Why it matters

To settle charges from the Equal Employment Opportunity Commission (EEOC) of operating a wellness program in violation of the Americans with Disabilities Act (ADA), Orion Energy Systems Inc. has agreed to pay $100,000 and tweak the program. In one of a handful of suits challenging employer wellness programs filed by the agency in 2014, the EEOC said Orion ran afoul of the statute by requiring employees to disclose their medical history, submit to blood tests and perform certain exercises on a range-of-motion machine, and then fired employee Wendy Schobert after she refused to take part. Orion argued the program was voluntary and therefore in compliance with federal law. A district court judge agreed the program was voluntary but found a factual issue remained with the treatment of Schobert. The parties then reached a settlement agreement. Pursuant to a three-year consent decree, Orion will be prohibited from maintaining a program that poses disability-related inquiries or seeks a medical examination that is not voluntary and will pay Schobert $100,000.

Detailed discussion

In 2014, the EEOC filed several lawsuits against employers, asserting that their wellness programs violated the ADA. The first suit targeted Wisconsin-based Orion Energy Systems Inc., with the agency alleging the company instituted an involuntary program that required employees to disclose their medical history, submit to blood tests and perform certain exercises on a range-of-motion machine.

When employee Wendy Schobert refused to take part, the employer “threatened and coerced her” and then terminated her in retaliation for her objections, the EEOC claimed.

The parties filed cross motions for summary judgment and U.S. District Court Judge William C. Griesbach issued a split decision. While he agreed with Orion that the wellness program was voluntary and not in violation of the ADA, he found that genuine issues of disputed fact remained on the EEOC’s retaliation and interference claims with respect to Schobert.

Facing continued litigation, the parties reached an agreement.

For a term of three years, Orion will be enjoined from maintaining any wellness program that poses “disability-related inquiries or seeks a medical examination” that is not voluntary within the meaning of the ADA and its regulations. The employer is further prohibited from maintaining a wellness program that imposes an incentive upon employees of more than 30% of the premium cost for self-only insurance (or the premium-replacement cost if Orion is self-insured) for participation, or as otherwise set forth in EEOC regulations.

Any form of retaliation, “including interference or threats” against any employee because the individual raised objections or concerns as to whether Orion’s wellness program complies with the ADA, is also banned under the consent decree.

Orion agreed to conduct a special training for its executives on the provisions of the decree as well as launch an annual training for employees on the prohibitions against retaliation and interference under the ADA, with an “emphasis” on Orion’s commitment to equal employment opportunity.

The employer will pay Schobert a total of $100,000 as a settlement payment, with $25,000 characterized as payment for attorney’s fees, $60,000 slated for compensatory damages (including pecuniary losses), and $15,000 as back pay.

To read the consent decree in EEOC v. Orion Energy Systems, click here.