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Sep 1, 2014

By Russell D. Chapman

The U.S. Equal Employment Opportunity Commission has filed its first lawsuit directly challenging the operation of a wellness program.

In EEOC v. Orion Energy Systems, the EEOC alleged that the employer imposed a wellness program on its employees in violation of the Americans with Disabilities Act.

According to the complaint filed Aug. 20, 2014 in the U.S. District Court for the Eastern District of Wisconsin, the EEOC claims that the defendant, Orion Energy Systems, administered a wellness program in which employees were asked to complete a health risk assessment, which included questions regarding medical history and blood work.

In addition, the lawsuit alleges that the assessment included a test on a Range of Motion Machine in the company’s physical fitness room. The suit does not allege that any part of the wellness incentive was based on any result of the assessment.

Only one employee complained, the EEOC says

According to the EEOC’s complaint, the plaintiff was the only employee who refused to complete the wellness program, and complained about the program to management.

The EEOC further alleges that the plaintiff was then required to pay the full premium for her employee-only health coverage election, and that she was subsequently terminated in retaliation for making complaints about the wellness program. The EEOC also claims that the wellness program violated the ADA because it was not voluntary, and was not job-related or subject to business necessity.

In its press release announcing the lawsuit, John Hendrickson, regional counsel for the EEOC’s Chicago District, stated that while employers may maintain voluntary wellness programs,

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.”

Of course, in a participatory wellness program, the shifting of the entire cost of coverage to the participant is not prohibited under the wellness regulations promulgated under the Affordable Care Act.

“Unusual” circumstances of a wellness program

The EEOC’s stance taken in the suit appears to be consistent with the its established ruling policy on wellness programs.

As might be expected, neither the EEOC’s complaint in the case, nor its press release, made any reference to any effect on the case of the ADA’s exemption for wellness programs administered as a term of a bona fide employee benefit plan under ADA Sec. 12201(c). (See Seff v. Broward County.)

What sets the Orion case and its factual allegations apart from Seff, and the usual circumstances of a wellness program administered under a group health plan, is that in Seff, there was no allegation by any of the plaintiffs that their failure or refusal to participate in the wellness program, or their complaints about it, resulted in any adverse employment action.

As of this writing, the defendant has not yet filed its answer to the lawsuit.

Clearly this case bears watching, and Littler will report on any further developments as the case progresses through the courts.

This was originally published on Littler Mendelson’s Employment Benefits Counsel blog© 2014 Littler Mendelson. All Rights Reserved. Littler®, Employment & Labor Law Solutions Worldwide® and ASAP® are registered trademarks of Littler Mendelson, P.C.

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