HR pros take note: The Equal Employment Opportunity Commission (EEOC) has taken its second wellness program to court.
EEOC v. Flambeau, Inc. comes on the heels of the agency’s first wellness-related suit (EEOC v. Orion Energy Systems). Like the earlier case, the central issue is just what constitutes a “voluntary” wellness program.
‘Dire consequences’ to non-participants
Flambeau’s wellness program was set up so that employees who participated in a biometric testing and completed a health-risk assessment (HSA) only paid 25% of their healthcare premiums. Employees who opted not to participate, on the other hand, were required to pay 100% of the healthcare premiums.
What’s worse, the EEOC alleges that employees were also slapped with unspecified discipline for not participating in the health testing.
The agency’s lawsuit claims that Flambeau’s program wasn’t truly “voluntary” because of the “dire consequences” it imposed on workers who chose not to participate. Therefore, because the company’s program wasn’t voluntary, the disability-related inquiries and medical exams the program required actually violated the Americans with Disabilities Act (ADA), the EEOC claims.
Remember: The ADA forbids employers from requiring its workers to undergo medical examinations that aren’t directly job-related; however, the law contains does contain a safe harbor that allows employers to create programs to help in “underwriting risks, classifying risks, or administering such risks.”
That’s where wellness programs come in. But they must be voluntary to pass muster with the feds.
This safe harbor helped pharmacy giant CVS come out on top in a lawsuit that challenged the voluntary-nature of its wellness initiatives.
A mixed message to employers?
One of the most frustrating aspects of the recent EEOC lawsuits against employer-sponsored wellness plans is the mixed message the agency seems to be sending.
Regarding wellness programs, the agency has said 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 award from non-participants constitutes a penalty, thus rendering the program involuntary.
However, despite this ambiguous stance, the EEOC has filed two high-profile lawsuits against employers because of their wellness programs.
In other words, even though EEOC won’t spell out what types of wellness initiatives will get firms in trouble, it has no problem coming after firms when it sees something it doesn’t like.
So where does that leave employers — and how can they avoid winding up on the wrong end an EEOC lawsuit?
In a press release announcing the Flambeau lawsuit, regional attorney for the EEOC’s Chicago district John Hendrickson had the following to offer:
Employers certainly may have voluntary wellness programs – there’s no dispute about that – and many see such programs as a positive development. But they have to actually be voluntary. They can’t compel participation in medical tests or questions that are not job-related and consistent with business necessity by cancelling coverage or imposing enormous penalties such as shifting 100 percent of the premium cost onto the back of the employee who chooses not to participate. Having to choose between complying with such medical exams and inquiries, on the one hand, or getting hit with cancellation or a penalty, on the other hand, is not voluntary and not a choice at all.
One thing all HR pros can take away from the first crop of EEOC wellness program lawsuits is this: Expensive penalties are likely to get you in trouble with the feds. Both Orion and Flambeau’s programs imposed non-participation penalties that were well above the norm.
One way to stay off of the EEOC’s radar is to err on the side of caution when it comes to designing wellness program penalties and rewards.