THIS ARTICLE WAS FIRST PUBLISHED ON HRLAWS.COM’S TENNESSEE EMPLOYMENT LAW LETTER BY BUTLER SNOW’S DAVID L. JOHNSON

Encouraged by health insurance companies, workplace wellness programs have become trendy. Wellness programs help prevent disease and encourage employees to adopt healthier lifestyles. What could possibly go wrong?

Well, wellness programs involve biometric screenings, medical questionnaires, and health risk assessments. If the information is in the hands of a third party (such as a health insurance company’s agent), that is OK. However, if HR or someone else in the company gets their hands on the information, it could give rise to a claim under the Americans with Disabilities Act (ADA), the Genetic Information Nondiscrimination Act (GINA), or the Health Insurance Portability and Accountability Act (HIPAA).

Sometimes a wellness program offers incentives to employees who participate in the program or achieve certain health goals. Recently, the Equal Employment Opportunity Commission (EEOC) went after certain employers’ wellness programs that offer incentives because they tend to discriminate against employees on the basis of disability and/or genetic information. In one lawsuit, for instance, the EEOC charged that an employer’s financial incentives to undergo biometric testing made its program “involuntary” in violation of GINA and the ADA. In another lawsuit, the EEOC alleged that an employer illegally threatened to discipline and cancel the insurance of employees who refused to undergo medical testing as part of a wellness program.

Recently, the EEOC issued final rules amending regulations and guidance concerning workplace wellness programs under the ADA and GINA. The rules allow employers to give limited incentives (including financial inducements) to employees who agree to provide medical-related information as part of a wellness program. Importantly, employees must truly provide the information on a voluntary basis. That means:

  • Employees may not be forced to participate.
  • Employees choosing not to participate may not be denied access to health coverage or the ability to select a particular health plan offered by the employer.
  • Businesses may not take retribution (e.g., demotions, threats, or intimidation) against employees who choose not to participate or fail to meet a stated health goal.
  • Businesses must clearly explain in writing the types of medical information they seek, how it will be used, who will have access to it, and how disclosure will be restricted.

In addition, there are incentive limits. If a company requires employees to be enrolled in a specific health plan in order to participate in a wellness program, the company cannot provide an incentive greater than 30 percent of the cost of the self-only version of the plan. If the company offers a wellness program but not a health plan, the incentive can’t be greater than 30 percent of the cost of coverage for a 40-year-old nonsmoker under the second-lowest-cost silver plan available on an Affordable Care Act (ACA) exchange at the company’s headquarters.

It’s important for employers to take a close look at their workplace wellness programs to make sure they comply with the EEOC’s new rules. In particular, employers should make sure that they don’t request medical information or testing that exceeds what is allowed by the rules and that participation in their program is truly “voluntary” as defined by the rules. Employers should also make sure they provide appropriate notifications about their program to employees. Links to the EEOC’s new rules as well as questions and answers can be found at www.eeoc.gov/eeoc/newsroom/release/5-16-16.cfm.