At the beginning of the year, many people make resolutions about improving their physical fitness and overall well-being. Employers may seek to give these goals a boost in the longevity department by offering an employee wellness program.
If your organization is doing so, or considering such a program, it’s important to be aware of the many federal laws involved. Five of the most important are:
- The Employee Retirement Income Security Act (ERISA),
- The Consolidated Omnibus Budget Reconciliation Act (COBRA),
- The Health Insurance Portability and Accountability Act (HIPAA),
- The Americans with Disabilities Act (ADA), and
- The Genetic Information Nondiscrimination Act (GINA).
But even if you’re well-versed in how ERISA, COBRA and HIPAA apply to wellness programs; how the ADA’s rules relate to disability-related inquiries or medical examinations; and how GINA’s rules oversee the handling of genetic information, there are still other laws to anticipate. These include:
The Age Discrimination in Employment Act (ADEA). The ADEA prohibits employers from discriminating against employees and job applicants because of age in relation to employment and the compensation, terms, conditions or privileges thereof — including benefits. The ADEA’s protections apply to people who are age 40 years or older and could affect wellness programs that decrease incentives, impose surcharges or otherwise discriminate against these employees or groups of employees.
Title VII of the Civil Rights Act. A wellness program that makes distinctions based on race, color, sex (including pregnancy), religion or national origin would likely violate Title VII. Also, the Equal Employment Opportunity Commission has taken the position that sexual orientation is inherently a “sex-based consideration,” and that an allegation of discrimination based on sexual orientation is an allegation of sex discrimination under Title VII.
The Fair Labor Standards Act (FLSA). The FLSA requires that covered, nonexempt employees be paid not less than time and one-half the employee’s regular rate for time worked over 40 hours in a workweek. Employers requiring participation in wellness programs — particularly health risk assessments — need to carefully review whether the wellness program is mandatory, which could result in the time spent completing the program being considered compensable time under the FLSA.
The Internal Revenue Code. Although health benefits provided under a wellness program (such as diagnostic tests) are likely to be tax-free, rewards for participating in these programs might be taxable. Rewards such as plan premium subsidies or employer contributions to a health Flexible Spending Account, Health Reimbursement Arrangement or Health Savings Account can be excluded from an employee’s income and aren’t subject to wage-withholding or employment taxes if applicable nondiscrimination requirements are satisfied. However, other rewards such as cash or cash equivalents (for example, gift cards or gift certificates) are includible in employees’ income and subject to wage-withholding and employment taxes.
Exceptions may exist for some of these laws — particularly for small employers. Research any exception carefully because conditions tend to vary according to the applicable statute. Contact us for more information about establishing or administering an employee wellness program.
We highly recommend you confer with your Miller Kaplan advisor to understand your specific situation and how this impacts you.