Home – Doctors and Lawyers—Employers That Incentivize Good Health May Need to Consult Both

Doctors and Lawyers—Employers That Incentivize Good Health May Need to Consult Both


By Kristin Casler

Featuring R. Scott Oswald and Tom Harrington


Is your company one of the many employers across the country that is rewarding employees for healthy habits?


Regardless of whether your company uses an incentive-based employee wellness program in order to help curb costs, to bolster workers’ health—or both, you need to ensure none of the program’s features runs afoul of applicable state and federal laws. These include the Americans with Disabilities Act (ADA), the Genetic Information Non-Disclosure Act (GINA), the Affordable Care Act (ACA), and the Health Insurance Portability and Accountability Act (HIPAA). As wellness programs gain popularity, they come under greater scrutiny by the Equal Employment Opportunity Commission (EEOC) and employment lawyers who will be monitoring whether you cross the line.


Here is some guidance on the current state of the law and some tips for best practices from R. Scott Oswald, managing principal, and Tom Harrington, principal, both at The Employment Law Group in Washington, D.C.


Regulations and laws governing wellness plans

A year ago, the U.S. Departments of Labor, Health and Human Services and Treasury issued final workplace wellness program rules, codifying existing HIPAA provisions to bring them in line with the ACA, according to Oswald. Two types of programs are provided for— participatory programs that do not require employee testing or do not offer incentives and health-contingent programs that require an employee to meet certain health standards to obtain the reward. In a participatory program, an employer might offer financial rewards, such as partially or fully paid health insurance premiums. A contingent program might require that a worker perform an activity or meet a health goal, on say, a cholesterol level or blood pressure reading, before receiving the reward.


Blending the ADA, ACA and HIPAA

Since the ADA bars discrimination based on an employee’s disability and prohibits employers from requiring medical exams or asking about a worker’s medical conditions, Oswald said employers must design or review their programs with these restrictions in mind to ensure they are not violated. Only job-related medical inquiries are permitted, if they are a business necessity. Voluntary medical examinations and histories are also allowed, but the definition of “voluntary” is in dispute. For 15 years, the EEOC has said that a wellness program is voluntary if the employer does not mandate participation nor penalize an employee who chooses not to participate. Last year, the EEOC’s Chicago district elaborated, saying employers cannot impose excessive penalties, such as shifting all of the health-care premiums to the non-participating employee or terminating the employee, said Harrington.


Under GINA, group health plans are barred from requesting or using employees’ genetic information, nor can they discriminate against employees because of their genetic information. A wellness program seeking genetic information could land the employer in litigation, Harrington said.


EEOC taking employers to task

The EEOC has stepped up its efforts against companies it feels discriminate against workers, Oswald noted.


In a case filed in October against Honeywell, the EEOC contends the company violated the ADA and GINA with its wellness program because it is not voluntary. Penalties for employees and their spouses who refused to participate in biometric screenings included paying a surcharge for their medical plan.


According to the EEOC, Honeywell told its employees that their biometric results would help the company set goals to reduce risk factors. It also said employees who refused to participate would lose their health-savings-account contributions.


Honeywell argues that the ADA’s safe harbor provision allows the plan, or, alternatively, that the program complies with the ADA’s definition of a voluntary program. Further, the ACA expressly approves premium surcharges, Honeywell argues.


According to Harrington, the Honeywell case shows that ACA rules may conflict with the EEOC’s interpretation of the legality of wellness programs under the ADA and GINA.


The EEOC was denied an injunction in this case; the court reasoned that the EEOC could not establish the threat of irreparable harm absent a preliminary injunction and that the balance of harms favored Honeywell. The court also commented that “great uncertainty persists in regard to how the ACA, ADA and other federal statutes such as GINA are intended to interact.”


In EEOC v. Orion Energy Systems, filed last year, the EEOC said Orion Energy Systems discriminated against Wendy Schobert when it required her to take a medical examination as part of its wellness program. When she declined, she was required to foot the bill for her entire health-care premium—more than $400 per month. She later was fired.


In a similar case filed last year, the EEOC alleges Flambeau Inc. violated the ADA by requiring employee Dale Arnold to submit to medical examinations and inquiries. Flambeau’s wellness program required employees to complete biometric testing and a health-risk assessment by a certain date. Arnold was on medical leave at the time and was denied additional time to comply. Flambeau terminated Arnold’s health insurance. So, instead of having about three quarters of his insurance premiums paid, he had to cover them 100 percent.


What a company can do

With the state of the law on this complex issue in flux—a state it may be in for many years—employers need to follow some general guidelines to help avoid litigation, Oswald said. Best practices include:


  • Ensuring that all “voluntary” wellness programs are indeed voluntary
  • Minimizing or eliminating penalties for those employees who do not participate
  • Administering the programs with flexibility, particularly with regard to requiring and scheduling medical examinations that are not job-related
  • Avoiding any retaliation against employees for raising objections to or voicing opinions about program participation
  • Using great care in requiring any kind of biometric testing that might run afoul of GINA’s protections


Harrington pointed out that in the EEOC cases cited above, Wendy Schobert’s allegations included that the company reprimanded her for her “attitude” when she objected to the program—and later fired her; and, as noted, Dale Arnold alleged that his employer denied him additional time to complete testing and health assessment. Flexible program administration can avoid many of these types of allegations.


More broadly, though, employers must recognize the need to interpret competing and interacting rules and laws when crafting and administering their programs, and also recognize that determinations regarding these interactions may remain unsettled for some time.