EEOC’s Recent Challenges to Corporate Wellness Programs

In its third lawsuit targeting a wellness program, the United States Equal Employment Opportunity Commission (EEOC) sought to enjoin Honeywell International, Inc. (Honeywell) from requiring employees who do not participate in its wellness program to pay financial surcharges. EEOC v. Honeywell Int’l, Inc., 2014 WL 5795481 (D. Minn. Nov. 6, 2014). The EEOC claims that Honeywell’s wellness program violates the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). The District Court denied the EEOC’s Motion for a Preliminary Injunction, but the merits of the case have yet to be decided.

Wellness programs are generally permissible, but it is worthwhile to be wary. The EEOC continues to challenge wellness programs that it views as unlawful under the ADA and other laws, such as GINA. Ensuring that a wellness program is truly voluntary and complies with all applicable laws is essential to avoid challenges from the EEOC. However, the level of incentives and penalties significant enough to render a wellness program “involuntary” is still a question the courts will have to answer. Therefore, employers may want to consider how their wellness programs stack up to the Honeywell design and understand where the EEOC’s concerns lie. Thus, here is a brief summary of the issues in this ongoing case.

To participate in Honeywell’s wellness program, employees (and their covered spouses) must allow a third-party to collect blood and measure blood pressure, height, weight and waist circumference (BMI), HDL and total cholesterol, glucose and nicotine or cotinine. Participants with salaries under $100,000 receive a contribution toward their Health Savings Account (HSA) ranging from $250 to $1,500. Employees who do not submit to the biomedical tests do not receive an HSA contribution and must pay a surcharge of $500 for their medical coverage. Additionally, employees and their spouses who smoke (those who refuse to undergo the biomedical tests are presumed to be smokers) are subject to an additional $1,000 nicotine surcharge; however, they can avoid the surcharge by (1) enrolling and participating in a tobacco cessation program, (2) submitting to a test to confirm that they do not smoke, or (3) otherwise demonstrating that they are nicotine free.

The EEOC alleges that Honeywell’s wellness program violates the ADA “because the biomedical test associated with its wellness program constitutes an involuntary medical examination that is not job related.” The EEOC relies on its Enforcement Guidance which states that “[a] wellness program is ‘voluntary’ as long as an employer neither requires participation nor penalizes employees who do not participate.”

In response, Honeywell asserts that its wellness program is covered by the ADA’s insurance safe harbor provision, which waives application of the ADA in administering the terms of a bona fide benefit plan. Honeywell points to a United States Court of Appeals for the Eleventh Circuit decision where the court held that a similar wellness program fell under the ADA’s safe harbor provision and, therefore, was lawful. Seff v. Broward County, 691 F.3d 1221 (11th Cir. 2012). In the alternative, Honeywell argues that its wellness plan is indeed voluntary and that the Affordable Care Act (ACA) approves of surcharges in connection with wellness plans, and the ACA should be given much greater deference than the EEOC’s internal guidance, which is not binding on courts.

On another front, the EEOC contends that Honeywell’s wellness program violates GINA because the program collects medical information from family members (i.e. covered spouses). Conversely, Honeywell asserts that a “genetic test” (defined as “analysis of human DNA, RNA, chromosomes, proteins or metabolites that detect genotypes, mutations or chromosomal changes”) does not occur during the biometric testing. Furthermore, Honeywell confirms that the biometric screening does not include a broad health questionnaire or questions related to an employee’s family medical history, and Honeywell does not receive or have access to the test results.

Earlier this year, the EEOC filed lawsuits against Orion Energy Systems (August 2014) and Flambeau, Inc. (October 2014) claiming that their wellness programs also violated the ADA by requiring submission to medical testing such that refusal to participate in the programs shifted payment of the entire health insurance premium to the employees. In all three cases, the EEOC claims that the financial surcharges for employees who do not participate in the wellness programs are too high and, therefore, the programs are involuntary.

John Hendrickson, a regional attorney for the EEOC Chicago district stated, “[t]hey can’t compel participation in medical tests or questions that are not job-related and consistent with business necessity by cancelling coverage or imposing enormous penalties such as shifting 100 percent of the premium cost onto the back of the employee who chooses not to participate. Having to choose between complying with such medical exams and inquiries, on the one hand, or getting hit with cancellation or a penalty, on the other hand, is not voluntary and not a choice at all.”

However, Honeywell argues that the use of incentives in the form of financial surcharges does not make a wellness program involuntary and points to the approved cost limits under the ACA. Specifically, Honeywell argues that the cost of healthcare for all affected employees, with and without the applicable surcharges, falls below ACA’s 9.5% limit on costs (“affordable care” is defined as costing up to 9.5% of an employee’s household income).

In summary, the EEOC has, thus far, shown a relentless desire to regulate wellness programs in a way that aligns with its views on what must be demonstrated in order to prove that submission to such programs was voluntary and not coerced or under undue pressure. Moreover, the EEOC continues to monitor and find ways to challenge the nature of wellness testing and the use of test results. As the EEOC lawsuits continue, we anticipate more developments and guidance in this area.