Get Fit . . . Or Pay the Price

Some companies have turned to coercive or mandatory wellness programs to push employees toward better health. And some employee groups have pushed back. Experts suggest employers and HR leaders be careful to design programs that reward healthy behaviors rather than punish unhealthy ones.

Friday, January 25, 2013
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It's not unusual for companies to offer financial motivation to employees who participate in wellness programs. 

See the recent Kaiser Family Foundation survey of 3,326 public and private companies of all sizes, which found that 41 percent of large firms (200-plus employees) offering at least one wellness benefit also offer monetary incentives for employees to take part in wellness programs.

But what about employer programs that require certain workers to engage in healthier activity, and/or penalize those who don't?

The same survey found 11 percent of large companies saying employees identified with a risk factor such as obesity are obliged to participate in a wellness program, or else pay more for their insurance. In addition, 9 percent of large employers that ask employees to complete health-risk assessments reported they financially reward or penalize workers based on whether they meet certain biometric outcomes, such as specific cholesterol numbers or body mass index.

Those aren't large percentages, to be sure. But coercive or mandatory wellness policies and programs aren't unheard of or altogether new. For example, automobile manufacturer Volkswagen put newly hired production line workers at its Chattanooga, Tenn.-based plant into a mandatory fitness program in 2010. According to a Volkswagen statement, the automaker adopted the compulsory program as a way to help employees "perform at the highest level of professional excellence." The company reported that some new hires had lost as much as 30 pounds after three weeks of training.

Fitter auto workers aside, these types of employer mandates regarding employee health have been met with their share of resistance. Local 1149 in Syracuse, N.Y., for instance, continues to push back against a PepsiCo policy that, in 2011, began charging employees a $50 monthly fee if they smoke or have medical issues that may lead to weight gain. About 400 workers covered by a Teamsters contract filed a complaint with the National Labor Relations Board in 2011, and began shopping for a different health plan.

In the case of Seff v. Broward County, a Broward employee alleged the county's health plan, which required participants to complete a health-risk assessment and undergo a health screen to obtain a $20 premium discount per paycheck, violated the Americans with Disabilities Act's prohibition on non-voluntary employee medical examinations and disability-related inquiries. In August 2012, an 11th Circuit Court of Appeals found Broward's wellness program did not violate the ADA, ruling the program was part of the County's group health plan, and thus was exempt by virtue of the ADA's "bona fide plan" exception.

Whether the resistance to coercive wellness policies gains more traction may partly depend on who's doing the resisting -- and where, says James Matthews, a Philadelphia-based partner and co-chair of the labor and employment department with Fox Rothschild.

For instance, "where a union is present, the terms of health insurance coverage is a mandatory subject of bargaining," he says. "Absent a 'clear and unmistakable waiver' by the union of the right to bargain over the issue, the employer may not make unilateral changes in a mandatory subject of bargaining. Doing so is simply an unfair labor practice."

In this context, a clear and unmistakable waiver may be found, where the collective bargaining agreement simply obliges the employer to provide health insurance with terms "no less favorable than that provided to other employees," continues Matthews. "That's probably what's going on in Syracuse. This restriction would obviously not apply to a non-union employer or to a union-signatory employer's non-union employees."

In either case, state laws may still come into play, he says, noting some states -- Colorado, Connecticut, Indiana, Kentucky, Louisiana, for example -- have statutes prohibiting discrimination against employees based on "lawful, off-duty conduct" such as smoking.

"However, some of those statutes contain specific exceptions for health insurance premium differentials for smokers," he says. "That is, the employer can't refuse to employ a smoker, but may charge him or her a higher health insurance premium."

So, while some employees may see such measures as unreasonable, "I think it's extremely unlikely it would be a legally actionable invasion of privacy, particularly in the private sector," says Matthews. "That's one reason why state legislatures have found it necessary to enact off-duty conduct statutes."

Still, employers and HR leaders may be wise to create wellness programs with components that reward healthy behaviors rather than punishing unhealthy ones, says Eric Stevens, a Nashville, Tenn.-based attorney with labor and employment law firm Littler Mendelson.

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"If the wellness plan is part of the employer's group health plan, charging a higher premium on the basis of a health status-related factor is generally prohibited," says Stevens. "A group health plan is permitted to offer premium discounts, rebates or reduced co-payments or deductibles in return for adherence to programs of health promotion and disease prevention."

Typically, such an incentive would not be a violation of employee privacy, since employees may choose to bypass the incentives and not participate, he continues. "Of course, when parties are negotiating on terms of a collective bargaining agreement, what one side sees as an incentive, the other side will likely cast as a charge."

As such, companies should give careful thought to how such additions to wellness programs are framed, says Stevens. 

"A wellness plan that rolls out simply as a mandate is likely to fail for a number of reasons. If an employer implements a program that stands alone -- unless participation is purely voluntary -- such a program could be in violation of the ADA."

Moreover, employees who do not see the value of healthy living aren't likely to participate, or may to some extent rebel against what they perceive as an intrusion on their personal lives, adds Stevens.

"Employers who do not feel a purely voluntary program would have a broad enough impact should consider including the program as a component of the employer's group health plan. This not only bolsters the plan's ability to withstand legal challenges, but also helps employees see the value of wellness initiatives in the context of their medical costs."

Ultimately, as more employers opt for wellness program components that try to urge employees to get healthier, "we may see more legal challenges down the road," says Jason Rothman, a shareholder in the Cleveland office of Ogletree, Deakins, Nash, Smoak & Stewart, and a member of the firm's employee benefits practice group.

 "There's going to be unions or employees who feel they're being coerced to participate," he says, "which means there's a good chance to see more of this litigation."

But, "with good planning, organization, communication and plan design," he adds, "you're likely going to get the largest part of your employee population to buy into the program."

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