Workplace Wellness Programs Under Attack

Within the last four months, the Equal Employment Opportunity Commission (EEOC) has filed lawsuits against two (2) Wisconsin employers and one Minnesota employer alleging that each of the employers’ workplace wellness programs were in violation of the Americans with Disabilities Act (ADA). The EEOC has been able to file such lawsuits because the language of the ADA and the language of the Affordable Care Act (ACA) are not consistent in establishing workplace wellness program requirements and such requirements have not yet been clarified by a legal or authoritative body. As such, any employer operating a workplace wellness program that imposes surcharge penalties is advised to review its wellness program to determine whether its wellness program design satisfies the requirements not only of the ACA but also of the ADA.

ACA Wellness Overview

The ACA, as signed into law by President Obama in March 2010 (and under wellness-specific rules finalized on June 3, 2013), incorporates the 2006 HIPAA nondiscrimination requirements and endorses workplace wellness programs to encourage good health and healthy lifestyles. Wellness programs can take many forms and may not even be called “wellness” programs. Regardless of the name, however, the ACA recognizes and regulates three (3) types of workplace wellness programs: participatory wellness programs, activity-only wellness programs, and outcome-based wellness programs.

Participatory wellness programs are programs that do not condition eligibility for a reward upon a participant having to satisfy a standard related to a health factor. Examples of participatory wellness programs include: a program that reimburses employees for all or part of the cost for membership in a fitness center; and a program that provides a reward for participation in a health risk assessment and does not base any part of the reward on a health outcome.

Activity-only wellness programs are programs that require participants to perform or complete an activity related to a health factor in order to obtain a reward. Examples of activity-only wellness programs include walking, diets, or exercise programs.

Outcome-based wellness programs require participants to attain or maintain specific health outcomes in order to obtain a reward or avoid a financial penalty. Examples of outcome-based wellness programs include: tests for specific medical conditions or risk factors with rewards provided only to employees who are within a normal or healthy range. Outcome-based wellness programs typically have two (2) elements: (1) a measurement, test, or screening as part of the initial standard; and (2) a program that targets participants who do not meet the initial standard with wellness activities.

The ACA requires that both activity-only and outcome-based wellness programs satisfy certain design requirements, including at least a once-per-year opportunity to qualify for the reward, and the availability of a reasonable alternative method of qualifying for a reward if an individual participant is unable to meet the usual standard due to medial reasons. Even full compliance with the ACA wellness program requirements, however, does not guarantee that an employer has satisfied the separately applicable ACA requirements.

ADA Wellness Rules

Title I of the ADA allows employers to conduct voluntary medical examinations and activities, including obtaining information from voluntary medical histories, as part of a workplace wellness program. The EEOC has generally considered workplace wellness programs to be “voluntary” under the ADA if participation in the wellness program is not required and employees are not penalized for their failure and/or refusal to participate in the wellness program. The EEOC has also previously taken the stance that, under the ADA, employers may ask employees to complete a health risk assessment or undergo medical testing or screening as part of a voluntary workplace wellness program.

Conflict Between Laws

The primary conflict between the workplace wellness program language of the ACA and the ADA revolves around the ability of employers, offering workplace wellness programs, to make medical inquiries, require medical examinations and provide financial incentives or penalties for participation. Medical inquiries, examinations and financial incentives/penalties are permitted, and in fact encouraged, under ACA outcome-based wellness program guidance. However, such medical inquiries, examinations and financial incentives/penalties may violate the ADA by making workplace wellness programs non-voluntary and asking non-voluntary disability-related questions which are non-job related or not consistent with business necessity.

On May 8, 2013, the EEOC held a public hearing during which it discussed the conflicting language in the ACA and the ADA pertaining to workplace wellness programs. During the public hearing, Chris Kuczynski, Assistant Legal Counsel and Director of the ADA/GINA Policy Division at the EEOC, noted the conflict between the language of the ADA and the ACA. Since the public hearing, the EEOC has reported that it is working on drafting a proposed rule that would amend the ADA to address whether, and to what extent, Title I of the ADA allows employers to offer financial inducements and/or impose financial penalties as part of ACA workplace wellness programs and to address other aspects of ACA wellness programs that may be subject to the ADA’s nondiscrimination provisions.

EEOC Legal Action

As of November 14, 2014, however, the EEOC has yet to produce the rule or guidance amending the ADA. Instead, the EEOC has taken to filing lawsuits against two (2) Wisconsin employers and one Minnesota employer alleging that certain elements of those employers’ ACA workplace wellness programs are in violation of the ADA. The controversies over those employers’ workplace wellness programs arise over wellness programs that require employees to answer disability-related questions, obtain medical examinations and impose financial penalties on employees who fail or refuse to participate. By imposing and requiring these questions, examinations and financial penalties, the EEOC has claimed that the three (3) employers’ workplace wellness programs are allegedly non-voluntary and not job related or consistent with business necessity.

The fact that the EEOC has initiated legal action against three employer’s wellness plans prior to providing any guidance on the parameters of a “voluntary” wellness program has come to the attention of the United States Senate, which sharply questioned the EEOC General Counsel on the topic at his re-nomination hearing on November 13. Several industry organizations representing human resources officers and CEOs have also been quick to condemn the apparent contradiction between EEOC and ACA policy, and have warned that the EEOC’s legal action will have a chilling effect on employer’s ability to encourage employees and their families to monitor and improve their health.

Notwithstanding the controversy, some practices identified on at least one of the EEOC claims do appear to clearly violate both ACA and ADA norms. Given the increased regulatory focus and influx of EEOC workplace wellness program lawsuits, it is advisable for employers to review their workplace wellness program to see if certain elements of their wellness program makes the program non-voluntary to participants and not job related or not consistent with business necessity. Davis & Kuelthau attorneys are available to assist you in reviewing your workplace wellness program to evaluate compliance with the ACA and to provide insight into any potential risks of liability that specific workplace wellness practices may have under the ADA.

If you have any questions regarding this article, please contact your Davis & Kuelthau attorney.