EEOC Sues Employer Over Wellness Program

by David W. McBride

On August 20, 2014, the Equal Employment Opportunity Commission (EEOC) filed a lawsuit against Orion Energy, a Wisconsin-based energy company, alleging that Orion violated the Americans with Disabilities Act (ADA) when it required an employee to pay a higher health insurance premium for failing to participate in its company wellness program and eventually terminated her when she refused to submit to medical inquiries and exams.

The EEOC has had company wellness programs on its radar since 2013, when it held a public meeting on the topic in May.  The focus of that meeting in May was determining whether and to what extent employers may or may not offer financial incentives or penalties as part of company wellness programs offered through employer health plans.  All interested parties, including employee advocates, employer advocates, and benefits experts, agreed that the EEOC needed to clarify what was and wasn’t allowed under the ADA.

One particular concern raised at the meeting was the issue of what constitutes a “voluntary” wellness program.  Voluntary company wellness programs are generally lawful; problems arise when an employee argues that a nominally voluntary program is actually mandatory because participation is in essence compelled by stiff penalties for not participating.  Another dimension to this issue is when the employee feels similarly compelled to respond to his or her employer’s request to submit to medical examinations or answer medical inquiries.  The EEOC regulations don’t elaborate on what “voluntary” means, but one interpretation is that voluntary simply means participation in the program is not required, while another interpretation is that voluntary means employees are not punished for declining to participate.

The EEOC’s recent lawsuit against Orion indicates that it is leaning toward that latter interpretation of voluntary.  In his comments on the recent lawsuit, John Hendrickson, regional attorney for the EEOC Chicago district stated,

Employers certainly may have voluntary wellness programs – there is 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 by imposing enormous penalties such as shifting 100 percent of the premium cost for health benefits onto the back of the employee or by just firing the employee who chooses not to participate.  Having to choose between responding to medical exams and inquiries – which are not job-related – in a wellness program, on the one hand, or being fired, on the other hand, is no choice at all.

The EEOC’s decision to file this lawsuit is a clear indication of its current policy on company wellness programs, and any employer who has such a program or is considering creating such a program should take particular note of how this case proceeds.

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