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“In order to avoid costly litigation, employers need to carefully design their wellness program — especially when they reward participants with incentives and discounts on their medical coverage. The EEOC recently sued a Wisconsin employer, claiming the penalty the employer imposed for non-participation in its program was too significant. The EEOC also determined the wellness requirements were involuntary under the Americans with Disabilities Act,” Employee Benefit Adviser reports.

“Employers and their advisers should pay careful attention to how the EEOC defines liability in this case, EEOC v. Orion Energy Systems. It is a reminder to stay in compliance with the Affordable Care Act’s rules for wellness as well.”

“In the EEOC case, the employer paid 100% of the health insurance premiums for employees who participated in its ‘voluntary' wellness program. If the employee chose not to participate, the employee paid 100% of the premiums. The program contained two components. First, employees completed a health risk assessment, and second, a ‘fitness' component involved completing a medical history questionnaire and exercising on the employer’s range of motion machines. The complaint also alleges that there was a $50 ‘penalty' for not participating in the fitness component of the wellness program.”

Key to avoid problems: “For outcomes-based wellness programs that reward employees for meeting certain goals, such as lowering their body mass index or cholesterol, or quitting smoking, a reasonable alternative standard must also be provided for those who don’t meet the outcomes-based standard. This ensures that the wellness program is reasonably designed to improve health and is not a ruse for underwriting or reducing benefits based on health status.”