Employers Pursue 'Not-So-Voluntary' Wellness Programs

‘Not-So-Voluntary’ Wellness Programs Forecast

By Allen Smith, J.D. Apr 17, 2007

PHOENIX—Employment law is on the verge of a vigorous workout as more employers see how far they can go to press workers to participate in “not-so-voluntary” employee wellness initiatives, according to Garry Mathiason, an attorney with Littler Mendelson.

The results of voluntary wellness programs have been positive, but some employers are concluding that voluntary wellness might not be enough in the face of rising health care premiums and the obesity epidemic, Mathiason said April 12 at Littler’s Executive Employer Conference here. Despite legal risks, these employers are opting for “tough love” to help rein in health care costs and gain a healthier and more productive workforce.

This approach isn’t without many potential legal pain points, Mathiason acknowledged, saying he could practically hear the clash between the growth in individual privacy rights and wellness as a business imperative.

Numerous federal laws might pose hurdles—including not just the Americans with Disabilities Act (ADA), Age Discrimination in Employment Act (ADEA) and Title VII, but also the Health Insurance Portability and Accountability Act (HIPAA), whose final wellness regulations apply to plan years beginning on or after July 1, 2007. And then there are state and local laws.

More aggressive wellness programs might be too rocky a road for some to follow, but Mathiason outlined their benefits as well as legal risks, noting that the benefits might help employers tone their group health plans.

Business Case for Wellness

Group health care insurance premiums continue to soar, rising 87 percent since 2000 and projected to double by 2016, Mathiason said. A hefty portion of those health care costs include preventable illnesses arising from unhealthy habits, he noted.

Some employers are taking a harder look at the fat in their rising premiums. General Motors Corp. has found that 25 percent of the $5.3 billion it spent in health care in 2005 could be traced to unhealthy habits, he said. And Mathiason cited a study by Citigroup that found that for every dollar spent on wellness, the bottom line improved by $4.50.

It’s no wonder then that some employers are considering how to leverage their wellness programs even more to make their premium increases leaner.

Some payoffs are nothing short of heart-racing.

Mathiason pointed to Scotts Miracle-Gro Co. as an example. He recounted a recent BusinessWeek a rti cle about its pursuit of wellness among employees. Employees reportedly were required to take annual health risk assessments or pay $40 a month more in premiums. Those with moderate to high risk had to be assigned a health coach or pay $67 more a month in premiums.

One health coach urged an executive, a 48-year-old jock with high cholesterol, to visit a doctor, which led to a life-saving heart operation.

But not every Scotts Miracle-Gro worker is turning cartwheels over the company’s proactive stance on wellness. The company is being sued by a worker allegedly fired for failing a drug test. For nicotine use.

Smoke-free workplaces are statutorily mandated in many states, but some states grant workers rights as smokers—yet another litigation risk.

‘A Difficult Balance’

Mathiason described more aggressive wellness initiatives as “a difficult balance” but said that balance can be achieved.

How far can employers go?

Employment laws provide some clear boundaries, he noted, urging employers to stay within the “HIPAA five,” as set out in the final wellness regulations:

    • A wellness program reward or penalty cannot exceed 20 percent of the total cost.

    • Reasonable structures should be in place to promote health and prevent disease.

    • There must be annual eligibility for the program.

    • There must be alternative standards to accommodate people who have medical conditions that prevent them from reaching certain goals to receive a reward.

    • The employer must advertise alternative standards.

Age-related adjustments should be made to programs, as well as adjustments to weight goals to avoid claims under Title VII, he added. And under the National Labor Relations Act, unionized employers would have to bargain about wellness programs.

Sensitive Subjects

Aggressive wellness programs aren’t for every company. It isn’t difficult to imagine employees objecting for reasons beyond the law.

Some topics, like weight and smoking, are just sensitive. Many employers may not want to broach them beyond the usual encouragements to participate in voluntary wellness programs.

“Dignity and respect” are of the utmost importance when dealing with sensitive health topics, Mathiason noted. Third-party administrators are essential to make a wellness program work, and an approach that becomes too aggressive might risk claims of harassment, he cautioned.

But he predicts that the business need for wellness will lead more employers to go beyond voluntary wellness programs. He expects a new story to emerge, predicting that over the next 20 years courts will write new chapters about how far employers can go.

Allen Smith, J.D., is SHRM's manager of workplace law content.

Related Articles: 

HIPAA Wellness Rules To Take Effect, HR News, April 5, 2007

CEOs Urged: Make Workplace Wellness a Corporate Strategy, HR News, February 2007

Smelling Smoke, HR Magazine, December 2006

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