EEOC Lawsuit Challenges Wellness Program for the First Time

By Naomi Dabi Lantsberg and Jeffrey A. Kimmel

The Equal Employment Opportunity Commission ("EEOC") has filed its first lawsuit directly challenging the operation of a wellness program. In EEOC v. Orion Energy Systems, 1:114-cv-01019, the EEOC alleged that Orion Energy Systems ("Orion"), a Wisconsin lighting retrofit company, imposed a wellness program on its employees in violation of the Americans with Disabilities Act ("ADA"). The EEOC claims that defendant, Orion, administered a wellness program in which employees were asked to complete a health risk assessment, which included, among other things, medical history, disability-related inquiries and blood work that were allegedly not job-related or consistent with business necessity. In addition, the suit alleges that the assessment included a test on a Range of Motion Machine in the company’s physical fitness room.

According to the Complaint, the plaintiff, Wendy Schobert, was the only employee who refused to participate in the wellness program, and complained about the program to management, questioning whether the "health risk assessment" was voluntary and whether Orion could guarantee the confidentiality of her information. The EEOC alleges that plaintiff was financially penalized as a result of her refusal to participate in the wellness program, and was required to pay the full premium of her employee-only health coverage election ($400 per month) as well as a $50 per month non-participation fee. According to the EEOC, the imposition of financial penalties for nonparticipation rendered the medical exam and disability-related inquiries "involuntary" under the ADA. The EEOC further alleged that plaintiff was terminated one month after she opted out of the wellness program, in retaliation for failing to participate in and complaining about the wellness program.

The EEOC claims that Orion acted intentionally and "with malice or reckless disregard for Schobert's federally-protected rights," and that Orion's purported bases for firing plaintiff are pretextual. The EEOC further contends that the wellness program violated the ADA because it was involuntary, and was not job-related or subject to business necessity. The EEOC is seeking an injunction barring Orion from its unlawful conduct regarding the wellness program and from retaliating against employees who object to the program. The lawsuit also demands that Orion compensate plaintiff for back pay, medical expenses, lost pension contributions and "mental anguish," in addition to punitive damages for "malicious and reckless" conduct.

Despite the EEOC's position, the Affordable Care Act does permit employers to offer financial incentives to induce employee participation in corporate health and wellness programs. In this case, the EEOC is raising the issue of whether withholding an incentive as a penalty for nonparticipation is permissible or renders a plan as "involuntary." With wellness programs' increasing popularity among employers, to avoid violating the ADA, it is important that employers make sure that their wellness programs are voluntary, though it is unclear what that actually means at this juncture. Hopefully, the outcome of this case will help clarify this issue.

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