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Importance of Keeping Employer-Sponsored Wellness Programs “Voluntary” Make sure wellness programs are legally fit under the ADA in order to avoid litigation

October 8, 2014
Source: Inside Counsel

According to findings by the Equal Employment Opportunity Commission (EEOC) last year, more than 90 percent of employers with more than 200 employees, and 63 percent of smaller companies, offered some sort of employee wellness program. The importance of implementing wellness programs that are “voluntary” cannot be overemphasized, especially now that the Equal Employment Opportunities Commission (EEOC) — for the first time ever — commenced a lawsuit (EEOC v. Orion Energy Systems) challenging under the Americans with Disabilities Act (ADA) a purported “voluntary” wellness program.

The reasons employers desire to offer wellness programs are obvious: increased employee health and productivity, decreased absenteeism and reduced health care expenses. Good intentions, however, are not enough.

Wellness programs must also comply with a host of applicable statutes, regulations and laws, many of which have differing legal requirements that are often difficult to navigate and may even seem to be counterproductive. This article focuses on Title I of the ADA as it relates to “voluntary” employer wellness programs.

Under Title I of the ADA, an employer cannot require its employees to undergo medical exams or answer health and/or disability-related questions unless doing so is “shown to be job related and consistent with business necessity.” One exception to this rule, however, permits such medical exams and/or health screenings if they are part of a “voluntary” wellness program. What renders a wellness program “voluntary”?

According to the EEOC, a “wellness program is "voluntary" as long as an employer neither requires participation nor penalizes employees who do not participate.” In an “informal discussion letter” released by the EEOC in January 2013, the EEOC advised that it has “not taken a position on whether and to what extent a reward amounts to a requirement to participate, or whether withholding of the reward from non-participants constitutes a penalty, thus rendering the program involuntary.” Such uncertainty may make employers uneasy especially when financial incentives — including gifts, cash awards and reduced insurance premiums — or penalties such as additional health insurance surcharges are often used to encourage employee participation. Creating more uncertainty is that the EEOC warned that its “discussion letter” does not constitute an official opinion of the EEOC.

This past August in a case of first impression, however, the EEOC appears to have finally taken a position with regard to the proper execution of wellness programs. Having been unable to effect voluntary compliance with the ADA by Orion, the EEOC brought suit against Orion alleging that its wellness program violated the ADA because Orion required its employee, Wendy Schobert, to submit to medical examinations and related inquiries that were not job related or consistent with business necessity. The EEOC further alleges that Orion retaliated against Schobert in violation of Section 503(a) of the ADA by terminating her because she voiced objections to the wellness program.

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