Orion Energy Systems, Inc., a publicly traded company based in Manitowoc, WI, was sued by the EEOC on August 20, 2014, in an action pending in federal court in Green Bay, WI. The EEOC has alleged that the company violated the ADA in requiring their employee to participate in its wellness program, and then charging her a higher monthly health insurance premium and fining her $50 for refusing to participate. The EEOC contends that her ultimate termination was due to her failure to participate in the wellness program. The EEOC also sought to enjoin the employer from requiring employees to respond to medical or disability-related questions on the Health Risks Assessments (HSA).
Followers of this intriguing issue also know of the 2011 opinion from a federal court in Florida that upheld the validity of a wellness program that imposed a $20 bi-weekly surcharge on employees who did not participate in the wellness program. The program only required participants to provide a blood sample for glucose and cholesterol tests without regard to the outcome of those tests. The court held that the wellness program, designed to mitigate risks so that employees could get involved in their own healthcare, was permissible under the ADA.
I don’t agree with the EEOC that an employer violates the ADA if it discounts health insurance premiums for those employees who participate in an employer’s wellness program. The ADA contains a safe harbor provision for bonafide benefit plans based on underwriting, classifying or administering risks as long as the safe harbor provision is not used as a subterfuge to evade the purposes of the ADA. The purpose of the safe harbor provision is to permit development and administration of benefit plans using accepted principles of risk assessment.
Is it not an accepted principle of risk assessment for a wellness program to reward employees who participate so as to mitigate the insured risk? If acceptable and not meant as a subterfuge for discrimination against the disabled, then the practice of imposing surcharges on nonparticipants or rewards for participants should not violate the ADA. The ADA is meant to protect employees who are disabled by requiring employers to accommodate their disability assuming the employee can perform the essential functions of the job. The ADA does not pertain to the type of healthcare coverage an employer offers to its employees.
Besides, the Affordable Care Act (ACA) and interpretive regulations permit employers to monetarily incentivize employees to participate in wellness programs and penalize those employees who smoke by permitting premium surcharges, in addition to meeting certain requirements under the ACA and Health Insurance Portability and Accountability Act (HIPAA).
The United States Supreme Court has also spoken, stating that employers are free to design employee welfare benefit plans as they choose. Black & Decker v. Nord, 538 U.S. 822 , 832 (2004), cert. denied, 543 U.S. 815 (2004)(“employers have large leeway to design disability and other welfare plans as they see fit”).
So then, aren’t employers legally permitted to design and implement wellness programs imposing surcharges and rewards without violating the ADA?
 42 U.S.C.S. §12201(c).
 29 CFR §2590.