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Wellness Program Lawsuit Settled, Employer Pays $100,000 and Changes Program

MINNEAPOLIS — On April 5, the U.S. Equal Employment Opportunity Commission (EEOC) announced that it has resolved its lawsuit against Orion Energy Systems, a Wisconsin lighting company after it challenged its wellness program under the Americans with Disabilities Act (ADA). The lawsuit also alleged that Orion Lighting retaliated against an employee who objected to the wellness program by terminating her.

According to the EEOC, Orion instituted a wellness program that required medical exams and made disability-related inquiries. Employees were required to complete a health risk assessment, self-disclose their medical history and have blood work performed. The program also included a fitness component under which employees were required to use a Range of Motion Machine (or ROM) in Orion’s physical fitness room, and fill out a medical history form. The medical exam and disability-related inquiries which were part of Orion’s wellness program were not job-related and consistent with business necessity. When an employee, Wendy Schobert, declined to participate in the program, Orion shifted responsibility for payment of the entire premium for her employee health benefits from Orion to Schobert. The EEOC alleged that shortly thereafter, Orion fired Schobert.

The EEOC filed its lawsuit in U.S. District Court for the Eastern District of Wisconsin (EEOC v. Orion Energy Systems, Inc., No. 14-CV-1019 E.D. WI). During litigation, the district court rejected the employer’s argument that the insurance safe-harbor provision in the ADA immunizes wellness plans from scrutiny under the Americans with Disabilities Act (ADA). The court concluded that the EEOC’s recently issued regulations on the ADA’s safe-harbor provision were within the EEOC’s authority and further held that the safe-harbor provision did not apply. The parties agreed to settle the dispute prior to trial and entered a consent decree. Under the consent decree, Orion agreed to pay $100,000 to Schobert and agreed that it will not maintain any wellness program in the future that poses disability-related inquiries or seeks a medical examination that is not voluntary within the meaning of the ADA and its regulations.

New EEOC rules published on May 17, 2016, under the Americans with Disabilities Act (ADA) require employers who offer wellness programs that collect employee health information to provide a notice to employees informing them what information will be collected, how it will be used, who will receive it, and what will be done to keep it confidential. Sample Notice for Employer-Sponsored Wellness programs.

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