When developing a wellness program, which employment laws should you pay particular attention to?

For the past 40 years, employment laws have favored limits on employer intrusion into employees' personal lives. Today, however, employers are becoming more involved in their employees' lives and health through workplace wellness programs. As health care costs become more and more staggering, the number of companies using wellness and disease management programs will continue to trend upward. However, not everyone sees workplace wellness as a "win-win" situation because such programs inject employers into the most intimate aspects of employees' lives: their diseases, family history, habits and weight. The question is "To what extent may employers intrude in their employees' lives and lifestyles for the dual goals of improving health and saving money?" While this debate likely will continue for years, developing wellness programs raises concerns under federal and state law.

ERISA issues. Wellness programs offered as part of an employer-sponsored group health benefit plan must comply with ERISA, the Internal Revenue Code, and the Public Health Service Act, as amended by the Health Insurance Portability and Accountability Act of 1996 (HIPAA). Among other things, HIPAA prohibits discrimination in health coverage based on health status. However, HIPAA's nondiscrimination provision does not prevent a group health plan or health insurance issuer from establishing discounts or rebates or modifying otherwise applicable co-payments or deductibles in return for adherence to programs of health promotion and disease prevention, or wellness programs.

Under regulations applicable to plan years beginning on or after July 1, 2007, wellness programs that do not condition rewards based on an individual satisfying a health factor standard comply with HIPAA's nondiscrimination requirements (assuming participation is made available to all similarly situated individuals). However, if any of the conditions for obtaining a reward is based on satisfaction of a health factor standard, the program must meet the following five requirements:

1. The amount of the reward may not exceed 20 percent of the cost of employee-only coverage under the plan.

2. The program must be reasonably designed to promote health or prevent disease.

3. The program must give individuals eligible for the program the opportunity to qualify for the reward under the program at least once per year.

4. A reasonable alternative standard for obtaining the reward must be available for individuals for whom, for that period, it is unreasonably difficult due to a medical condition to satisfy, or medically inadvisable to attempt to satisfy, the otherwise applicable standard.

5. All plan materials describing the terms of the program must disclose the availability of a reasonable alternative standard.

Disability discrimination issues. Wellness programs must also comply with the ADA's reasonable accommodation requirements to allow individuals with known disabilities to participate. However, the ADA prohibits employers from inquiring about employees' medical conditions, unless such inquiries are "job-related and consistent with business necessity." The only exception being, according to the EEOC's Enforcement Guidance on "Disability-Related Inquiries and Medical Examinations of Employees," that employers may conduct voluntary medical examinations and activities, including voluntary medical histories, which are part of an employee health program, without having to show that they are job-related and consistent with business necessity. Medical records acquired as part of a wellness program must be kept confidential and separate from personnel records.

Conflict with the ADA may be avoided by foregoing medical questions and focusing on behavior. According to the EEOC, if a program simply promotes a healthier lifestyle but does not ask any disability-related questions or require medical examinations, it is not subject to the ADA. Nevertheless, any behavioral assessment must be crafted carefully to avoid a court finding it an unlawful "medical examination" under the ADA.

These ADA issues are particularly significant because ADA challenges to wellness programs may be brought by any employee since the ADA's "medical inquiries and examinations" provisions apply to both disabled and non-disabled individuals.

Lifestyle discrimination issues. Various laws may limit an employer's ability to achieve a "healthy" workforce. The broadest "lifestyle discrimination" statutes protect an employee's right to engage in any lawful activities. Other state statutes protect only employees' right to use lawful products no matter how unhealthy. The narrowest laws protect only the right to use tobacco products away from work.

Lifestyle discrimination claims could arise when an overweight employee who chose not to join the company gym suffers an adverse employment action, such as the failure to get a promotion. As in other discrimination claims, that individual may allege that the real reason for the employment decision is the lawful conduct of leading a sedentary lifestyle and that the employer's explanation is a pretext to mask the violation.

Discrimination issues in unionized workplace. Employers who's workplaces are unionized are subject to special considerations. The National Labor Relations Act requires a unionized employer to bargain with the union regarding wages, hours, and other terms and conditions of employment. Participation in a wellness program, even if voluntary, likely is a "term of condition" of employment, especially if the program includes financial incentives. Related "mandatory subjects" may include replacing "unhealthy" with "healthy" options in the cafeteria or vending machines, and making the workplace smoke-free.

Developing lawful wellness programs. The legal boundaries of wellness programs are changing, creating more opportunities and greater risks. To minimize the likelihood of legal challenges, an employer should:

• State the positive purposes for the program and consider whether these purposes may be achieved without medical inquiries.
• Emphasize voluntary participation to avoid a "coercive" tone.
• Provide accommodations for individuals with disabilities to enable them to participate in the wellness program.
• Comply with applicable state lifestyle or disability discrimination laws.
• Raise awareness about inappropriate "lifestyle" remarks. Jokes and nicknames are fodder for harassment and discrimination litigation.

Reprinted with permission. © CCH