EEOC PLACES EMPLOYEE WELLNESS PROGRAMS UNDER SCRUTINY

Wellness programs are surging in popularity as employers seek to reduce steadily rising healthcare costs.  But could a well-intentioned wellness program end up costing you? With open enrollment for medical plans right around the corner for most employers, now is the time to ensure your wellness program complies with the Americans with Disabilities Act (ADA) and EEOC guidelines.  A pair of EEOC complaints filed in Wisconsin should put employers on alert that the agency is placing employee wellness programs under its microscope to determine if the programs potentially violate the Americans with Disabilities Act (“ADA”).  These two cases are the first the agency has ever filed over wellness programs.

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In the first case, the EEOC alleged that Orion Energy Systems, Inc. violated the ADA by requiring its employees, through its wellness program, to submit to medical examinations and inquiries that were not job-related or consistent with business necessity.  The EEOC alleged that Orion, as part of its wellness program, required its employees to complete a health risk assessment and to use a Range of Motion Machine.  The program allegedly also required employees to disclose their medical histories and have blood work performed.

One employee questioned whether the wellness program was truly voluntary and whether the medical information Orion obtained was going to be maintained as confidential.  Consequently, she opted out of the program.  Because she declined to participate in the program, according to the EEOC, Orion required her to pay the entire premium cost for her health insurance.  Conversely, had she participated in the program, the employer would have covered the entire amount.  The EEOC alleged that Orion also imposed a penalty of $50 per month on the employee for declining to participate in the fitness component of the program.  Finally, according to the EEOC, Orion discharged the employee in retaliation for objecting to and refusing to participate in the wellness program.

The second case involved similar facts.  There, the EEOC alleged that Flambeau, Inc. violated the ADA by requiring one of its employees, as part of a company-sponsored wellness program, to submit to a medical examination and inquiries that were not job-related or consistent with business necessity.  When the employee failed to complete biometric testing, involving blood work and measurements, and a “health risk assessment,” which required the employee to disclose his medical history, the company terminated his health insurance.  Had the employee completed the biometric testing and health risk assessment, the company would have covered about three-fourths of the insurance premiums.

The EEOC alleged that this purportedly “voluntary” wellness program was, in fact, not voluntary at all.  Any employee who refused to participate was adversely affected by losing his or her health insurance.  Although the employee in this case could apply for health insurance through COBRA, he would have to pay the entire premium himself.  The EEOC characterized this as a “financial penalty” for not completing the medical exam and inquiries.

The question then becomes, what is voluntary?  The EEOC has said it plans to issue guidance on this precise issue sometime this year.  While employers patiently await this guidance, they are left wondering how to ensure their programs are voluntary.  John Hendrickson, regional attorney for the EEOC Chicago district, has said that wellness programs “…can’t compel participation by imposing enormous penalties such as shifting 100 percent of the premium cost for health benefits onto the back of the employee who chooses not to participate.  Having to choose between complying with such medical exams and inquiries, on the one hand, or getting hit with cancellation or a penalty, on the other hand, is not voluntary and not a choice at all.”

Both of these cases are still pending, so whether either employer is found to actually have violated the ADA remains to be seen.  But, the fact that the EEOC filed the complaints should alert employers that the agency is looking at employee wellness programs to determine whether they potentially violate any laws.  Accordingly, it is in employers’ best interest to take a look at their own wellness programs and other health-related policies to make sure that they are complying with the law.

First, be sure a voluntary wellness program is truly voluntary.  If failure to participate results in a financial penalty, such as loss of insurance or the employee having to pick up the entire premium cost, the EEOC will not consider the program to be voluntary.  Second, ensure that any required medical exams are job-related and consistent with business necessity.  You should be able to explain why an employee in this particular position has to have this exam in order to safely perform his or her job.  Finally, beware asking for family medical histories in either wellness programs or job-related medical exams.  As we discussed in an earlier blog, the EEOC is also actively enforcing the Genetic Information Nondiscrimination Act (“GINA”), which prohibits covered employers from acquiring “genetic information.”  GINA defines “genetic information” to include family medical histories.

So take this opportunity to review any wellness program and medical exams you use in your business.  Make sure that your policies do not run afoul of the ADA, GINA, or other non-discrimination statutes.  Additionally, employers should keep in mind that there are Affordable Care Act regulations that could apply to their wellness programs. As two businesses in Wisconsin are learning the hard way, the EEOC is looking at these programs, so you’d better, too.