EEOC and Unsure Future for Employee Wellness Plans

November 12, 2014

On November 3, 2014, the U.S. District Court for the District of Minnesota rejected a request for a preliminary injunction and allowed Honeywell International, Inc. to move forward with its corporate employee wellness plan, including the plan’s financial disincentives for workers who refuse to take part in and be tested under the plan. This decision represents a victory for corporate America (albeit small, as discussed below) in the continued use of carrot-and-stick-style employee wellness plans.
Employee wellness plans have become increasingly popular in the wake of the Affordable Care Act (ACA) due to their promise of increased productivity, reduced absenteeism, and reduced medical costs. In general, these types of plans require covered employees to undergo a biometric screening, the results of which are then used to calculate health insurance costs. As was the case with Honeywell’s plan, employees who refuse coverage from the corporate health plan often face financial repercussions. For example, Honeywell employees who did not opt into the plan were assessed a $500.00 surcharge onto the costs of their medical plan, could lose up to $1,500.00 in company contributions toward their health insurance costs, and could be charged up to an additional $2,000.00 in tobacco-related surcharges. However, Honeywell employees who elected not to participate in the wellness plan despite the obvious incentives were not subject to either discipline or termination.
In seeking a preliminary injunction preventing Honeywell from moving forward with its employee wellness plan for the 2015 year, the Equal Employment Opportunity Commission (EEOC) argued that the company’s plan violated two federal statutes: the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).
Generally, the ADA provides numerous protections for workers with disabilities, one of which prevents employers from requiring employee medical examinations that are not job-related. Pursuant to the ADA, employee medical information can only be gathered in limited circumstances, including where an employee “voluntarily” provides such information in connection with a wellness plan. The EEOC historically hinted that any provision to employees of financial incentives or imposition of financial penalties for participating in such an assessment rendered employee participation “involuntary” under the ADA. The EEOC argued that Honeywell’s employee wellness plans violate this protection, claiming that they are involuntary medical examinations that are not job-related. Further, the EEOC argued that Honeywell’s wellness plan violates GINA, which prohibits discrimination based on genetic information in the provision of health care. The EEOC claimed that Honeywell’s wellness plan, which collects medical information about covered employees and spouses, was being used to discriminate against those individuals in health insurance rates and coverage.
The District Court denied the EEOC’s request for an injunction. In reaching this decision, the court weighed multiple factors, including the relative harm to employees and Honeywell in granting the order and the lack of clarity in the law on this topic. The court determined that no harm would befall either the EEOC or the Honeywell employees if it did not issue the injunction, especially since the employees in question had already submitted to the medical testing for the 2015 calendar year. The court also found that, if it did issue the injunction, Honeywell would be greatly harmed because it would be a barrier to the administration of the company’s wellness program for the coming year. Accordingly, all factors weighed in favor of allowing the plan to go forward for the 2015 calendar year.
Importantly for employers, however, the court did not consider whether the EEOC could eventually prevail on the merits of its legal claims, stating that the legal questions involved are “intriguing” and involve “uncertainty.” More broadly, the court stated that “great uncertainty persists in regard to how the ACA, ADA and other federal statutes such as GINA are intended to interact.” Therefore, the ultimate legality of employee wellness plans like Honeywell’s remains unclear. Despite Honeywell’s success in avoiding the halting of its 2015 wellness plan, the case remains pending in order to ultimately determine whether the plan violates the ADA and/or GINA. Further, the EEOC continues to file similar cases concerning other employee wellness plans.
Though the future of the corporate employee wellness plan remains uncertain, this small victory for Honeywell is certainly a positive indicator for corporate America. Nevertheless, employers should work closely with their legal counsel to determine whether or not their wellness plans comply with federal law.