EEOC Challenges Honeywell’s Wellness Program
The EEOC recently sued Honeywell International, Inc., claiming that Honeywell’s wellness program violated the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). Although the EEOC sued two other employers for wellness program violations before it sued Honeywell, this is the first case where the agency seems to be challenging a fairly mainstream program, albeit one with somewhat hefty penalties. On the other hand, there is no reason to think that the penalties violate wellness guidelines under the Affordable Care Act (ACA) (penalties generally of no more than 30% of premium costs, with penalties of up to 50% of premium costs allowed for tobacco use).
The EEOC is particularly concerned about Honeywell’s biometric screenings, characterizing the screenings as medical tests that are permissible only if voluntary or required by business necessity. Honeywell does not seem to claim that there is a business necessity for the tests. Instead, it relies either on the tests being considered voluntary or on there being a bona fide health plan exception under the ADA that allows the screening. The EEOC does not agree that there is an exception to the ADA that permits this type of screening. The EEOC also claims that the program violates the ADA because the size of the penalties (total of $4,000 for participant and spouse, if family coverage is elected) makes the program not “voluntary.” According to news reports, the judge asked the EEOC more than once where the line was drawn on the size of penalties and the EEOC answered that it did not know where to draw the line, but that Honeywell had stepped across it.
The EEOC is also claiming that the screening violates GINA, at least with respect to the testing of spouses, because the screening can provide information that is protected genetic information.
The legal proceeding so far has been a hearing on a temporary restraining order (TRO), an injunction motion brought by the EEOC to stop Honeywell from imposing penalties on participants for failure to undergo the screenings. The EEOC argued that the privacy invasion could not be remedied after the fact; the bell could not be “unrung” once the data was collected.
The court denied the TRO. I have not seen a written decision, but news sources reported that the judge concluded that it would be easier for Honeywell to refund penalties imposed if the court should conclude that the program violated the law than it would be for Honeywell to try to collect the penalties after the fact if the program is upheld but the court issued the TRO. The judge did say that the decision was not one on the merits, nor on the likelihood of success on the merits. She said that the case raises difficult issues that will be explored as the case proceeds.
Employers will want to see how this case unfolds. Given the claims against Honeywell, employers most at risk for EEOC challenge are those that impose high penalties (thousands of dollars), those that require biometric screening, and those that include spouses in the biometric screening required for the incentives. Under Honeywell’s program, $2,000 of the $4,000 reported penalties related to smoking status, $1,000 for the employee and $1,000 for the spouse. Individuals who declined the biometric screening (which tested for smoking status among other things) were treated as smokers regardless of actual status.
Members of Congress have spoken out on the case, challenging the EEOC to engage in rulemaking on the topic. Trade groups have done the same. The lack of clear guidelines may have influenced the judge when she ruled against the EEOC on its request for a TRO.
The EEOC has included proposed regulations on the ADA and GINA in a recent list of guidance on which it is working. The timing of those regulations is uncertain. However, interested employers should watch for the proposal and consider commenting, either separately or through trade associations, if the EEOC guidance would undermine standard wellness programs that employers would like to maintain.
Contact Benefits Notes for more information.