How Legal Is Your Employee Wellness Program?

When Pennsylvania State University's employees refused to fill out a wellness questionnaire and penalties set in, the uproar got national attention. Here's how to avoid a similar revolt among your staff.

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By Matthew Faustman

Opinions expressed by Entrepreneur contributors are their own.

Many employers already have at least one wellness program, such as employee-fitness reimbursements or smoking-cessation programs. Tack on the prospective changes resulting from the new healthcare law and the trend is likely to expand. Specifically, under the wellness rules defined in the Affordable Care Act that take place January, 2014, companies can reward employees who participate in risk assessments or biometric tests like waist measurements and many companies are implementing wellness programs of all kinds.

In the meantime, there are two types of wellness programs: Those that are reactive, which seek to intervene with respect to certain existing illnesses, and those that are proactive, which seek to prevent future illnesses by making positive changes in employee's lifestyles and health choices.

As you might imagine, it's a kind of carrot-and-stick question: Do employers entice employees (the carrot version) to participate in wellness programs, or do they punish employees (the stick version) who refuse to participate?

Keep in mind that either strategy could cost you. Just ask Pennsylvania State University. The school recently suffered significant backlash from employees over its now suspended employee-wellness program. Employees criticized the plan as "coercive and financially punitive." Specifically, the university levied a monthly non-compliance fee on employees who declined to fill out an online-wellness questionnaire. The form, administered by WebMD Health Services, asked employees intimate details about their jobs, marital situation, finances and more. It also asked female employees if they planned to become pregnant over the next year.

Penn State isn't the only employer implementing penalties for employees who decline to participate in wellness programs that involve questionnaires, and it's likely not the last. The question is, is it legal?

Related: How to Encourage Employee Wellness Without Being a Jerk

It's unclear at this time and here's why: The key is whether the assessment, which may be called by other terms, can be considered voluntary if there is a penalty against employees who do not participate. The Equal Employment Opportunity Commission, or EEOC, has suggested that denying enrollment, for example, is a penalty sufficient to post a problem with the American Disabilities Act, or ADA.

By contrast, employers argue that they're on the hook for the medical bills and no one is forced to enroll in health coverage, so they believe they can ask employees to take more responsibility. Perhaps for these reasons, the assessment could be automatically considered voluntary. Further guidance on the subject is clearly needed, and recently federal lawmakers asked the EEOC to investigate wellness programs that seek health information from employees and issue guidelines.

But clarity isn't only the federal government's job. How you're able to frame a potentially contentious issue is very important. Employers can explain that they're putting faith in workers and counting on them to get healthier to reduce everyone's health-insurance costs. They can use wellness programs to give employees a sense that they're cared about and that they are working in a place that is geared toward high performance from every employee.

Related: What 3 Companies Are Doing to Keep Employees Healthy

Here are three tips to help employers implement wellness programs that are (so far) legal as well as helpful:

  1. Incentives vs. penalties: A wellness plan is generally considered legal if it creates incentives instead of penalizing, but again the details of this have yet to be completely ironed out.
  2. No hoops to jump through: A wellness program has to comply with the ADA and thus refrain from requiring employees to meet specific health standards. Otherwise, it could be considered discriminatory.
  3. Reasonable hoops are allowed: If the program is reasonably designed to promote health, gives employees the opportunity to qualify for the reward at least once a year, and the reward is (for now) less than 20 percent of the total cost of coverage, it's legal.

Ultimately, it's about creating a sense of engagement rather than accountability. It also comes down to helping employees get excited about being part of a healthy culture.

What's your company's wellness plan like? Let us know with a comment.

Matthew Faustman

CEO and Co-founder, UpCounsel

Matt Faustman is the CEO and co-founder of UpCounsel, the fastest-growing online workplace where businesses can easily hire trusted business lawyers, corporate lawyers, patent lawyers and many other types of legal professionals. He frequently posts on the UpCounsel blog on business legal issues, efficiency and the future of labor. 

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