving a tobacco surcharge that allegedly violates ERISA. He also said PNG was penalizing smokers who work in places where smoking is often pervasive: “In some of these casinos, smoking continues to be permitted. So just think of the irony of penalizing a worker for smoking when they are all smoking in some way in at least those facilities which permit patrons to light up.”

PNG operates 41 casinos in 19 states and employs 18,000 workers. The company’s subsidiaries include Argosy Casino in Riverside, Missouri; Hollywood Casino St. Louis; and Hollywood Casino at Kansas Speedway in Kansas City, Kansas.