Employers who offer more than minimal incentives (or who impose more than minimal penalties) to encourage employee participation in workplace wellness programs could be taking significant risks. Davenport Evans litigation attorney Mike Snyder explains.

Yale University recently agreed to pay $1.29 million to settle a class action lawsuit brought on behalf of current and former employees who were offered participation in Yale’s wellness program, called the Health Expectation Program (HEP). The lawsuit alleged that Yale required its employees to either participate in the HEP or pay a weekly opt-out fee of $25 (or $1,300 per year). In addition, the lawsuit alleged Yale violated the Americans with Disabilities Act (ADA) and the Genetic Information and Non-Discrimination Act (GINA) by requiring its employees who participated in the HEP to undergo mandatory medical screenings and to share their results with their employer.

Under the settlement agreement, Yale admits no wrongdoing and denied that any aspect of the HEP violated the ADA, GINA, or any other law. Yale agreed, however, to suspend imposing opt-out fees and to revise its practices regarding the collection of its employees’ health information.

The lawsuit follows in the wake of a series of conflicting regulations and rulings affecting workplace wellness programs. In 2016, the EEOC issued regulations that allowed employers to provide incentives to their employees for participating in such programs. However, the ADA and GINA require employee participation to be “voluntary” if the wellness programs include medical questions and exams. This created tension and uncertainty as to when a particular incentive could go too far and be viewed as coercive.

The AARP (who represented in the plaintiffs in the Yale class action lawsuit) sued the EEOC over its existing rules and, in 2017, a federal court ordered the EEOC to reconsider and revise its regulations to comply with ADA and GINA. However, the EEOC failed to do so and, in January 2019, the court vacated the EEOC’s then-existing rules. (Read more on this from Jean Bender, July 29, 2019.) This resulted in further uncertainly as to whether employers could offer incentives or opt-out fees at all and, if so, to what extent.

On January 7, 2021, the EEOC announced a new set of proposed rules that would limit employers to offer only “de minimis” incentives to encourage participation in their wellness programs. However, the proposed regulations were withdrawn. Thus, and in the absence of further regulations or guidance, employers must be particularly mindful of the ADA and GINA voluntary participation requirements in formulating incentives or penalties to spur participation in their wellness programs. If those programs include monetary penalties for non-participation or mandatory risk assessments and screenings, for example, then those programs could be out of compliance and subject the employer to significant legal risks.

The employment law attorneys at Davenport Evans stand ready to help. Contact us at [email protected], 605-336-2880, or find a specific lawyer here.

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Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is one of the State’s largest law firms. The firm’s attorneys provide business and litigation counsel to individuals and corporate clients in a variety of practice areas. For more information about Davenport Evans, visit www.dehs.com.