EEOC Looking at Wellness Programs and Potential for ADA Violations
In 2013, we wrote several articles on how wellness programs will play an increasingly important role in employer-sponsored healthcare plans with the adoption of the Affordable Care Act (ACA). Under the ACA, employers could use employee wellness program to reward or penalize workers up to 50% of the premium as an incentive to exercise, quit smoking, lose weight, eat more healthful food and lower cholesterol and blood pressure. Wellness programs also play a critical role in self-insurance plans for those employers who’ve turned to this alternative option as a means of containing the rising costs of healthcare.
One of the concerns now is if these wellness programs, especially if mandatory, will run into legal obstacles. Wellness programs must be voluntary and under the Americans with Disabilities Act (ADA), employers, among other things, are prohibited from inquiring employees about health or disability issues. The ACA distinguishes between participatory and health-contingent wellness programs. Under a participatory wellness plan employees are not required to satisfy any particular standard related to a health factor in order to receive a reward. Health-contingent wellness programs, on the other hand, require the employee to either perform an activity related to a health factor in order to obtain a reward or achieve a specific health outcome in order to get a reward. There are also set requirements for rewards to be given under health-contingent programs. However, the Employment Equal Opportunity Commission (EEOC) has yet to issue any guidance under the ADA regarding to what extent participation rewards – or penalties for non-participation – are lawful. Therein lies the rub.
A recent lawsuit by the EEOC illustrates the potential for employment practices issues. The EEOC sued a Wisconsin manufacturer which “required an employee to submit to biometric testing and a ‘health risk assessment,’ or face cancellation of medical insurance, unspecified ‘disciplinary action’ for failing to attend the scheduled testing, and a requirement to pay the full premium in order to stay covered.” When the employee did not complete the biometric testing and health risk assessment, the company cancelled his medical insurance and had him pay the entire insurance premium. The employees who completed these tasks were not subject to the penalty.
The complaint contends that these requirements were “disability-related inquiries and medical examinations” that were not job-related and consistent with business necessity, defenses under the ADA. “These alleged actions and severe consequences for not providing prohibited information as part of its ‘wellness program’ violate Title I of the ADA, which prohibits disability discrimination in employment, including making disability-related inquiries.”
An EEOC attorney noted that: “Employers certainly may have voluntary wellness programs there’s no dispute about that and many see such programs as a positive development. But they have actually to be voluntary. They can’t compel participation in medical tests or questions that are not job-related and consistent with business necessity by cancelling coverage or imposing enormous penalties such as shifting 100 percent of the premium cost 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.”
This EEOC case may be just be the beginning of the battles to come, as some attorneys contend. Employers who have implemented wellness programs must review their employee manuals, revise them appropriately, train managers, and make sure they’re familiar with various anti-discrimination laws and how they may impact the type of plan provided.
Caitlin Morgan offers Employment Practices Liability Insurance to a number of industries to address exposures related to workplace issues. Please contact us at 877.226.1027 to discuss how we can provide your insureds with the protection they need.
Sources: EEOC, MONDAQ