León Cosgrove

Does dismissal of the EEOC’s Flambeau lawsuit allow employers to tie company health insurance to employee participation in wellness programs?

By: John D. Bosco

employment

In late 2015, U.S. District Court Judge Barbara B. Crabb granted summary judgment to Flambeau Inc., a manufacturing firm in Baraboo, Wis., that required employees who wanted company health insurance coverage to participate in the company’s wellness program.

Flambeau, which manufactures and sells plastic products, first offered its wellness program in 2011 with an additional benefit of a $600 credit to any participating worker.  But by 2012, the company required any employee who wanted to obtain health insurance to fulfill the requirements of its wellness program, which included a health risk assessment and a biometric test, similar to a routine physical.

A worker refused to complete the requirements and was dropped from insurance coverage. The Equal Employment Opportunity Commission filed suit on his behalf. A recent article in Human Resource Executive Online discussed the ramifications for employers and their HR departments of the court’s summary dismissal of the EEOC’s Flambeau lawsuit.

León Cosgrove LLC is advising several clients on the employment implications of adopting various wellness programs as the law evolves in this area.  In spite of the favorable ruling for the employer in EEOC v. Flambeau, Inc., 2015 U.S. Dist. LEXIS 173482 (W.D. Wis. Dec. 30, 2015), employers should be aware that the EEOC is unlikely to reverse its current position on wellness programs reflected in its April 2015 proposed regulations.  While not currently binding, once finalized, these regulations will likely be viewed as more restrictive than the case law interpretation.  Accordingly, a prudent employer may want to comply with the EEOC’s interpretation to avoid a potential challenge.

Alternatively, if an employer elects to rely on the ADA’s “safe harbor” exemption, described in the Seff v. Broward County, 778 F. Supp. 2d 1370 (S.D. Fla. 2011), aff’d, 691 F.3d 1221 (11th Cir. 2012), and Flambeau cases,  it should be prepared for a challenge, particularly if the wellness program imposes a severe penalty for noncompliance, such as a requirement that the employee pay the entire cost of plan coverage.  An employer willing to accept this risk should ensure that its wellness program strictly complies with the requirements of the “safe harbor” exemption.

 

JohnBosco_BW_WebJohn D. Bosco is a partner in the Dallas, Texas, office of León Cosgrove LLC who focuses his practice on the defense and trial of complex labor & employment and accessibility matters in state and federal courts across the country.