In EEOC v. Orion Energy Systems, Inc., a federal district court considered a challenge to an employer’s wellness incentive program. As explained in part 1 of this article, the court rejected the company’s contention that the Americans with Disabilities Act’s (ADA) safe harbor for benefits administration should apply.
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However, the court still had two other issues to consider: 1) The U.S. Equal Employment Opportunity Commission’s (EEOC) claim that Orion Energy Systems Inc.’s incentive violated the ADA, because it required nonparticipating employees to pay their entire health insurance premium and 2) The EEOC’s contention that the employer retaliated against an employee who refused to participate in the wellness program (that included a health risk assessment (HRA) and biometric screening) by terminating her shortly after her refusal.
Costly but Voluntary
Regarding the “voluntariness” analysis of the case, the court first noted that while the EEOC’s recent rule (explained in part 1 of this article) sets numerical limits and other restrictions that a wellness incentive must meet to be deemed voluntary, “EEOC does not maintain those aspects of the regulation apply retroactively.”
Even without applying the rule, the EEOC argued, shifting 100 percent of the premium cost is so substantial as to be “more than a mere incentive.” But the court responded that “even a strong incentive is no more than an incentive; it is not compulsion,” in that employees still have the option of completing the HRA or paying the full premium.
“A corporation is not required to fully pay for an employee’s health insurance,” Griesbach wrote, “and it is not unlawful to give an employee a choice regarding her health benefits provided the choices are among lawful alternatives.” Schobert’s choice to forgo the medical exam and pay her full health premium “may have been difficult, but is a choice nonetheless.”
Therefore, finding that Orion had conducted voluntary medical examinations as allowed by the ADA, the court granted the company summary judgment on the EEOC’s claim that its wellness program and HRA violated the law.
Retaliation, Interference Claims
The story did not end there, however. Under the ADA, making a retaliation claim requires showing there was a protected activity, an adverse employment action, and some causal connection between the two.
“Orion argues the EEOC’s claims fail because Schobert was not engaged in any protected activity by complaining about aspects of the program that were lawful,” Griesbach noted. But he disagreed, finding it “well established that an employee may engage in protected activity even if the challenged practice is not actually illegal, so long as the employee has a sincere and reasonable belief that she is opposing an unlawful practice.”
The concern that Schobert expressed about the confidentiality of her medical information “is a legitimate concern under the ADA, i.e., something the ADA actually does govern,” Griesbach continued. “Moreover, Schobert decided to opt out of the HRA. Orion does not argue that it could have required Schobert to participate in the HRA on pain of termination of employment, only that the HRA was not involuntary.”
Therefore, the court found Schobert’s opt-out to be protected activity. “Given the conflicting evidence regarding who actually decided to terminate Schobert and why, and the timing of her termination, a fact question remains as to whether there was any causal link between Schobert’s protected activity and her termination,” Griesbach wrote.
A jury also could find that, if Schobert’s allegations were true that “she was flat out told not to share her opinion about the new wellness program with her coworkers,” the company had interfered with her exercising her rights, or with her helping others do so, in violation of ADA Section 12203(b).
The court therefore denied Orion summary judgment on the EEOC’s retaliation and interference claims, and allowed that portion of the case to proceed to trial.
Implications
Although the court found this employer’s wellness program did not violate the ADA, “the EEOC may find much it likes in this court’s rationale,” observed Mark Stember, an attorney with Kilpatrick Townsend & Stockton, in a blog post.
“In what we view as a win for the EEOC, this court concluded that it must defer to the EEOC’s interpretation of its rulemaking authority, determined the EEOC’s interpretation to be reasonable, and agreed with the EEOC that the new regulation can be applied retroactively as a clarification,” wrote Stember, an advisory board member for BLR’s Employer’s Guide to HIPAA.
The court also found that the ADA safe harbor did not apply anyway because wellness programs are “unrelated to basic underwriting and risk classification,” and Orion’s program was not included in its group health plan description.
“Because coverage under the medical plan was still available to those who chose not to participate in the wellness program, it was determined to be voluntary even though the cost difference made it a ‘hard choice,’” Stember continued.
In the end, however, “this case has more for the EEOC to be pleased with than it does for employers still looking to bolster support for the position that Congress intended for the ADA’s safe harbor exception to have wide applicability to wellness programs.”
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Questions? Comments? Contact David at dslaughter@blr.com for more information on this topic |
David A. Slaughter, JD, is a Senior Legal Editor for BLR’s Thompson HR products, focusing on benefits compliance. Before coming to BLR, he served as editor of Thompson Information Services’ (TIS) HIPAA guides, along with other writing and editing duties related to TIS’ HR/benefits offerings. Mr. Slaughter received his law degree from the University of Virginia and his B.A. from Dartmouth College. He is an associate member of the Virginia State Bar.