Benefits and Compensation

EEOC Wellness Lawsuit Against Orion Ends in $100,000 Settlement

A federal challenge to a Wisconsin energy company’s employee wellness incentive was resolved April 5 with a $100,000 settlement. A federal court had thrown out the U.S. Equal Employment Opportunity Commission’s (EEOC) claim that the program violated the Americans with Disabilities Act (ADA), but allowed the EEOC’s related ADA retaliation and interference claims to proceed.wellness


In 2009, Orion implemented a wellness program that included a health risk assessment (HRA) and biometric screening. Orion employee Wendy Schobert refused to participate and, as a result, was required to pay her full health premium costs of more than $400 per month. She ultimately was terminated and filed a complaint with the EEOC, which in turn sued Orion, claiming that its wellness program violated the ADA as involuntary and that the company had retaliated against Schobert in violation of the ADA.

In general, the ADA prohibits covered employers from requiring medical examinations or making disability-related inquiries of an employee, unless the examination or inquiry is job-related and consistent with business necessity. The law includes an exception for “voluntary” wellness programs, but until very recently the EEOC had not specified what this meant in terms of permissible incentives. The commission ultimately issued final regulations on the subject in May 2016, well after the events at issue in this case.

In a September 2016, a U.S. District Court rejected Orion’s contention that an ADA “safe harbor” for benefits administration should apply. However, the court found the incentive to be voluntary. Shifting the entire premium cost to the employee was a strong incentive but still not a “compulsion,” the court reasoned, because employees still had the option of completing the HRA or paying the full premium. In an additional twist, though, the court refused to dismiss the EEOC’s ADA retaliation and interference claims.

Settlement Terms

To settle these remaining issues, Orion Energy Systems agreed to pay Schobert $100,000. Orion also agreed:

  • Not to maintain any wellness program in the future with disability-related inquiries or medical examinations that is not “voluntary” under the ADA and the rules the EEOC issued last year.
  • Not to engage in any form of retaliation, including interference or threats, against any employee for raising objections or concerns as to whether the wellness program complies with the ADA.
  • To tell its employees that any concerns about its wellness program should be sent to its human resources (HR) department.
  • To train its management and employees on the law against retaliation and interference under the ADA.
  • To conduct an additional training meeting with its chief executive officer, its chief operating officer, its chief financial officer, its HR director, and all employees responsible for negotiating or obtaining health coverage or selecting a wellness program. This training is to include an explanation of the settlement terms and the ADA’s requirements regarding wellness programs.

“The EEOC supports employers and employees who want to explore ways to become healthier and to lower health care costs,” said Julianne Bowman, director of the EEOC’s Chicago District Office, in a statement. “Wellness plans must comply with the ADA and its regulations, however, as well as other laws dealing with them. Under this consent decree, Orion Energy can explore ways to help its employees and itself.”