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EEOC to Take Closer Look at Employer Wellness Programs

By Francis P. Alvarez and Joseph J. Lazzarotti
  • May 9, 2013

The Equal Employment Opportunity Commission has heard testimony from a panel consisting of representatives of the business community, advocacy groups and providers on the treatment of employer-sponsored wellness programs under federal equal employment opportunity (EEO) laws. According to the EEOC’s press release, issued after the May 8, 2013, meeting, “Wellness programs are an increasingly common feature of employee benefits programs.” Yet unanswered questions on the interplay of federal antidiscrimination laws enforced by the EEOC and other laws impacting wellness programs can make employer compliance a complex undertaking. The EEOC’s meeting appears to indicate the Commission will examine carefully rules governing wellness programs. 

Programs are Increasingly Prevalent

According to EEOC Chair Jacqueline A. Berrien, “There has been broad, bipartisan support for the expanded use of wellness programs to reduce health insurance and healthcare costs….” In fact, one of the panelists stated that 94 percent of employers with more than 200 workers and 63 percent of smaller employers offer some type of wellness program. Generally, these programs are designed to encourage employees to take preventive measures, through education, risk assessment or screening, or behavioral modification, to avert the onset or worsening of a medical condition. 

As the panelists explained, many programs use financial incentives to motivate participation. They distinguished between those providing rewards or penalties based on participation only (sometimes referred to as “participation incentives”) and those focusing on outcomes (sometimes referred to as “attainment incentives” or “outcome-based programs”).

Testimony Highlights Complexities

One key take-away from the meeting is that wellness programs (which face significant resistance from a number of advocacy groups) could be challenged under a number of federal statutes, as the law is complex and evolving. The Americans with Disabilities Act (ADA), the Genetic Information Non-Discrimination Act of 2008 (GINA), Title VII of the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act (ADEA), the Equal Pay Act (EPA), Health Insurance Portability and Accountability Act (HIPAA), the Affordable Care Act (ACA), and Sections 503 and 504 of the Rehabilitation Act were highlighted at the meeting. Some participants in the meeting criticized both private and public employers for having wellness programs that could violate these laws. 

The ADA, for example, prohibits medical inquiries unless they are “voluntary” and “part of an employee health program available to employees at that work site….” According to the EEOC’s 2000 Enforcement Guidance on Disability-Related Inquiries and Medical Examinations of Employees Under the Americans with Disabilities Act (ADA), “A wellness program is ‘voluntary’ as long as an employer neither requires participation nor penalizes employees who do not participate.” In an informal letter issued earlier this year, the EEOC added 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.” 

There also are limitations on wellness programs in HIPAA. Any reward offered in connection with an “outcome-based” wellness program generally cannot exceed 20 percent of the cost of employee-only coverage under the plan. This will increase to 30 percent (and can be as high as 50 percent, as determined by certain federal agencies) as a result of the Affordable Care Act. The EEOC has not adopted a clear-cut standard for determining when a wellness program is voluntary. 

There are questions raised under GINA, Title VII and other EEO laws also. Panelists urged the EEOC, for example, to provide guidance on whether employers could request health information about an employee’s spouse in the context of wellness programs without running afoul of GINA. 

Substantial Resistance to Wellness Programs

Judith Lichtman, Senior Advisor, National Partnership for Women and Families, emphasized that some advocates are pushing the EEOC to challenge employer wellness programs under Title VII, by using systemic litigation, among other means. According to Ms. Lichtman, there could be disparities in employee contributions to health care may have a disparate impact based on gender, race, age or disability. Certain health conditions, such as obesity, diabetes and hypertension, Ms. Lichtman said, disproportionately affect members of racial minorities; other health conditions, she said, disproportionately affect women or older individuals. 

* * *

Employers have been hoping for some time that the EEOC would clarify its position under the ADA on when a wellness program is voluntary. Even if the EEOC does this, wellness programs still may face resistance from advocacy groups looking to challenge these programs under other EEO laws. 

“Many employers are convinced financial incentives make a real difference in wellness program participation and that tying rewards to outcomes is critical to changing behaviors that enhance health and productivity,” said Frank Alvarez, National Coordinator of Jackson Lewis’ Disability, Leave & Health Management Practice. He continued, “Employers need to understand that these programs are under attack and there is a movement afoot to further regulate, limit or eliminate their use. We saw this in the proposed wellness regulations issued last December under the Affordable Care Act; now we are seeing a major push for EEOC rules that could kill outcome-based wellness programs. Ironically, this push seems to be at odds with what Congress and the White House did when they expanded the use of financial incentives for wellness programs under the Affordable Care Act.”

In the meantime, employers ensure their wellness programs comply with clear legal requirements, such as those outlined by HIPAA and the ACA. 

The Commission has invited the public to submit written comments on any of the issues raised at the meeting. Employers may want to take this opportunity to tell the EEOC why they believe these programs are important to the efficient operation of their businesses. Comments will be accepted until May 23. Additional information about the meeting, including the panelists’ testimony, can be accessed here.

Jackson Lewis has extensive experience advising clients with respect to all types of wellness programs. 

©2013 Jackson Lewis P.C. This Update is provided for informational purposes only. It is not intended as legal advice nor does it create an attorney/client relationship between Jackson Lewis and any readers or recipients. Readers should consult counsel of their own choosing to discuss how these matters relate to their individual circumstances. Reproduction in whole or in part is prohibited without the express written consent of Jackson Lewis.

This Update may be considered attorney advertising in some states. Furthermore, prior results do not guarantee a similar outcome.

Jackson Lewis P.C. represents management exclusively in workplace law and related litigation. Our attorneys are available to assist employers in their compliance efforts and to represent employers in matters before state and federal courts and administrative agencies. For more information, please contact the attorney(s) listed or the Jackson Lewis attorney with whom you regularly work.

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