This should be easy.  Like motherhood and apple pie, everybody should be in favor of encouraging more wellness.  But, in 21st century America, nothing is ever easy; mothers baking apple pies beware.

There are two fronts in the wellness program wars. The first has been playing in court for several years.  The second arises from the Equal Employment Opportunity Commission’s (“EEOC”) new rules on wellness programs issued on May 17, 2016, under the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”).

Let’s begin with a brief overview.  In general, there are two types of wellness programs.  Health-contingent programs require employees to meet a specific health outcome such as reaching a target cholesterol level, weight, or blood pressure.  Participatory programs simply support healthy lifestyles with incentives such as reimbursement for gym memberships (and, as a result, duck under many of the ADA/GINA potential problems).

A.  The Litigation Front

The EEOC began challenging health-contingent wellness programs in 2014.

  • In a lawsuit against Orion Energy Systems, the EEOC claimed Orion’s program violated the ADA because it required employees to complete a health-risk questionnaire and screening. EEOC v. Orion Energy Systems, Inc., No. 1:14CV01019 (E.D. Wis. filed Aug. 20, 2014). Orion has argued that its wellness program does not violate the ADA because it is protected by a “safe harbor” provision that shields such programs from liability if they are connected to a health insurance plan. That case is still pending.
  • The EEOC also sued Flambeau, Inc. after the company discontinued an employee’s health insurance when he refused to take a health risk assessment or a biometric test as part of Flambeau’s wellness program. The district court ruled in Flambeau’s favor, holding that the company’s wellness program fell under the ADA’s safe harbor. The EEOC appealed. EEOC v. Flambeau, Inc., 131 F. Supp. 3d 849, 856 (W.D. Wis. 2015), appeal docketed, No. 16-1402 (7th Cir. Feb. 25, 2016).
  • In another action, the EEOC sued Honeywell International. EEOC v. Honeywell Int’l, Inc., No. 14-4517 ADM/TNL, 2014 U.S. Dist. LEXIS 157945, at *14 (D. Minn. Nov. 6, 2014). There, it requested a temporary restraining order to enjoin Honeywell’s wellness program, which required employees to complete biometric screenings and refrain from tobacco use. After the district court denied a preliminary injunction, there was a voluntary dismissal.

A core issue in these lawsuits has been the ADA’s safe-harbor provision, which exempts employers from the restrictions of the ADA if their wellness plan is associated with a voluntary insurance program. The EEOC’s new regulations take the position that this safe harbor is subject to its regulations and has declared that its new regulations (effective in January 2017) will eliminate that safe-harbor. 29 C.F.R. § 1630.14 (d)(6). This far exceeds the traditional use of administrative power to interpret statutory law via regulation; it is questionable whether courts will acquiesce in the EEOC’s novel claim of a power to amend statutes via regulation.

B.  The Regulation Front

Under the new EEOC regulations, there are five key compliance concepts:

  1. Wellness Programs Must Promote Health Or Prevent Disease. Wellness programs must be “reasonably designed to promote health or prevent disease.” 29 C.F.R. § 1630.14 (d)(1). Employers cannot simply collect health-related data without providing advice, counseling, or follow-up information to employers. For example, it’s a non-starter for companies to merely use health-related data to estimate future healthcare costs.
  2. Wellness Programs Must Be Voluntary. Employees cannot be forced to participate in a wellness program or be penalized for abstaining from one. Intimidating or threatening employees to join a wellness program violates this “voluntary” mandate. 29 C.F.R. § 1630.14 (d)(2).
  3. Wellness Programs Must Comply with the EEOC’s Limitations on Incentives. The general rule is that if employees must be enrolled in a specific health plan in order to participate in the wellness program, companies may offer financial incentives up to 30 percent of the total cost of self-only healthcare coverage. 29 C.F.R. § 1630.14 (d)(3). There are, however, a number of situation specific variants of that ceiling.
  4. Notice Rules Must Be Honored. If a wellness program asks medical information or includes any disability-related inquiries, companies must provide written notice to the employees describing what medical information will be collected, the purpose of collecting the information, how such data will be used, who will receive it and how the company will prevent unauthorized disclosure of sensitive data. 29 C.F.R. § 1630.14 (d)(2)(iv). The EEOC has published a sample notice for company-sponsored wellness programs to help employers comply with the ADA.
  5. Medical Information Must Be Kept Confidential. Employers must ensure compliance with the requirements under the Health Insurance Portability and Accountability Act (“HIPAA”). 29 C.F.R. § 1630.14 (d)(2)(iv) (C). More to the point, managers deciding the future of any given employee should be firewalled from access to their medical information.

C.  The Practical Front

Employers still considering wellness plans may want to hold off until the litigation dust clears. Employers with existing plans need to gear up to meet the additional requirements outlined in the EEOC regulations (which become effective January 1 of 2017).  But, let’s go beyond both fronts to consider some practical advice.

Like everything else in employment, the duty to reasonably accommodate employees applies equally to wellness plans. For example, accommodations should be made for a hemophiliac if a wellness program requires a biometric screen involving a blood draw.  Additionally, employers may need to provide educational materials in different formats—like large print, braille, or offer sign language—to allow individuals with visual and hearing impairments to participate in the program.

Wellness programs, despite complying with every line in the EEOC regulations, are not immune from disparate impact claims under Title VII and the ADEA. Remember that certain conditions (such as obesity, diabetes and hypertension) may disproportionately affect certain protected groups, but that ought not be a problem: i.e., properly structured wellness plans do not create the requisite adverse employment action.

So, weigh [pun intended] the potential costs as well as the potential benefits in considering, adopting, and managing wellness plans.