Many employers offer corporate wellness programs to their employees in an effort to promote employee health and curb healthcare costs. Although no regulations have been issued clarifying the Americans with Disabilities Act’s (“ADA”) application to these programs, the Equal Employment Opportunity Commission (“EEOC”) has filed its first two lawsuits challenging wellness programs it believes violate the ADA.
While corporate wellness programs are touted as beneficial to employees these programs must be voluntary. The rub comes with whether or not the penalties for non-participation, or the inducement to participate, are high enough to render the program “involuntary.” Under the terms of the ADA, an employer may make “disability-related inquiries” of a current employeeonly if the inquiries are job-related and consistent with business necessity. EEOC guidance provides that disability-related inquiries are permitted if they are part of a “voluntary wellness program” – one which does not compel the participation of individuals who either cannot participate due to disability or do not wish to answer disability-related inquiries.
In these two cases, the EEOC alleges that a program is not “voluntary” if the employer either requires participation or penalizes employees who do not participate. Further, it alleges that an employer health program is not voluntary if it offers participants significant financial incentives or penalizes employees who do not participate or cannot meet a program’s goals, by requiring them to pay significantly higher premiums. The EEOC has refused to define the contours of what a “significant financial incentive” or “significantly higher premiums” are under the ADA. While HIPAA and other federal agencies set the threshold at 20% of premiums, the EEOC rescinded an Opinion Letter that agrees with this, and earlier this month stated that clarification in the near future was unlikely.
The wellness programs at issue in the EEOC’s first two lawsuits are alleged to offer significant incentives to participate, such as offering to pay the entire cost of coverage for employees participating in the program, while shifting the entire burden of coverage to employees who do not participate. These cases go to the extreme of what an employer can’tdo, but provide no meaningful guidance on what an employer can do. The EEOC also has not spoken to how these programs may lead to liability under the Genetic Information Nondiscrimination Act, Title VII, the Pregnancy Discrimination Act, and the Age Discrimination in Employment Act.