The feds do allow companies to employ “negative incentives” to boost wellness program participation. But as this case proves, you’ve got to tread carefully.  

A Wisconsin lighting company will pay $100,000 to settle an EEOC lawsuit that claimed the employer’s wellness program violated the Americans with Disabilities Act (ADA) and alleged that the employer retaliated against an employee who objected to the program by terminating her.

In its suit, the EEOC contended that Orion Energy Systems, based in Manitowoc, WI, instituted a wellness program that unlawfully required medical examinations and made disability-related inquiries. When an employee, Wendy Schobert, declined to participate in the program, Orion shifted responsibility for payment of the entire premium for her employee health benefits from Orion to Schobert. Shortly thereafter, Orion fired Schobert, the EEOC said.

The EEOC maintained that Orion’s wellness program violated the Americans with Disabilities Act (ADA) as it was applied to Schobert, and that Orion unlawfully retaliated against Schobert because of her good-faith objections to the wellness program.

The EEOC filed its lawsuit in U.S. District Court for the Eastern District of Wisconsin after attempting to reach a pre-litigation settlement.

Upon cross-motions for summary judgment, the district court rejected the employer’s argument that the insurance safe-harbor provision in the ADA immunizes wellness plans from ADA scrutiny.

The court concluded that the EEOC’s recently issued regulations on the ADA’s safe-harbor provision were within the EEOC’s authority, and further held that the safe-harbor provision did not apply even without regard to the new regulations. However, the court found that the wellness plan was lawful because it concluded that the employee’s decision whether to participate was voluntary under that law existing prior to the regulations, which were not applicable in the case.

Avoiding a trial on retaliation charge

The court also held that there were issues of fact regarding whether Schobert was fired because of her opposition to the wellness plan, and indicated that the case would be set for trial. The consent decree resolved these issues.

Under the consent decree settling the suit, Orion agreed to pay $100,000 to Schobert. The company further agreed that it won’t maintain any wellness program in the future that poses disability-related inquiries or seeks a medical examination that is not voluntary within the meaning of the ADA and its regulations.

Orion also agreed not to engage in any form of retaliation, including interference or threats, against any employee because he or she has raised objections or concerns as to whether the wellness program complies with the ADA.

The company also agreed that it will tell its employees that any concerns about its wellness program should be sent to its human resources department.

According to company information, Orion Energy manufactures and markets energy-efficient lighting systems and retrofit lighting solutions.

Orion also will train its management and employees on the law against retaliation and interference under the ADA. The company will conduct an additional training meeting with its chief executive officer, its chief operating officer, its chief financial officer, its human resource director and all employees responsible for negotiating or obtaining health benefit coverage or selecting a wellness program. This training shall include an explanation of the provisions of this decree and the requirements of the ADA and its regulations as they pertain to wellness programs.

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