American Benefits Council
Benefits Byte


October 29, 2014

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

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EEOC Continues to Pursue Legal Action Against Employer Wellness Programs

The U.S. Equal Employment Opportunity Commission (EEOC) filed a new lawsuit against an employee wellness program on October 27, alleging violations of the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).

The lawsuit, filed in the U.S. District Court for the District of Minnesota, seeks a temporary restraining order and a preliminary injunction to prevent Honeywell International Inc. from imposing penalties on employees who decline participation in the company’s biometric screening program. The program assesses a $500 surcharge if employees forego biometric screening and an additional $1,000 tobacco surcharge for the employee as well as a $1,000 tobacco surcharge for the employee’s spouse/domestic partner if either foregoes the biometric screening and does not satisfy a reasonable alternative, such as participating in a tobacco cessation program. Additionally, only employees who participate in the biometric screening will receive a contribution to their Health Savings Account.

The EEOC’s lawsuit contends that “The proposed medical testing is not voluntary, and therefore violates the [ADA]. The testing imposes penalties on employees whose spouses do not provide their medical information, and therefore violates [GINA].”

In a public statement, Honeywell called the lawsuit “frivolous,” noting that the “incentives we provide are specifically sanctioned by two separate Federal statutes” (the Health Insurance Portability and Accountability Act (HIPAA) and the Patient Protection and Affordable Care Act (PPACA)) and “are in strict compliance with both HIPAA and [PPACA’s] guidelines … No Honeywell employee has ever been denied healthcare coverage or disciplined in any way as a result of their voluntary decision not to participate in our wellness programs.”

This is the third lawsuit filed by the EEOC in recent months challenging employer-sponsored wellness programs. As we reported in our October 7 Benefits Byte story, the EEOC is also pursuing a lawsuit challenging a wellness plan sponsored by a Flambeau, Inc. (a Wisconsin-based manufacturer with 1,600 employees) as well as a similar suit against Orion Energy Systems.

Importantly, the EEOC lawsuit against Honeywell cites the Seff v.Broward County case, in which the Court of Appeals held that the employer’s wellness program fell within a safe harbor of the ADA, which states that the ADA does not restrict organizations from “establishing, sponsoring, observing or administering the terms of a bona fide benefit plan that are based on underwriting risks, classifying risks, or administering such risks that are not based on or not inconsistent with State law.” The EEOC lawsuit contends that “Seff’s analysis is inconsistent with the language, the legislative history and the purpose of the safe harbor provision.”

The EEOC announced in its most recent semi-annual regulatory agenda that it intends to issue regulations later this year addressing wellness programs under the ADA and GINA. Specifically, EEOC states such regulations will address “whether, and to what extent, Title I of ADA allows employers to offer financial inducements and/or impose financial penalties as part of wellness programs offered through their health plans, and to address other aspects of wellness programs that may be subject to the ADA's nondiscrimination provisions.” Additionally, EEOC is drafting a proposed rule to amend GINA regulations “to resolve whether employers may offer inducements to employees' spouses or other family members who answer questions about their current medical conditions on a health risk assessment.”

The Council testified before the EEOC in a May 2013 hearing on this matter, describing employers' strong concern about the ongoing legal uncertainty that exists with respect to the application of the ADA and GINA to wellness programs and saying, "creating a regulatory framework by which employers can create nondiscriminatory wellness programs that help support the shared vision of improving health for all citizens is the ultimate goal.”

For more information on wellness program issues and health policy legal matters, contact Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.

The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.

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