Five Ways the EEOC Proposed Wellness Regulations Would Change Workplace Health Initiatives

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Background

The Americans with Disabilities Act (ADA) generally prohibits employers from requiring current employees to submit to medical examinations or medical inquiries unless the exam or inquiry is “job-related and consistent with business necessity.”  Guidance issued by the Equal Employment Opportunity Commission (EEOC) in 2000 makes an exception to this rule for wellness programs that request employee medical information (e.g. biometric testing, health risk assessments, etc.) as a condition of participating in the program.  However, this exception only applies if participation in the wellness program is “voluntary” – meaning that participation may not be required and non-participants may not be penalized.

Over the past fifteen years, employers and their benefits consultants have developed a myriad of strategies for encouraging employee participation in wellness programs, many of which involve “discounts” on employee contributions for health coverage for wellness participants.  More aggressive employers have gone so far as to condition enrollment in their group health plan on an employee’s participation in a wellness program.  Allegations of such requirements were the basis for EEOC lawsuits filed in late 2014 against Honeywell International Inc. and several other employers.  It is in this context that the EEOC published their proposed regulations on April 20, 2015 to further define the “do’s and don’ts” for wellness programs under the ADA.  The proposed regulations, if finalized in their current form, would change the wellness landscape in five significant ways.

Financial Incentives

The Affordable Care Act caps aggregate financial incentives that are offered under wellness programs at 30% of the applicable group health plan premium (and 50% for tobacco-related incentives).  The EEOC proposed regulations, on the other hand, would cap total financial incentives for participation in any wellness program(s) that involves employee medical inquiries (e.g. health risk assessments) or examinations (e.g. biometric testing) to 30% of the cost of employee-only coverage.

Employee Notice Requirements

If a wellness program is offered as part of a group health plan, employees must be provided with a notice that: (i) describes the type of medical information that will be obtained through the program and the purposes for which it is used; (ii) describes applicable restrictions on the disclosure of the employee’s medical information; and (iii) is written in a manner that the employee is likely to understand.

Reasonable Design Requirement

Wellness programs which include medical inquiries or examinations must be “reasonably designed to promote health or prevent disease.”  The EEOC explains that medical information that is gathered through a wellness program must be put to a use that benefits program participants.  For example, if a particular health risk is identified through such information, the risk should be communicated to the participant.  Gathering such information without providing employees with follow-up information or advice would not meet this standard.

Equal Benefit Rule

Some employers have offered additional health plan options to wellness participants while non-participants are limited to participating in a single less generous plan.  The proposed regulations would prohibit employers from denying coverage under any group health plan or otherwise limiting the extent of benefits available to employees who do not participate in wellness programs.

Non-Retaliation

The EEOC proposed regulations further prohibit employers from taking any “adverse employment action” due to an employee’s decision not to disclose medical information or submit to medical exams in connection with wellness programs.  For programs that offer financial incentives for participation, the “packaging” of these incentives will be important.  Premium discounts will remain lawful if they are within the applicable limits set forth in the ACA and the EEOC regulations.  However, premium “surcharges” for non-participation would likely be considered unlawful retaliation.

The EEOC will be accepting public comments on the proposed regulations through June 19, 2015.  Although the regulations are merely “proposed” at this stage, they provide a road map for how the Commission interprets the ADA in the context of wellness programs.  Non-compliant programs could conceivably be challenged even before the regulations are finalized.  For this reason, employers would be wise to reconsider their existing programs in light of the new proposed regulations now.

An OSHA Inspection Can Be Costly for the Unprepared Employer

Knock Knock!  Who’s there?  OSHA.  OSHA who?  OSHA, the federal agency responsible for workplace safety, which is going to hit your company with hefty fines if you are not prepared.

This is no joke.  OSHA is a very active and well-resourced organization with an aggressive agenda.  The statistics tell the story: OSHA’s total budget for 2015 exceeds $550 million, more than 36,000 inspections were conducted in 2014, the top 10 fines issued by OSHA in 2014 totaled more than $9.2 million, and significant fines (over $100,000) issued in 2014 averaged $2.6 million/month and totaled $30 million for the year.  With smart preparation, your company can avoid being included among these statistics.

Any company may be subject to an OSHA inspection as a result of an employee complaint, a work-related accident, or random selection for inspection designed to address or target specific workplace hazards (e.g., fall hazards, asbestos).  Regardless of how an inspection is initiated and any specific issue(s) that may be in play in connection with a particular inspection, OSHA will likely review certain records and various areas of compliance including: any required written plans/programs required for your workplace/industry (e.g., safety plan, emergency action plan,  lockout/tag-out procedures, fall protection program), written program and other required Hazcom materials (labels, Safety Data Sheets and training records), accident and injury logs (e.g., OSHA 300 if applicable), and the mandatory OSHA poster.  Taking a proactive approach and ensuring that certain essential OSHA compliance matters have been adequately addressed, before a government inspector is at your door, will best position your company to successfully navigate any future OSHA inspection and reduce potential liability.

For example, OSHA recommends that a compliant safety plan should address certain issues, at a minimum. OSHA recommends that each written plan include the following basic elements:

  • policy or goals statement,
  • identification of responsible persons,
  • hazard identification,
  • hazard controls and safe practices,
  • emergency and accident response, and
  • employee training and communication, and recordkeeping.

If you have a hazard plan, and you must if you are covered by OSHA, does it cover these elements?

Similarly, an OSHA compliant emergency action plan should (at a minimum) address:

  • the means to report fires and other workplace emergencies,
  • evacuation procedures and emergency escape routes,
  • procedures for employees who remain to operate critical plant operations before evacuation,
  • procedures to account for all employees after an emergency evacuation,
  • rescue and medical duties for certain employees with such responsibilities, and
  • names and titles of persons who can be contacted for further information or with questions about the plan.

