October 31, 2014 | Compliance

What You Need to Know: EEOC Cases Against Orion Energy Systems, Flambeau and Honeywell

Recently, the Equal Employment Opportunity Commission (EEOC) filed three lawsuits against employer wellness programs at Orion Energy Systems, Flambeau, Inc., and Honeywell International, Inc.

The EEOC lawsuits question the fairness of a high dollar amount tied to participation in the wellness program, and the fact this amount is being used as a penalty, rather than a reward. As a result of this high penalty, the programs have been viewed as involuntary by the EEOC, which enforces federal labor laws having to do with discrimination.

The EEOC's press release on one of the lawsuits stated:

"Employers certainly may have voluntary wellness programs—there's no dispute about that—and many see such programs as a positive development," said John Hendrickson, regional attorney for the EEOC Chicago district.

"But they have to actually be voluntary. They can't compel participation by imposing enormous penalties such as shifting 100 percent of the premium cost for health benefits onto the back of the employee or by just firing the employee who chooses not to participate. Having to choose between responding to medical exams and inquiries -- which are not job-related -- in a wellness program, on the one hand, or being fired, on the other hand, is no choice at all."

So what does this mean? How it could impact your wellness program, and what you can do to mitigate any risk associated with the EEOC, Department of Labor, and Affordable Care Act? 

Based on our interpretation of these three EEOC cases, there are a number of things employers should be aware of as they take a closer look at their own program, regardless if your plan is participation-based or outcomes-based. 

Here are some of Bravo's recommendations for running a program that is compliant, not only with the EEOC, but also the Affordable Care Act (ACA) and other federal regulations:

  • Program materials should emphasize that plans are voluntary and intended to control healthcare costs.
  • Position incentives as rewards instead of penalties.
  • If a spouse participates, only they can respond to questions regarding their health. The employee cannot answer on their spouse's behalf.
  • Communicate clearly that a physician is always able to provide a waiver or reasonable alternative.
  • Improvement goals must be clearly defined, reasonably attained in the time permitted, and have alternatives to be considered voluntary.
  • Limit entire rewards to 50% of premium (if including tobacco use). Until the EEOC takes a stance, the lower the percentage, the lower your risk for their disputes.
  • Those who complete a tobacco cessation program will receive credit as a non-smoker, regardless of whether they quit.

The EEOC's lawsuits do not allege that the wellness programs violate the ACA wellness regulations, but rather that the wellness programs are contrary to the Americans with Disabilities Act (ADA) and/or the Genetic Information Nondiscrimination Act (GINA). To date, there is no formal EEOC guidance with regard to wellness programs and only one case, Seff v. Broward County, which addresses voluntariness of a wellness program with regard to the ADA. The Seff decision, upheld on appeal, found for the employer and allowed for a $20 per bi-weekly pay period charge for non-participation in a company wellness program requiring screening and health risk assessment completion.

These recent EEOC cases are in the early stages of litigation and each presents unique factual circumstances. Bravo will be monitoring the cases closely as they develop. We hope for resolutions to these cases that allow employers the latitude to design fair, reasonable, and effective wellness programs, as envisioned under the ACA, while staying with the bounds of voluntariness under the ADA. We are working with industry associations to provide a collective response to these lawsuits.

If you would like to discuss any specific questions or concerns you may have about your program, particularly in light on these recent lawsuits, contact us.

For further information about the latest lawsuit, refer to to the related articles listed below.

Topics: Compliance

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