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EEOC Takes Aim at Employers with “Voluntary” Wellness Programs Tied to Health Benefit Costs

On Tuesday, the EEOC commenced its second lawsuit in as many months targeting certain employer wellness programs for violating the Americans with Disabilities Act (ADA).  In both of the pending cases, employers are alleged to have maintained wellness programs that required employees to submit to medical examinations (including blood work) and to disclose medical history as part of a health risk assessment.  Wellness programs in general have become more widespread in recent years, as employers seek to decrease health insurance expenses by encouraging a healthier workforce.  Further, provisions of the Affordable Care Act (ACA) encourage employer wellness programs.  Unfortunately, as the recent litigation proves, wellness programs are not without risk.

Close-up of Stethoscope

For now, the EEOC appears to have focused its attention on penalty assessments that call into question the voluntariness of employee participation in such programs. For example, in EEOC v. Flambeau, Inc., the EEOC asserts that an employee who was absent from the office on medical leave and unable to comply with a wellness program within the proscribed time frame was improperly dropped from the company’s health insurance plan in violation of the ADA. Similarly, in EEOC v. Orion Energy Systems, Inc., the EEOC asserts that an employee who objected to a wellness program was wrongfully penalized by being required to pay an excessive premium as compared to other employees who agreed to participate in the program and then improperly fired for refusing to participate in the wellness program.

According to the EEOC complaints, the Flambeau and Orion programs were anything but voluntary. Instead, the EEOC contends the programs required examinations and disclosures that were neither job related, nor consistent with business necessity, in violation of the non-discrimination provisions of the ADA.  Additionally, it argues that Orion unlawfully retaliated against the employee who objected to its wellness program.

Although these cases are pending in district courts in Wisconsin, the implications of a ruling in favor of the EEOC would have much broader impact, particularly given how common and diverse employer wellness programs and incentives have become.  For years, the EEOC has declined to provide explicit guidance on the acceptable parameters of such programs, leaving employers in the dark as they search for creative solutions to limit healthcare expenses.  EEOC Commissioner Lipnic, a voice of reason at the Commission, has repeatedly stated that the EEOC has a duty to clarify its position on wellness programs, which are a benefit to employees and encouraged by the ACA, so that employers understand how to implement the programs without legal risk.  Unfortunately, it appears that the EEOC is on a different path with its recent suits, choosing to litigate issues it could have helped to avoid with guidance.

Stay tuned.

© 2019 Proskauer Rose LLP.

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About this Author

Katharine H Parker, Labor Employment Attorney, Proskauer Rose Law Firm
Partner

Katharine Parker is a Partner in the Labor & Employment Law Department and co-head of the Employment Law Counseling & Training and Government Regulatory Compliance and Relations Groups.

212-969-3009
Kelly Anne Targett, Proskauer Rose Law Firm, Labor Employment Attorney
Associate

Kelly Targett is an Associate in the Labor & Employment Law Department, and a member of the Employment Law Counseling & Training, Whistleblower & Retaliation, and Appellate Practice Groups.

973-274-6074