GSF1Achieving OSHA compliance can seem like a daunting task, but ignoring workplace safety is not an option when there is so much at risk.  The unprepared company can suffer significant consequences and face substantial potential exposure in the event of an OSHA inspection. Those companies which take a proactive and coordinated approach, by first addressing the most critical needs/areas of concern and ultimately developing a comprehensive workplace safety program with full compliance as the goal, are much more likely to succeed.

Stay tuned for future blog posts that will feature additional advice regarding OSHA inspections and address other important OSHA compliance topics.

Contact any of the attorneys in Labor & Employment Practice Group if you have a question about this post or need assistance with OSHA compliance.

New Jersey’s Ban the Box Law Goes Into Effect

On March 1, 2015, New Jersey’s Opportunity to Compete Act (also known as “Ban the Box”) went into effect.  The Act applies to employers with 15 or more employees over 20 calendar weeks that do business, employ people, or take applications for employment in the Garden State.  During the initial employment application process, employers are prohibited from requiring applicants to disclose their criminal history on applications, from making any inquiry (oral or written) into an applicant’s criminal record, and posting job advertisements which exclude applicants with a criminal background. However, employers can make such inquiries after the initial process is complete.  Additionally, if the applicant voluntarily brings up his or her criminal history during the initial process, the employer can make a limited and reasonable inquiry into the history that has been disclosed.

The Act also provides for several exceptions, including whether the position being sought is in law enforcement, the judiciary, homeland security, corrections or emergency management; where a criminal background check is required by law, where an arrest or conviction may preclude the person from holding such a position as required by law, or where the employer is restricted by law, rule or regulation from engaging in specified business activities based on its employees’ criminal records; or where the position sought is designated as part of a program designed predominantly to encourage the employment of persons who have been arrested or convicted.  The Act also includes significant civil penalties for the first, second, and subsequent violations.

While the New Jersey Department of Labor and Workforce Development has issued a draft rule (which is currently in the comment period) in order to clarify some portions of the Act, employers should ensure they are compliant with the Act.  Employers should review their applications and job advertisements for any questions or information which may be considered violative of the Act.  Employers should also review the Act with and consider training its employees or agents responsible for handling the initial employment application process.

Data Encryption and Its Potential Effect on Litigation and Discovery

While most employers take many steps to avoid employment litigation, even the most meticulous of Human Resources departments sometimes find themselves facing a lawsuit in federal or state court.

In some respects, technology has made the discovery process easier, however, it has also complicated civil litigation. Rachel Hadrick, an Associate in our Litigation group, recently wrote an article about data encryption and its effect on litigation and discovery. Check it out here! And as you read, consider whether your “Bring Your Own Device” and technology policies adequately safeguard your company’s interests.

PLRB Issues Controversial Ruling on Volunteer Fire Companies

Recently, the Pennsylvania Labor Relations Board (PLRB) issued a Final Order indicating that members of a volunteer fire company which provided coverage to a local borough were actually Borough employees.   In doing so, both the hearing examiner who issued the Proposed Decision and Order and the Board determined that it did not matter that the firefighters were “appointed” and not “hired” by the borough, and further opined that the relationship of providing services for wages was an element of an employer-employee relationship.

The fire department was a non-profit corporation, with its building and most of its equipment and apparatus owned by the Borough.  In 1999, the Borough’s council adopted an ordinance establishing a fire department and officer ranks, providing for vehicles and equipment, and reserving the right for council to establish binding rules, regulations and Standard Operating Procedures (SOPs).  The ordinance further indicated that the Borough Council would appoint the officers, require the officers to take the same oath that was required for Borough officials, and allowed the Fire Chief (an employee of the Borough) to issue orders and an SOP manual.

In its review, the Board found that the Borough’s 2012 and 2013 budgets contained a number of line items for the Fire Department (and later included a fire services tax), and further noted that when an expense was incurred, it was paid directly by the Borough.  Significantly, volunteers were paid an hourly rate by the Borough, which had the power to set and approve the hourly rates plus incentives for further training.  The Board further noted that the Secretary of the Borough ran the day-to-day operations of the department (including scheduling), that the Borough had to authorize any overtime, and that the firefighters submitted time cards and received W-2s from the Borough.  Additionally, personnel matters, including disciplinary action, were handled by the Fire Chief.  Challenged disciplinary matters could be taken to the Borough Manager.

FIREFIGHTER HELMET-BlankBased upon the above information, the hearing examiner determined that the officers were actually employees and not volunteers.  The Borough did not challenge the findings that it controlled the wages, hours, or working conditions of the firefighters- all considered to be evidence of an employer-employee relationship- but did file exceptions on the basis of the hearing examiner’s finding regarding discipline.  Upon review, the Board found that because the Fire Chief, as an employee of the Borough, acted in the interest of his employer, the Borough “exercised control over disciplinary matters.”  The Borough made several other arguments, including that the hearing examiner’s findings would mean that the Borough was in violation of civil service and veterans preference laws.  However, the Board ultimately found no error in the examiner’s ruling and made the order final.

The order has been appealed to the Commonwealth Court, with support from both the Pennsylvania State Association of Township Supervisors and the Pennsylvania State Association of Boroughs.  If the Court agrees with the PLRB, this will have a huge impact on municipalities which rely on the services of volunteer fire companies but may not have the financial ability to absorb these volunteers and the costs that come along with them being declared employees of the municipalities.  This is definitely one to watch.

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