How Wellness Programs Might Result in Employment Discrimination Lawsuits

Employers beware: the EEOC is bringing lawsuits against businesses that use wellness programs to discriminate against disabled employees. The EEOC claims that employers are using wellness programs to subject employees to medical tests unrelated to job performance in an effort to discriminate against disabled employees.

In August 2014, the EEOC filed a suit against Orion Energy Systems for discriminating against Wendy Schobert. The EEOC alleges that Orion shifted premium costs to Schobert after Schobert refused to participate in Orion’s wellness program. When Schobert complained, Orion fired her. Earlier this month, the EEOC filed a second wellness program lawsuit against Flambeau, Inc. The EEOC alleges that Flambeau violated the Americans with Disability Act (ADA) by cancelling employee Dale Arnold’s medical insurance after he refused to complete biometric tests and health risk assessments.

Due to the popularity of wellness programs, the EEOC is expected to file more wellness program suits in the near future. Kaiser Family Foundation reports that about 94% of businesses with over 200 workers and 63% of smaller employers offer wellness programs. A RAND Employer Survey shows that 80% of employers with wellness programs screen their employees for health risks for program planning purposes.

Ironically, the federal government is partly responsible for the recent rise of wellness programs. The Affordable Care Act (ACA), or Obamacare, offers 30% to 50% tax credits to employers who get their employees to meet health goals. Many employers believe the EEOC’s recent lawsuits constituted a bait and switch by the federal government: Obamacare incentives them to create these wellness programs for their employees, but then the EEOC sues the employers for implementing wellness programs in a manner that saves employers on insurance costs.

Doing the Right Thing without Being Punished for It

Health employees are obviously a good thing. The employee lives longer, the employer doesn’t have to change employees as often, and everyone saves money when people don’t need medical attention. The question becomes: how does an employer get ACA tax credits without triggering an ADA lawsuit?

First, an employer cannot defend against an EEOC lawsuit by claiming that the employer had to comply with the ACA. The ACA’s tax credits are completely voluntary. Employers aren’t mandated to create wellness programs. If an employer is slapped with a lawsuit after implementing a wellness program, the employer can’t argue that the employer was entrapped because the ACA is voluntary while the ADA is not.

Okay, so employers can’t argue that they can’t comply with both laws. Employers should probably avoid creating wellness programs that will result in a discrimination lawsuit. Let’s examine what Flambeau and Orion Energy System did wrong.

Flambeau and Orion both attempted to subject their employees to unwanted medical tests. An employer might want these tests to see what kind of program they need and to see how expensive their insurance will be. The problem is that the ADA only permits medical tests on employees if the tests are related to work performance. Insurance coverage and employee health are typically not work related. Employers cannot, and should not, compel employees to take medical exams.

In the EEOC’s collective minds, shifting medical insurance costs from the employer to the employee violates the ADA’s rule on medical tests. Raising costs on an employee who refuses to undergo an exam is viewed as employee retaliation because the employer is adversely affecting an employee who stands up for an ADA right.

If an employer decides to create a wellness program, the employer should make the program completely voluntary. The employer should avoid forcing employees to pay the premiums if the employees refuse to undergo a test. It is likely that health insurance might be higher, so the employer must consider the costs of a possible EEOC lawsuit against higher insurance if the employer implements a wellness program and an employee refuses to comply with medical exams. Obamacare might want employers to promote good health among employees, but no good deed goes unpunished.