Court Rules Employee Wellness Program Does Not Violate ADA
Employers who fear that they may violate the Americans with Disabilities Act (ADA) by offering incentive-based wellness programs can now breathe a bit easier.
A federal district court recently ruled that an employer may offer incentives, including charging a surcharge for not participating in a health risk assessment (“HRA”), as long as its plan falls within the ADA’s safe harbor for bona fide benefit plans.
In Seff v. Broward County (S.D. Fl.), the employer offered a wellness program that required employees to pay $20 more per pay period if they chose not to participate in a wellness program that included a HRA and a biometric screenings for cholesterol and glucose. The issue was that for a wellness program to be permissible under the ADA it must be voluntary, and the plaintiff’s argument was that if employees are required to participate or pay a penalty, then the plan was not truly “voluntary.”
Part of the ADA's prohibition against discriminating against employees includes a specific provision that forbids medical exams or inquiries unless they are necessary to determine whether the employee is fit to work. In the past, the EEOC has allowed employers to give medical examinations as long as they were part of a “voluntary wellness program,” but it has not said whether the ADA should apply to those programs.
The Court in Seff found that the employer’s wellness plan (and its penalty) fell squarely in to the exception for “bona fide benefit plans.” Specifically, the Act does not punish employers who are “establishing, sponsoring, observing, or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with state law.”
In general terms, this provision allows employers to establish programs that their insurance companies will recognize. Broward County’s plan was acceptable because its insurance provider administered it as part of its contract with the county, and because only those enrolled in the health plan could participate. Also, the Court recognized that cholesterol and glucose fell into the area of risk factors that plan administrators could consider when formulating their plans.
While this decision is a significant step, it is not advisable for all employers to start penalizing their employees that won’t submit to medical tests. First, the EEOC still has not weighed in officially, and indeed it appears that it may disagree when it does. Also, this decision out of the Southern District of Florida is not binding on the EEOC or on courts in other jurisdictions. Finally, in addition to the ADA, employers need to be aware that the Health Insurance Portability and Accountability Act and the Genetic Information Nondiscrimination Act both include provisions that limit how incentives may be used and what information may be collected. Any employer considering instituting such an incentive plan should only do so after consulting with a knowledgeable benefits provider and/or an employment law attorney.
