EEOC weighs in on employer wellness plans

by Kelly Smith-Haley

January is here, which means diet, exercise, and wellness resolutions aren’t far behind.  And, like many of us, the EEOC has “wellness plans” on its list of 2015 New Year’s resolutions.  The Chicago branch of the EEOC recently filed its third action alleging that an employer-sponsored wellness program violates the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act.  In filing these actions, the EEOC has implicitly challenged the Affordable Care Act’s express approval of wellness programs.   Read on to find out why this topic is not a fad you can ignore.

Testing, testing
Honeywell International, Inc. offers its employees and their families a high deductible health plan (“HDHP”), which is a self-insured group plan sponsored by Honeywell.  Employees who participate in the HDHP have the option of participating in Honeywell’s wellness program.  The wellness program is designed to inform participants about their health status, encourage improvement of specific health goals, and reduce claim costs.

Employees who participate in the wellness program agree to undergo biometric testing. The biometric tests provide information relating to the employee’s blood pressure, body mass index, cholesterol, and glucose levels.  Employees who earn less than $100,000 and who choose to participate in the wellness program become eligible for a health savings account (HSA), and Honeywell agrees to make an annual contribution to the HSAs of those employees.

Employees who choose not to participate in the wellness program are not disciplined or terminated.  However, these employees are not eligible for HSAs and they must pay a $500 surcharge that goes towards their annual health insurance contribution.  Additionally, employees who refuse to undergo biomedical testing are presumed to be tobacco users unless they enroll and participate in a tobacco cessation program, submit a report from their doctor which shows they do not use tobacco, or work with a health advocate to establish they are nicotine free.  Honeywell imposes another $1000 surcharge on nicotine users (and presumed nicotine users).

Carrot sticks
Under the ADA, employers generally cannot require a medical examination or otherwise inquire about whether the employee has a disability, unless the examination or inquiry is job-related and is consistent with business necessity.  There are a few exceptions to this general rule.  For our purposes, the most important exception is that the ADA permits employers to conduct “voluntary” medical examinations, including inquiries into medical histories, which are part of an employee health program available to employees at the work site. The EEOC has stated that a wellness program which includes medical exams and medical inquiries is “voluntary” as long as an employer neither requires participation nor penalizes employees who do not participate.

According to the EEOC, Honeywell’s wellness program violates the ADA because it utilizes an involuntary medical examination—the biomedical test—that is not job related. The EEOC contends that Honeywell’s wellness program is not voluntary even though employees can choose to participate.  The EEOC asserts it is not voluntary is because the financial incentives are so steep and the surcharges are so penalizing that the employees have no choice but to participate.

For this reason, the Chicago office of the EEOC filed a petition in the district court of Minnesota alleging that Honeywell’s wellness program violates the ADA and GINA, which prohibits discrimination on the basis of genetic information with respect to health insurance and employment. The EEOC requested an emergency temporary restraining order which would have required Honeywell to stop parts of its wellness program immediately and until the EEOC completed its investigation of Honeywell’s wellness program.

But mom said I could
Honeywell argued to the district court that the EEOC’s position—i.e. Honeywell’s wellness program is not “voluntary” because it offers steep incentives and imposes surcharges—is outdated in light of the Affordable Care Act.  According to Honeywell, its program strictly complies with the ACA’s express approval of surcharges and financial incentives for employees who participate in certain types of wellness programs.

The ACA provides that employers who offer wellness program can provide “rewards” to employees, as long as certain other factors are met (which are not important for purposes of this article).  The types of available rewards under the ACA include discounts or rebates of premiums or contributions, and the absence of a surcharge.

In light of this language, Honeywell argued that the district court should ignore the EEOC’s view that the use of steep incentives and surcharges means wellness programs are not “voluntary.”  According to Honeywell, Congress would not expressly endorse in one federal statute (the ACA) what the EEOC claims is illegal under another pre-existing federal statute (the ADA).

The diet starts tomorrow
The district court denied the EEOC’s request for an emergency order which would have required Honeywell to stop part of its wellness program until the EEOC finished its investigation of the issue.  In its decision, the district court stated that there is great uncertainty as to how the ADA, the Affordable Care Act, and other federal statutes such as GINA are intended to interact.

The district court explained that the EEOC’s recent lawsuits highlight the tension between the ADA and the Affordable Care Act and signal the need for clarity so that corporations are able to design lawful wellness programs.  However, the district court did not decide whether Honeywell’s program, which Honeywell believes complies with the ACA, violates the ADA.  Instead, the district court stated that EEOC had not established it was entitled to an emergency order, without weighing in on the underlying merits of the wellness program.  The diet, indeed, starts tomorrow.  EEOC v. Honeywell International, Inc., Civil No. 14-4517, (D. Minn., Nov. 6, 2014).

Stay well
The Honeywell petition filed in Minnesota is but one of several actions in the Midwest brought by the EEOC’s Chicago office.  Illinois employers need to understand that even though the Affordable Care Act promotes incentives and allows for surcharges, it is unclear whether use of these “rewards” will violate the ADA and/or GINA.  Until this issue is settled, employers should evaluate their wellness programs not only in light of the Affordable Care Act but also the ADA, GINA, and other federal statutes so that they don’t become the next target of an EEOC lawsuit on this topic.  In the meantime, we will continue to monitor these issues.

Editors’ Note:  The EEOC has asked that the Editors clarify to their readers that the EEOC did not file an action on the merits of Honeywell’s wellness program and biometric testing; it filed a petition for a temporary restraining order which would not have stopped the wellness program, but merely stayed certain aspects of it while the EEOC investigated the matter.  This article has been revised since its original publication to incorporate these clarifications.

Kelly Smith-Haley, an attorney with Fox, Swibel, Levin & Carroll, LLP. She may be contacted at ksmithhaley@fslc.com.