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$100K Settles First Challenge to Wellness Program

April 17, 2017

In the first lawsuit filed by the Equal Employment Opportunity Commission (EEOC) directly challenging an employer’s wellness program, a Wisconsin lighting company will pay $100,000 and provide other relief to resolve allegations that its program violated the Americans with Disabilities Act (ADA) and the company unlawfully retaliated against an employee who objected to the program by firing her.

Wellness plan. In 2008, Orien switched from a fully insured health plan to a self-insured plan. In 2009, to reduce costs by improving employee health, it began a wellness initiative with three "incentives" whereby employees who enrolled in Orion’s plan: (1) had to certify they did not smoke or pay a surcharge ($80 per month for single coverage); (2) had to exercise 16 times per month or pay a $50 monthly surcharge; and (3) had to complete a health risk assessment (HRA) or pay the entire monthly premium, which was $413.43 for single, $744.16 for limited family, and $1,130.83 for family coverage.

Health risk assessment. The HRA included a health history questionnaire and a biometric screen involving a blood pressure check; height, weight, and body circumference measurement; and blood draw and analysis. Orion did not receive personally identifying information; instead the questionnaire and samples were collected and compiled by outside vendors and sent back to Orion as anonymous, aggregated data, which allowed it to see the percentage of participants who had certain health risks such as high cholesterol. The goal, according to Orion, was to identify common health issues and offer educational tools and assistance to improve employee health.

Employee who objects is fired. The employee raised concerns about the wellness initiative and HRA, questioning confidentiality and how the premium was calculated, believing it excessive in light of the service fee Orion paid its third-party administrator (she knew the amount because she paid invoices). She sent a letter to the HR director electing not to participate and signed the opt-out form on April 24, indicating she understood she had to pay the monthly premium of $413.42. She was the only employee to opt out of the wellness program that spring. Meanwhile, her supervisor and the HR director spoke to her about comments she made to coworkers about the premium, telling her such negativity was not welcome, and to keep her opinions to herself. She was terminated May 18.

EEOC challenge. In August 2014, the EEOC filed this first lawsuit to directly challenge an employer wellness program. The suit asserted that Orion's wellness program violated the ADA as it was applied to the employee and that the company unlawfully retaliated against her because of her good-faith objections to the wellness program.

Case narrowed at summary judgment. In September 2016, the district court rejected the employer's summary judgment argument that the insurance safe-harbor provision in the ADA immunizes wellness plans from ADA scrutiny. The EEOC's recently issued regulations on the ADA's safe-harbor provision were within the EEOC's authority, according to the court, and the safe-harbor provision did not apply even without regard to the new regulations. The court nonetheless found that Orien’s wellness plan was lawful because the employee's decision whether to participate was voluntary under that law existing prior to the regulations, which were not applicable in the case.

However, the court found issues of fact as to whether the employee was fired because of her opposition to the wellness plan—and those issues would be resolved at trial.

Retaliation consent decree. The consent decree resolving the suit settles the retaliation allegations. In addition to the monetary relief to the employee, Orien will refrain from maintaining any wellness program in the future that poses disability-related inquiries or seeks a medical examination that is not voluntary within the meaning of the ADA and its regulations, according to the EEOC. The company also agreed to refrain from engaging in any form of retaliation, including interference or threats, against any employee because he or she has raised objections or concerns as to whether the wellness program complies with the ADA. Employees will be told that any concerns about Orien’s wellness program should be sent to the HR department.

Further, Orion will train management and employees on the law against retaliation and interference under the ADA. The company also will 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 benefits coverage or selecting a wellness program. This training will include an explanation of the provisions of the consent decree and the requirements of the ADA and its regulations as they pertain to wellness programs.

"The EEOC has always maintained that wellness programs, done right, are a good thing," EEOC Regional Attorney Greg Gochanour. "But they have to be voluntary. Through this settlement, Orion Energy agrees that its future wellness programs will be done right."