The U.S. Equal Employment Opportunity Commission (“EEOC”) has sued a third employer for its wellness program, after two suits were brought earlier in 2014. In all three cases, the employer offered wellness programs to all employees; however, in order to participate in the program, they had to submit to medical exams and inquiries. Importantly, those employees who did not participate were subject to a variety of negative consequences. The EEOC argues that the severity of the consequences creates a penalty for those who do not participate and therefore participation is involuntary, which violates the Americans with Disabilities Act (“ADA”), which requires voluntary participation.
Employer-Sponsored Wellness Programs
A 2014 survey of employers found that 98% of large employers and 73% of smaller employers offer at least one wellness program. Employers use wellness programs as part of a strategy to help employees be healthy, productive, and engaged. Many wellness programs are geared to help employees stop smoking, manage their diabetes, and assist with weight loss. In turn, employers will benefit by reducing absenteeism, increasing productivity, reducing workers’ compensation and disability-related costs, reducing injuries, and improving employee morale and loyalty. In order to assess an employee’s well-being, employers frequently use biometric testing, which often includes a blood draw that can provide information about blood pressure, cholesterol, glucose, body mass index, and nicotine usage.
As apart of these programs, employers offer employees premium discounts, cash rewards, gym memberships, and other incentives to participants. While these programs offer many benefits, in recent months, the EEOC took a stance against certain employer-sponsored wellness programs that imposed disincentives for non-participation.
For the third time in four months, the EEOC has objected to employer-sponsored wellness programs that subject employees to negative consequences for not submitting to medical examinations and inquiries that are unrelated to their job and not consistent with business necessity. The EEOC claims that these consequences function as disincentives and therefore non-participation in these programs is involuntary, which violates the ADA .
Generally speaking, the ADA prohibits the use of medical exams or other medical inquiries unless such examination or inquiry is job-related or consistent with business necessity. However, voluntary medical exams and inquiries are permitted as part of an employee health plan if: (1) participation in the program is voluntary; (2) information obtained is kept confidential; and (3) information obtained is not used to discriminate against an employee. Therefore, the key to ADA compliance for an employer with a wellness program is that participation must be voluntary.
Moreover, the Department of Labor (“DOL”) has provided further guidance on employer-sponsored wellness programs to ensure protection of employees from unfair practices. It provides that workplace wellness programs must be “reasonably designed to promote health or prevent disease, reasonably designed to be available to all similarly situated individuals and not be overly burdensome for employees” Conceivably, the DOL is supporting a rewards approach to wellness program, but is frowning upon a penalty approach that would be unreasonably burdensome on employees.
Recent EEOC Cases
In the first challenge to a wellness program, the EEOC filed a complaint against Orion Energy Systems, Inc. (“Orion”) in August 2014. Orion required employees to submit to biometric testing and complete a health risk assessment in order for the employer to pay 75% of employee’s medical insurance premium. Those who took the test only paid only 25% of the medical insurance premium while those who declined to participate needed to pay 100% of the premium. An employee declined to participate and was forced to pay 100% of her premium and was fired shortly thereafter. The EEOC argued that Orion’s wellness program violated the ADA and Orion retaliated against the employee because of her good-faith objections to the wellness program. The EEOC states that these medical exams and inquiries were not job-related or consistent with business necessity and the enormous penalties make such programs involuntary. The EEOC contends that since this program is not a rewards-based system, but rather penalty based, it makes participation in the program involuntary.
In October 2014, the EEOC filed its second wellness program related complaint against Flambeau, Inc (“Flambeau”). In order to participate in the wellness program, Flambeau required employees to submit to biometric testing. If employees did not, they would face ‘disciplinary action’ for not attending the scheduled testing and they would be required to pay 100% of the premium cost. An employee did not submit to the testing and Flambeau would charged the employee 100% of the premium. The EEOC posited that this program was involuntary because it compelled participation in medical testing and questioning that were not job-related or consistent with business necessity. Furthermore it imposed enormous penalties on employees by shifting 100% of the premium cost onto the employee who chose not to participate.
Most recently, the EEOC filed a complaint against Honeywell International, Inc. (“Honeywell”). Honeywell offered a health benefit plan for employees where employees contributed to the plan through payroll contributions. Employees also had health saving accounts (HSA), which were tax-free for employees to use to pay for eligible out-of-pocket health care expenses. Honeywell’s program provided that employees were to undergo biometric tests and employees who decided not to participate would lose their HSA matching contributions from Honeywell (up to $1500), they would be charged $500 for not participating in the test, and also charged $1,000 ‘tobacco surcharge’ even if they refused to go through biometric testing, even if they did not smoke. The EEOC filed suit and requested a temporary restraining order and preliminary injunction enjoining Honeywell from seeking to impose penalties on employees who did not want to submit to the testing. The District court denied the injunction request, but the suit will go forward.
Impact on Employers
Until the EEOC provides further guidance on the issue, employers should take the following steps to ensure their wellness programs comply with the ADA. Employers should:
* Define what your business necessities are
* Identify how the medical tests or inquiries are related to the job and/or how it is consistent with business necessity
* Ensure that accurate job descriptions exist so that the this correlation can be established with ease
* Ensure that the benefits reaped from wellness programs provide employees with an additional benefit, rather than removing or significantly diminishing existing benefits
* Ensure that employees who do not participate are not faced with such major consequences as to force participation
If you have any questions about the employer-sponsored wellness programs, please contact Vanessa L. Smith, Esq. or another of Vantage Legal’s attorneys at 312.440.0602.
The information contained in this publication is for informational purposes only and not for the purpose of providing legal advice. Use of this information does not create an attorney-client relationship. For advice about a particular problem or situation, please contact an advisor of your choice. This publication is not intended to solicit legal business; however, it may be considered attorney advertising in some states. For more information, please contact Vanessa L. Smith, Esq., Managing Counsel, Vantage Legal, P.C., 430 West Erie St, Suite 303, Chicago, Illinois 60654.