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Could your Bonuses and Promotions Soon be Determined by Wearable Technology?

From Apple Watches to Fitbits, the market for wearable technology has steadily increased over the years. In 2015, just under 50 million wearable devices were shipped.  Additionally, the wearables market is expected to increase 35% by 2019. As the wearable technology trend increases, many companies are beginning to view wearables as a way to efficiently increase both employee health and productivity.

Many workplaces are looking beyond simply punching a timeclock. Some companies are actually attempting to create a more healthy workforce through “wellness programs.”  In the US, approximately two-thirds of companies have “wellness programs” for their employees. In furtherance of these programs, companies are starting to utilize wearable technology to better track employees’ activities. Typically, a company’s “wellness program” runs on a rewards-based system, giving employees financial incentives for completing certain healthy activities. These incentives can include anything from discounts on health insurance to free gym memberships. However, employees are not the only ones benefiting from “wellness programs.” Employers are also seeing the benefits from these programs in terms of lower costs for employee health insurance. As employers begin to see the economic benefits of using wearables in their “wellness programs,” wearable technology may be introduced into other aspects of an employee’s job.

Several recent articles claim that productivity tracking of employees may be the next big step for wearable technology in the workplace. According to a study conducted by Rackspace, employees wearing wearable technology at work become 8.5 percent more productive. Tracking employee productivity is important for industries that measure efficiency according to the standard time actually worked and how the employee labored (e.g. warehouse workers).  These industries may use employee productivity to establish bonus and promotion metrics. However, similar to the “wellness programs,” using wearable technology to determine bonuses and promotions based on an employee’s productivity, may result in many legal issues.  At the forefront of those legal issues are federal law.  When implementing a productivity tracking system using wearable technology, companies should consider the following issues:

(1) The Americans with Disabilities Act (ADA) prohibits employment discrimination based on health status and generally forbids employers from inquiring about an employee’s health status.

(2) The Genetic Information Nondiscrimination Act (GINA) prohibits employment discrimination based on genetic information and forbids employers from asking about an employee’s genetic information.

(3) The Health Insurance Portability and Accountability Act (HIPPA) establishes standards to protect the privacy of personal health information, which may include information collected by an employer to track employee productivity.

Cody Fierro is co-author of this article. 

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume VI, Number 201


About this Author

Sheppard Mullin’s Fashion and Apparel team has firsthand experience working with companies that produce everything from hi-tech synthetic yarns to high fashion, fabrics to footwear, and bricks to clicks.

Fashion is a nearly $500 billion retail industry. It comprises a wide variety of skills and industry sectors, from fashion designers to contract manufacturers, from textile manufacturing to distributors, from financiers to factors. In addition, the major retail chains have a serious influence on the apparel and fashion business. Technology and global markets have rapidly changed...