12152017

Corporate Wellness Programs: Health Benefits With Some Legal Risks

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An employee wellness program can have great benefits, but you need to be aware of the legal risks to make sure those benefits are worth it. Here are some of the related laws.

Corporate wellness programs can offer a variety of benefits that provide added value for both companies and their employees. Employees gain access to a range of products, services and incentives that can help them improve their health and well-being, which in turn can help employers reduce costs and boost morale.

However, investing in a corporate wellness program has inherent risks as well as benefits, including the potential for legal challenges under federal laws designed to prevent discrimination and protect employees’ privacy.

In this article, we will outline some of the risks that corporate wellness programs can present to your business, and how to mitigate the risk while still providing value for both employees and the company itself.

What is a corporate wellness program?

A corporate wellness program is a company-led initiative undertaken with the intention of improving or maintaining the health and well-being of the company’s employees.

The precise nature of individual wellness programs can vary considerably, but they may integrate a variety of different elements, such as the following:

  • Gym or health club memberships offered for free or at a greatly reduced rate to participating employees
  • Other staff discounts and incentives that can be used with external trading partners
  • Access to support services to help people establish and work toward fitness goals, such as losing weight or stopping smoking
  • Provision of therapy services for both physical and mental health, including stress management
  • Paid leave for fitness efforts and initiatives
  • Company-specific wellness schemes, including group support, challenges, and the provision of health-related information and guidance
  • The integration of a culture of wellness and holistic support for employees within the company ethos

Benefits for your business

Well-designed corporate wellness programs have advantages for both the business and employees. They can help companies achieve significant savings on health insurance and medical care by supporting employees in their personal journeys to stay healthy, reduce risk factors for illness and injury, and generally improve their health.

The company will also benefit from less time lost to sickness on the part of the employees. It can also boost morale and, as a result, attendance and performance of the overall company.

For many companies, corporate wellness programs add value to the total employee package, providing incentives to both current and future employees, increasing staff retention, and enabling the company to remain competitive within the labor market.

Federal laws pertaining to corporate wellness programs

There are many positives for creating a corporate wellness program, particularly for larger companies and those with a strong ethos of investing in their employees. However, corporate wellness programs also come with risks for the companies that provide them, and understanding and mitigating these risks is important for limiting your company’s liability.

This is because provision of a wellness program means, by design, that the company displays a direct personal interest in the health and well-being of its employees – which can have implications for employee equality and privacy. The more formally structured and involved a company’s wellness program is, the higher the risks of it running afoul of federal laws.

The core federal laws that pertain to corporate wellness programs are outlined as follows:

HIPAA

The Health Insurance Portability and Accountability Act sets core standards governing the collection of personal and identifying information about employees, including their health, and mandates what sort of information employers can collect under the umbrella of wellness programs, how it can be used, and how it is stored and handled.

ERISA

Under the remit of the Employee Retirement Income Security Act, employers are prohibited from discriminating against employees because of their health status. However, there is a narrow exception within ERISA to permit employers to offer discounts on wellness services based on the health status of any given employee.

GINA

The Genetic Information Nondiscrimination Act dictates that employers must not require or request that employees provide genetic information about themselves, such as their family history or the presence of hereditary health conditions.

ADA

The Americans with Disabilities Act prohibits discrimination against employees on the basis of health or health status, with certain exceptions in place for voluntary participation in wellness programs.

ACA

The Affordable Care Act specifically restricts the allowable cost of corporate wellness program incentives to a cap of 30 percent of the cost of health coverage.

Other legal considerations

Under the remit of the ADA, employee participation in corporate wellness programs must be voluntary. It is permissible to incentivize employees within the limits outlined under the Affordable Care Act, but employers cannot mandate participation, nor penalize employees for refusal to partake.

Additionally, companies are strongly advised to incorporate a a comprehensive, legally compliant waiver into their corporate wellness programs, in order to reduce the risk of lawsuits by employees that may become injured or otherwise adversely impacted by means of wellness program participation.

If you need help with implementing a legally compliant corporate wellness program, require guidance or are facing litigation due to your corporate wellness program, we recommend you speak with an employment lawyer immediately. 

Disclaimer: The information presented on this site is not intended to be and should not be construed as formal legal advice or the formation of an attorney-client relationship between you and Walker Law. You should contact an attorney for advice on specific legal problems. Walker Law does not seek, and this website is not intended to solicit, legal employment outside of California that would constitute the unauthorized practice of law. Walker Law does not guarantee or warrant any results or outcomes in any matter.

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