wellness programs

EEOC Issues Proposed Regulations on Employer Wellness Programs

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EEOC ImageCan your employees participate in a wellness program through work? Do you offer financial incentives for participating in the program? If so, listen up.

In April, the U.S. Equal Employment Opportunity Commission issued proposed regulations focusing on how the American with Disabilities Act applies to corporate wellness programs. The proposed regulations give some guidance on how to legally use financial incentives to encourage workers to participate in such programs.

Although Title I of the ADA generally prohibits employers from obtaining medical information from employees, it allows employers to give medical examinations to employees and ask about their health if they are part of a voluntary “employee health program.” Before the proposed regulations, the EEOC had not yet determined whether employers could offer financial incentives to encourage employees to participate in such programs or whether offering incentives would make participation involuntary. The new proposed regulations answer these questions — according to the EEOC, employers may offer incentives up to 30% of the cost of the employee-only coverage to employees who participate in a wellness program and/or achieve certain health outcomes.

The proposed regulations (http://www.regulations.gov), in most pertinent part:

  • Define an “employee health program;”
  • Set forth the requirements that must be met for a program to be considered “voluntary;”
  • Detail the 30% of cost incentive limit; and
  • Set forth additional confidentiality requirements of information gathered during participation in wellness programs.

Although these regulations are only proposed and may or may not go into effect as written in the near future, we suggest that you review your wellness programs and corresponding financial incentives in light of the regulations. Please note that under existing laws – even before the introduction of the proposed regulations – you cannot:

  • Require employees to participate in a wellness program;
  • Deny health insurance to employees who do not participate in the program;
  • Take any adverse employment action or retaliate against, interfere with, coerce, or intimidate employees who do not participate in the program; or
  • Deny employees with disabilities reasonable accommodations that allow them to participate in a wellness program and receive any related incentives.

EEOC Lawsuits Shine a Spotlight on Wellness Programs

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wellnessThese days, many large employers have some form of wellness program, designed to help their employees address medical and lifestyle issues. Many employers reward employees who participate with discounts on insurance premiums or other incentives. Some “punish” employees who do not participate by, for example, adding surcharges to their premiums.

Two lawsuits filed recently by the Equal Employment Opportunity Commission (EEOC) have raised concerns about wellness programs as they relate to workers’ privacy, voluntary and mandatory participation requirements, and incentive rules under the Americans with Disabilities Act (ADA) that forbids employers from requiring medical exams and making disability-related inquiries.

Last August, the EEOC made history when it filed its first-ever suit alleging that a wellness program violated the ADA. In the suit (EEOC v. Orion Energy Systems, Civil Action 1:14-cv-01019) the EEOC claims Orion Energy Systems, Inc. (a Wisconsin-based company) required employees to take medical exams and allegedly fired a worker when she objected to, and refused to participate in, a wellness program that included a health risk assessment, a medical history questionnaire, and activity on range-of-motion machines. Then, in a lawsuit filed last week against Flambeau, Inc., (also a Wisconsin-based company) (EEOC v. Flambeau, Inc., Civil Action No. 3:13-cv-00638), the EEOC alleged an employee’s insurance coverage was canceled because the company shifted the full cost of his health insurance premium to him after he failed to complete biometric testing and a questionnaire about health risks. You can read more about this suit in the EEOC’s Press Release.

Employers with wellness programs are advised to ensure their programs are voluntary and offer reasonable alternatives for people otherwise unable to participate.