Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Sept. 20 — The EEOC failed to convince a federal judge that Orion Energy Systems Inc. violated the American with Disabilities Act when it required employees who elected to enroll in the company’s health insurance plan to undergo medical examination or pay full premium costs ( EEOC v. Orion Energy Sys., Inc. , 2016 BL 308310, E.D. Wis., No. 1:14-cv-01019, 9/19/16 ).
At issue in the case is a new regulation by the Equal Employment Opportunity Commission that allows employers to offer limited financial incentives to encourage employees to participate in wellness programs and remain in compliance with the ADA. The EEOC drew heat when it started suing employers, like Orion, before it issued this new guidance on wellness plan compliance with the ADA.
The U.S. District Court for the Eastern District of Wisconsin denied Sept. 19 the EEOC’s motion for summary judgment in its case against Orion. In partially ruling for Orion, the court said that the company’s wellness program was voluntary and as such didn’t violate the ADA. But Orion may still be on the hook over the EEOC’s allegation that the company retaliated against an employee when it terminated her shortly after she refused to complete the examination.
The ADA prohibits employers from conducting medical examinations and inquiries of employees, unless such examination or inquiry is shown to be job-related and consistent with business necessity. However, examinations that are voluntary and part of a health program don’t violate the ADA.
The EEOC argued that Orion’s examination wasn’t voluntary because it shifted fully the premium costs to employees who opted out.
The ADA has a safe harbor provision that states that the law shouldn’t prohibit self-insured employers, like Orion, from establishing and administering benefit plans. The EEOC’s new regulation provides that the safe harbor provision doesn’t apply to wellness programs, like Orion’s.
The court ruled that the EEOC’s regulation was valid and could be applied retroactively, but it declined to apply it to Orion’s wellness program. The court expressly declined to adopt the holdings of two cases with similar challenges to wellness programs that were resolved in favor of the employers: Seff v. Broward County, 691 F.3d 1221 (11th Cir. 2012) and EEOC v. Flambeau, Inc., 131 F.Supp. 3d 849 (W.D. Wis. 2015).
In Flambeau, the district court relied on Seff to hold that the protections set forth in the ADA’s safe harbor enable employers to design insurance benefit plans that require otherwise prohibited medical examinations and inquiries as a condition of enrollment in a plan, without violating the ADA. The Flambeau case is currently on appeal to the U.S. Court of Appeals for the Seventh Circuit. Last week, the Seventh Circuit hinted during oral arguments that it might dismiss the appeal on jurisdictional grounds.
In ruling for Orion, Chief Judge William C. Griesbach concluded that the company conducted voluntary examinations pursuant to the ADA and thus didn’t violate the statute.
The EEOC represented itself. Ogletree Deakins Nash Smoak & Stewart PC represented Orion.
To contact the reporter on this story: Carmen Castro-Pagan in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)