EEOC Keeps Its Resolution to Litigate Company Wellness Programs Under ADA, Despite Recent Victory for Employers

With the holidays now behind, many employees view the New Year as an opportunity to lose weight, exercise more, or make any number of other resolutions to improve their health.  And it’s not just individuals seeking healthier lifestyles—in recent years, companies have started to promote healthy behavior among their employees with corporate wellness programs.

But for some employers, their good intentions have led them straight into litigation with the EEOC.  On December 30, 2015, however, a federal district judge upheld a company’s wellness program by finding it fell within the “safe harbor” provision of the Americans with Disabilities Act (ADA), which allows employers to require employees to undergo medical exams, but only when they are part of wellness programs tied to voluntary company-subsidized health insurance.  EEOC v. Flambeau, Inc., no. 3:14-cv-00638 (W.D. Wisc.). 

This recent order is the latest development in a series of lawsuits filed by the EEOC involving corporate wellness programs, the first of which began in August 2014 when the agency sued Orion Energy Systems, Inc. (Orion), a Wisconsin lighting company, claiming that the company violated the ADA by requiring an employee to undergo a medical examination and answer disability-related questions that were not related to her job or to the business.  EEOC v. Orion Energy Systems, Inc., no. 1:14-cv-01019 (E.D. Wisc.).  The wellness program at issue in Orion required employees to disclose their medical history, submit to blood tests, and do certain exercises in the company’s fitness room.  Wendy Schobert, a former Orion employee, declined to participate, questioning whether the program was voluntary and whether Orion could ensure the confidentiality of her information.  If Schobert had participated, Orion would have fully covered her health costs.  According to the EEOC, her decision not to participate resulted in her paying $400 per month for insurance premiums in addition to a $50 monthly penalty for refusing the fitness part of the program.  Orion argued that the exam and questioning were voluntary and that the company only received aggregated health data about its employees, not information on specific employees.

One month later, the EEOC brought a similar lawsuit against another Wisconsin company, plastics maker Flambeau, Inc. (Flambeau).  The EEOC argued that Flambeau canceled former employee Dale Arnold’s medical insurance and shifted the entire premium cost to him after he failed to complete a health assessment and biometric testing required under a company wellness plan.  Arnold was unable to complete the tests as scheduled because he was on leave and being treated for heart conditions. Flambeau required testing for employees who wanted to use the company’s health plan, but said that this was lawful because it did not require participation in the plan.  Flambeau did not receive any health information about any particular employee through the exams (other than tobacco use), but rather obtained data in an aggregate form to calculate costs and premiums.

On December 30, 2015, a federal district judge for the Western District of Wisconsin granted Flambeau’s motion to dismiss the EEOC’s ADA claim.  While the ADA generally bars mandatory health-related tests unless they are job related, the district judge concluded that Flambeau fell within the law’s “safe harbor” provision because the testing was a condition for employees to voluntarily receive insurance.  Because employees were not at risk for losing their jobs if they declined insurance or refused to participate in the program, the judge concluded that Flambeau did not violate the ADA.

Just five days after the Flambeau decision, the parties in Orion submitted new briefs to the court, each focusing on the ADA’s “safe harbor” provision discussed in Flambeau.  The key questions in Orion appear to be whether the wellness plan at issue was a “stand-alone plan,” which would not be entitled to safe harbor protection, or whether the wellness plan was sufficiently connected to a health insurance plan to establish safe harbor protection. 

Employers not only are awaiting the outcome of EEOC wellness plan litigation; they’re also awaiting final guidance from the EEOC that would address how wellness plans should be treated under the ADA (the EEOC published a proposed rule that was open for public comment in April 2015, as we noted in a blog post last spring).  

In the meantime, employers should take care when establishing wellness programs and keep the ADA’s safe harbor provision in mind, including by ensuring any required medical exams and inquiries are sufficiently connected to a voluntary insurance plan.