EEOC Launches First Direct Attack On Employer Wellness Program

In its first such challenge, the Equal Employment Opportunity Commission (EEOC) filed a lawsuit on August 20 against Manitowoc, Wisconsin-based Orion Energy Systems claiming that the company violated the ADA with mandatory medical exams and inquiries that were not job related but nonetheless mandated by its compulsory “wellness program.” The company purportedly fired an employee who objected to the program—but only after making her pay for all of her health insurance premium. The suit is the EEOC’s first direct attack on an employer wellness program.

The question of exactly what are the lawful boundaries of wellness programs has been a source of much confusion for employers. In its Agency Rule List for Spring 2014, the EEOC anticipated that it would issue a proposed rule on wellness programs by June 2014. The slated proposal was to address whether, and to what extent, the Americans with Disabilities Act (ADA) permits employers to offer financial inducements and/or impose financial penalties as part of wellness programs offered through their health plans. The proposed rule also would address other aspects of wellness programs that may be subject to the ADA’s nondiscrimination provisions. However, the proposal has not yet been released.
In its suit against Orion, the federal agency contends that the company instituted a wellness program that required medical examinations and made disability-related inquiries, according to an agency release. When the employee declined to participate in the program, the company allegedly shifted responsibility for payment of the full premium for her employee health benefits to the employee. Soon afterward, Orion fired her.

According to the EEOC, Orion’s wellness program violated the ADA as it was applied to the employee. Moreover, the agency contends, Orion retaliated against the employee because of her good-faith objections to the wellness program. Orion also interfered with the employee’s exercise of her federally protected right to not be subjected to unlawful medical exams and disability-related inquiries, the EEOC asserts.

In May 2013 the EEOC held hearings on wellness programs. A majority of employers now offer some sort of wellness program—94 percent of employers with over 200 workers, and 63 percent of smaller ones, according the Kaiser Family Foundation.

“Employers certainly may have voluntary wellness programs—there’s no dispute about that—and many see such programs as a positive development,” remarked Regional Attorney John Hendrickson. “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 filed its lawsuit in the Eastern District of Wisconsin, Green Bay Division; the case number is 1:14-cv-01019.
Visit our News Library to read more news stories.