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Can Your Wellness Program Trigger a Workers' Compensation Claim?

A recent New York appellate court decision highlights one of the several risks employers must consider in an effort to promote a healthy workforce – having to pay workers’ compensation benefits to employees injured while taking advantage of a company-sponsored wellness program.

Wellness programs come in many shapes and sizes. Many wellness programs, for example, encourage employees to play a more active role in improving their personal health through exercise and other physical activity. Some employers even subsidize all or a portion of the cost of gym membership or reward employee who show success in their efforts, such as by reducing their weight or cholesterol levels. Despite the good intentions that often drive the development and design of these programs, there are a number of legal risks depending on the particular features of the program, such as risks of violating certain nondiscrimination mandates under Health Insurance Portability and Accountability Act (HIPAA), Americans with Disabilities Act (ADA), Genetic Information Nondiscrimination Act (GINA), and others laws.  Now, employers may have to worry about workers’ compensation costs, as well.

In Torre v. Logic Technology, Inc., the claimant suffered a spinal cord injury while participating in an exercise class at a fitness center which his employer made available for employees during work hours.  The employer also offered to pay a portion of the employees’ cost of the center. The Workers’ Compensation Law Judge determined that the claimant’s injury arose out of and in the course of his employment, and so was entitled to compensation for his injury. The Workers’ Compensation Board and the New York Appellate Division agreed.

In general, employees are entitled to workers compensation benefits when an injury or illness arises out of and is in the course and scope of employment. New York follows this general rule. Claimants generally cannot recover workers’ compensation benefits for injuries arising out of their “voluntary participation in an off-duty athletic activity not constituting part of the employee’s work related duties.” However, some states, such as New York, provide exceptions, as where the employer requires employees to participate in such activity, compensates employees for participating in such activity, or otherwise sponsors the activity. In New York, establishing that the employer sponsors the activity requires the showing of “an affirmative act or overt encouragement by the employer to participate.” Matter of Huff v. Department of Corr., 52 AD3d 1003, 1004 (2008); see Matter of Booth v New York State Dep’t. of Corr., 58 AD3d 1027, 1028 (2009).

In Torre, although the court found that the employer neither required nor compensated the claimant for exercising at the fitness center, it did find that the employer sponsored the activity. The court reasoned that the employer encouraged the claimant to have a gym membership, and offered reimbursement to its employees for half of their center’s membership fees (although the claimant elected not to seek that reimbursement). The court also noted that the claimant’s position required him to develop contacts with current and prospective clients, and both he and the employer’s president stated they furthered that objective while participating in classes at the fitness center. In short, the employer’s sponsoring the fitness center activity in this manner caused the claimant’s injuries to be considered compensable, as having arisen out of and to be in the course and scope of employment. 

While this ruling applies only in New York, the legal analysis followed in other states may be similar. The question whether an employer sponsored the particular activity is likely to be based on the particular facts and circumstances. Of course, subsidizing the activity or providing other incentives to employees to encourage their participation in certain activities likely would support a determination that the employer sponsored the activities. Employers, therefore, need to consider the effects of a potential increase in workers’ compensation claims on the effectiveness of their wellness programs, and how the design of their programs can mitigate those risks.