Labor and Employment

Is Your Employee Wellness Program Legal?

By Lisa Guerin, ​J.D., Boalt Hall at the University of California at Berkeley
Make sure your workplace wellness program complies with the requirements of the Affordable Care Act.

Does your company offer a workplace wellness program? Many businesses do, as a way to promote employee health and thereby reduce absences and health care costs and boost employee morale and productivity. However, there are a few legal traps to avoid in designing and implementing a workplace wellness program.

What Is a Workplace Wellness Program?

A workplace wellness program seeks to help employee’s improve their health and fitness levels, often by offering incentives to employees who participate in various program activities or achieve certain health-related goals. Workplace wellness programs can encompass a wide variety of offerings, from smoking cessation programs, lunchtime walking groups, or meditation classes, to rewards for getting a health screening, losing weight, lowering blood pressure, or managing chronic illnesses, such as diabetes or asthma.

Legal Issues Posed By Workplace Wellness Programs

Because workplace wellness programs sometimes ask employees to provide health information, they can run afoul of laws protecting the privacy of employees with disabilities and genetic conditions. Workplace wellness programs can also violate discrimination rules set out in the Affordable Care Act (Obamacare). (For more information on Obamacare’s employer mandate, see Nolo’s article on employer’s healthcare insurance requirements.)

Employee Medical Privacy

The Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) limit the information employers may request from their employees and require employers to maintain the confidentiality of any medical information they are entitled to have. Your workplace wellness program must meet these strict confidentiality requirements.

GINA prohibits employers from requesting or requiring employees to provide genetic information; the ADA places significant limits on the information an employer may request about an employee’s disability. Under both laws, any information the employer receives must be kept private, available only in very limited circumstances (for example, to a manager who needs to accommodate the employee’s disability or to security personnel who need medical information about a particular employee in case of emergency). If your wellness program offers an incentive to employees who complete a health questionnaire, for example, you must keep the responses confidential in compliance with these rules. Your lawyer can help you make sure your program complies with these rules.

Discrimination Based on Health Status: The ACA

Everyone can improve their health, regardless of where they start. However, some workplace wellness programs reward employees not simply for taking steps in the right direction, but for achieving certain goals, such as losing weight or quitting smoking. These outcome-based programs may discriminate against employees based on their health status.

The ACA rules divide wellness programs into two categories: those that reward employees for participating and those that reward employees for achieving certain goals or doing certain activities. The first type includes programs that reward employees for participating in a health screening assessment, taking diagnostic tests, or joining a gym. These types of purely participatory programs are allowed under the ACA.

The second type of program – called “health-contingent” programs under the ACA, because the reward is tied to the employee achieving a certain outcome – are subject to strict rules to make sure they do not discriminate against employees for whom achieving the goals might be unsafe or unrealistic. To be legal under the ACA, these health-contingent programs must meet these four criteria:

  • Employees must be allowed to qualify for the reward at least once per year.
  • The reward may not exceed 30% of the total cost of employee-only coverage under the employer’s health plan; this amount goes up to 50% for smoking cessation programs.
  • The program must be reasonably designed to prevent disease or promote health. In other words, it may not be a cover for discrimination, it may not be overly burdensome, it may not be based on highly suspect methods (such as crash diet programs), and it must have a reasonable chance of improving the health of those who participate.
  • The full reward offered by the program must be available to all similarly situated employees. If participation in an activity would be unreasonably difficult or unsafe, the employer must offer a reasonable alternative activity. If an employee is unable to meet a wellness goal (such as reducing weight), the employer must offer a reasonable alternative goal. The alternative must accommodate the recommendations of the employee’s doctor, among other things.

As you can see, there are a number of legal factors to consider in designing and implementing a workplace wellness program. Talk to your lawyer to make sure your program will meet your company’s wellness goals without creating unnecessary legal trouble.

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