Wellness Program Given the Green Light

Written by Robert G. Brody and Abby M. Warren on September 24, 2012

The Eleventh Circuit Court held, in Seff v. Broward County, Florida, an employee wellness program that rewarded certain employees for taking certain “healthy” steps did not violate the Americans with Disabilities Act (“ADA”), 42 U.S.C. § 12101, as it fell within the ADA’s safe harbor provision for insurance plans.

The employer offered employees a group health insurance plan which, in 2009, included a wellness program.  The program consisted of an online questionnaire and a biometric screening that measured glucose and cholesterol levels.  Participation in the program was not a condition of enrollment but beginning in April 2010, enrolled employees who did not participate in the wellness program were charged $20 extra on their biweekly paychecks.

Under the ADA, a “covered entity” cannot require a medical examination or make inquiries about whether an employee has a disability and the related details unless the inquiry or examination is job-related and consistent with business necessity.  General medical exams or checkups, health risk assessments, or screens are normally part of a wellness program and they are not likely to be job-related or subject to business necessity as their focus is not on participants’ job function.  However, an exception to this provision is where a wellness program is “voluntary,” which Equal Employment Opportunity Commission (“EEOC”) guidance from 2000 defines as “neither requires participation nor penalizes employees who do not participate.”  While the parties were prepared to debate, as has been the practice in prior cases, whether the $20 biweekly charge was “voluntary,” the Court had a different analysis in mind.

The Court looked to the safe harbor provision in the ADA that exempts certain insurance plans from the general prohibitions of the statute.  The provision states the ADA does not prohibit a covered entity from “establishing, sponsoring or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks or administering such risks.”  The Court held the plan fell under this exception and did not address the question of whether it was “voluntary.”

This decision does not mean other courts will use the safe harbor provision and not the voluntary exception, nor does it mean the EEOC will be persuaded to adopt this approach given its past disputes on the validity of wellness plans offering financial incentives, but it is a glimmer of hope.  Further, the extent to which the insurance safe harbor will be interpreted in these cases is unclear.  While we will have to wait to see if other courts follow suit, this case does give us some guidance.

First, wellness programs should be part of a bona fide insurance plan.  Next, in case other courts reject the safe harbor analysis, do everything possible to make the plan and incentives seem “voluntary.”  Offering financial benefits for employee actions as opposed to increasing costs for actions or inactions is a good start.  Also, remember there are a number of laws that govern wellness programs in addition to the ADA, including the Employee Retirement Income Security Act, Health Insurance Portability and Accountability Act, Genetic Information and Nondiscrimination Act, Patient Protection and Affordable Care Act, and state laws, as well as EEOC guidance and federal and state case law. The impact of all these other laws is unknown.  With employer-sponsored wellness programs on the rise and uncertainty about the ADA’s (and all these other laws’) impact on them, it is important for employers to evaluate their specific plans with the help of legal counsel and keep abreast of all developments.

Brody and Associates regularly advises management on complying with the ADA and other state and federal laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.

 

About the Authors

Robert G. Brody is the founding member of Brody and Associates, LLC. He has been quoted and published in national publications and appears as a guest T.V. commentator on contemporary Labor and Employment issues. Learn More

Abby M. Warren is an Associate with Brody and Associates, LLC. She works on both Labor and Employment Law matters. Abby worked at the New Haven Superior Court. Learn More