My colleague Marc Herman returns today to bring back the story of wellness programs and whether they will continue to pass legal muster. In the first post of a two-parter, Marc updates us on some litigation. Read on.  

Here’s one for you:  Did you hear the one about the employee that turned down the opportunity to have his annual health insurance premiums waived?   Not a joke, unfortunately.  And there’s not much of a punch line either.

Way back in 2014 –– a time when Donald Trump’s entry into politics was confined to an episode of the Simpsons –– the EEOC embarked on a relentless, and unexpected, crusade against wellness programs.

“Why!?” I hear you cry.  Let me remind you.

The EEOC took issue with various employer-sponsored wellness programs because, according to the EEOC, many such programs violated the Americans with Disabilities Act (the “ADA”).  [Enter smoke, stage left].

Among those employers side-swiped by the EEOC was Orion Energy Systems, Inc. – a Wisconsin-based manufacturer that employs around 250 people.

According to the EEOC, Orion’s incentive-based wellness program violated the ADA by unlawfully subjecting employees to involuntary medical examinations.

What are those? Well, in plain English, involuntary medical examinations are a big no-no under the ADA — consider it the No Exam Rule.  Remember this.  It is important.

Orion had told its employees that if they participated in a wellness program, they would have their annual health insurance premiums waived (a saving of over $400).

Hallelujah!

Wait, not so fast.

Participation in the wellness program also obligated employees to undergo something called a “Health Risk Assessment”  – a fancy name for a medical exam.

Ah, now enter from Stage Right — the No Exam Rule.

You might say – “What’s the big deal!?” “The employees had a choice!”  “How is this involuntary!?”

Well, yes, in a technical sense, the employees had a choice.  They could decline participation if they so wished.  But that’s not the way the EEOC viewed it.

The EEOC said:  Whoa!  No sane employee would choose to forego a waiver of their annual health insurance premium.  Put another way, no employee would voluntarily choose to pay the annual health insurance premium (i.e., opt-out of the wellness program).

The EEOC reasoned that employees have no meaningful choice to opt-out of the program.  Participation would be coerced.  The Health Risk Assessment would be involuntary.

So who’s right?

Well, last week, we finally go through round one: a federal court sided with the employer, Orion.

The court explained that while there “may be strong reasons to comply with an employer’s wellness initiative,” the employee still has a choice.

Orion’s wellness program did not subject employees to involuntary medical examinations.  It was lawful.

Now, before we crack open the cigars and champagne, let us pause.  The decision, while helpful, ought be put in context.

In May, 2016, the EEOC published its long-awaited regulation regarding wellness programs.  The regulation defines exactly what a voluntary wellness program is.  However, it only applies to wellness programs commencing on or after January 1, 2017.  This means that the new regulation did not apply to Orion’s.  The decision should, as they say, be taken with a heavy pinch of salt.

I shall return with part 2 to further explore the new regulation.  Stay tuned.