EEOC Seeks to Stop Use of Financial Incentives for Wellness Program Participation

The Equal Employment Opportunity Commission (“EEOC”) has requested that the United States District Court of Minnesota stop Honeywell from implementing a wellness program that would provide financial incentives for undergoing biometric screenings.  The EEOC is challenging Honeywell’s program on grounds that it would violate the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”).  The EEOC’s request is a surprising development because, as recently as last year, the EEOC stated that it has not taken a position on whether and to what extent providing a financial reward to participate in a wellness program violates the ADA.  In addition, EEOC staff have not previously given any public indication that providing incentives to spouses for participating in a wellness program violates GINA.  Consequently, many employers provide financial rewards to encourage participation in wellness programs up to the limits permitted by the Health Insurance Portability and Accountability Act (“HIPAA”), as amended by the Affordable Care Act (“ACA”).  Employers that offer financial rewards (or impose financial penalties) for participation in wellness programs that request medical information or involve medical examinations should take note of this development.

Update:  On November 3, 2014, the District Court judge denied the EEOC’s request.

The Potential ADA Violation

Facts of the Case:  EEOC is seeking to enjoin Honeywell from implementing a wellness program that would require employees (and their spouses) to submit to biometric testing of their blood pressure, cholesterol, glucose, and tobacco use and undergo height, weight, and body mass index measurements.  Employees and spouses who submit to the testing and measurements receive a contribution to their Health Savings Accounts (“HSAs”) of up to $1,500 and receive a discount on their health insurance premiums of up to $2,500.

Background:  The ADA places limits on an employer’s ability to make disability-related inquiries or to require employees to undergo medical examinations or provide medical information unless the examination or inquiry is job-related and consistent with business necessity or voluntary.  The EEOC has stated that medical examinations and inquiries under wellness programs are permissible if the programs are voluntary.  Although the EEOC has warned that providing a monetary incentive to complete a wellness program might render the program involuntary, it has not taken a position on whether or how much of an incentive would cause the program to become involuntary.  In the meantime, the Departments of Treasury, Labor, and Health and Human Services have issued regulations allowing employers to provide incentives of up to 30 percent of the annual cost of coverage (50 percent of the annual cost of coverage to discourage tobacco use) without violating HIPAA’s prohibition on discriminating against participants based on health factors.

The EEOC’s Position:  The EEOC argues that Honeywell’s proposed wellness program would not be voluntary (and therefore would violate the ADA) because (1) biometric testing is a medical examination, and (2) Honeywell proposes to impose large financial penalties (as opposed to a mere nominal incentive) on employees who decline to participate.  The EEOC is also quick to assert that that financial incentives may violate the ADA even if they meet the requirements of HIPAA.

The Potential GINA Violation

Facts of the Case:  On the theory that employees are more likely to achieve wellness goals if more than one member of their family participates in a wellness program, many employers offer incentives for spouses to participate in the employer’s wellness program.  Similarly, Honeywell’s wellness program would provide a $1,000 discount on the family medical premium if the employee’s spouse agreed to submit to biometric testing.

Background:  GINA prohibits employers, health plans, and health insurers from requesting, requiring, or purchasing genetic information about an individual or an individual’s family member with some exceptions.  “Genetic information” includes diseases and disorders of the individual’s family members—i.e., family medical history—but not information about the individual’s own diseases and disorders.  The EEOC’s regulation interpreting GINA defines “family member” to include an individual’s spouse.

Since 2011, it has been rumored that the EEOC considers the use of incentives to cause spouses to provide information about their own medical history to violate GINA.  The EEOC’s rumored position was surprising because GINA does not prohibit an employer from providing incentives to an individual (such as a spouse) for providing information about his or her own medical history.  Despite the rumors, prior to the enforcement action being taken against Honeywell, there were no publicly documented enforcement actions brought by the EEOC against any employer on this basis.

The EEOC’s Position:  The EEOC argues that Honeywell’s proposed program would offer impermissible incentives for information about the medical history of an employee’s family member—his or her spouse.  The EEOC’s position is that GINA prohibits employers from offering incentives to employees for providing family medical history, a spouse’s medical history is family medical history with respect to the employee, and therefore, providing incentives to employees whose spouses participate in the wellness program would violate GINA.  The EEOC did not address how its position is consistent with GINA’s statutory provision allowing employers to request information about an individual’s own medical history.