King F. Tower

King F. Tower
Of Counsel

Kameron V. Melton

Kameron V. Melton
Associate

Although many employees use their cherished vacation time during summer, it is not a time of rest for Human Resources. Instead of having their toes in the sand, HR has to monitor all of the workplace issues that arise from teams operating below their ideal staffing levels. What’s more, summer is often viewed as an opportune time to roll out employer initiatives, including the ever-popular employee wellness plan. These plans can add to HR’s summer workload.

Don’t get me wrong, health and fitness are worthy pursuits – and there is most certainly a connection to employee happiness and productivity, so employer-sponsored wellness plans make a lot of sense. That said, there are legal pitfalls to be avoided, and with a number of recent twists and turns in the legal landscape, HR would do well to stay on top of the dos and don’ts of employee wellness plans.

photo of an arm in a blood pressure cuffThe legal issue that has long been associated with wellness plans is compliance with the federal Americans with Disabilities Act (ADA), and since 2008 we have also had to be concerned with the Genetic Information Nondiscrimination Act (GINA). In 2016, the Equal Employment Opportunity Commission (EEOC) issued final rules that provided guidance to employers regarding the requirement under the ADA and GINA that employee inquiries (and medical examinations) associated with wellness plans be “voluntary.” Specifically, EEOC made it clear that employers would not violate ADA or GINA by permitting voluntary participation in wellness plans, even if those plans offered a financial incentive to employees. Under the 2017 rules, the wellness plans could make disability-related inquiries in exchange for such incentives, so long as the health premium reduction or other incentive was no more than 30% of the cost of employee-only coverage under the employer’s group plan.

The employer community embraced the 2016 rules, and many employers rolled out programs relying upon the “certainty” of the 30% rule in the EEOC regulations. But, as we know, nothing is certain when it comes to litigation. In response to a challenge from the AARP, a court held that the size of the permissible incentive was so large as to be coercive, meaning that employee participation was not actually voluntary under ADA and GINA. The EEOC promptly withdrew the rules, meaning that plans featuring biometric screenings and other medical exams (as well as information gathering about family history) are potentially in violation of the law.

With a few months perspective on these developments, we can summarize the current state of the law as follows: the old EEOC rules are gone, and it will likely be 2021 or later before the Commission completes a set of replacement rules. Employers can still rely on the Affordable Care Act (ACA) (so long as it remains good law), which provides a more limited safe harbor. Under the ACA rules, employers may provide large incentives (up to 50%) for participation in tobacco cessation programs, so long as the program asks only if the employee-participant consumes tobacco products, but does not test for nicotine. Employers may also include health quizzes, a healthy eating program, an exercise challenge, or an on-site lunch-and-learn, so long as there is no medical screening.

So, in our view, this summer should be a cautious one for most employers. Unless you can tolerate some legal risk, you should remove any incentive from your wellness program that is tied to inquiries that would otherwise violate the ADA or GINA. Or, consult with your friendly, neighborhood employment lawyer if you want to craft a more aggressive approach. Even though the EEOC rules have been withdrawn, the legal issue is unsettled, so employers who are not risk-averse may want to retain some incentives (and develop a plan to defend them, if needed).

Originally published in Virginia Human Resources Today Summer/Fall 2019. Reposted with permission.