Corporate Wellness Programs: Health Benefits With Some Legal Risks

What are corporate wellness programs?

Corporate wellness programs are initiatives led by a company to boost or sustain the health of employees. There are no hard and fast rules about what these programs should include, as they could differ from one company to another. Some examples are: 

• Gym or health club memberships offered for free or at a reduced rate to participating employees
• Other staff discounts and incentives employees can use 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 physical health and to support employee 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

How do corporate wellness programs benefit your business?

Well-designed corporate wellness programs have significant business advantages, including money savings, improved morale and better employee retention.  

1. Corporate wellness programs can help a business save money. 

Creating robust wellness initiatives can lead to significant health-related savings for small businesses. By backing your team’s personal health goals, you’re likely to decrease the risk of sickness and accidents, resulting in overall better health. 

“Major risk factors for chronic illness include inactivity, smoking and heavy alcohol usage. The most expensive conditions for health insurance and medical care are cancer and heart disease,” explained Daniel Foley Carter, director at SEO-Audits.io. “You can improve your employees’ general health and lower healthcare costs if your employee wellness program takes these variables into account. Long term, it will also have a favorable effect on the financial health of your business.”

2. Wellness programs can improve morale and productivity.

The company will benefit from less time lost to employee illness. With higher attendance comes improved overall business performance and productivity. Additionally, wellness programs can boost employee morale.

“Employees who participate in wellness programs feel valued and respected,” said Sep Niakan, managing broker at Blackbook Properties. “When workers feel respected and appreciated by their employers, they are happy. Employee enthusiasm at work frequently increases when wellness programs are offered.”

Niakan also said that healthy eating and regular exercise are likely to increase an employee’s productivity because they can focus better and require less time off due to illness or injury.

3. Wellness programs increase employee retention.

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

Paul Somerville, editor-in-chief and hardware program manager at Electric Scooter Guide, agreed that wellness programs significantly impact employee retention.

“Employee loyalty can be increased by an employer [that] offers a wellness program and encourages staff to work toward reaching their individual objectives,” Somerville said. “Offering a wellness program to your staff demonstrates your care for their health and happiness. [Employees] are more inclined to stay rather than look for work elsewhere when you view [them] as valuable assets of your business.”

Federal laws pertaining to corporate wellness programs

Creating a wellness program at your business has many benefits, especially for big companies or ones that value their employees’ growth. But, it’s also important to recognize that wellness programs can carry certain risks. Knowing and managing these risks can help protect your business. 

Having a wellness program shows your business really cares about the health and happiness of your employees. But, this can also bring up issues related to fairness and privacy at work. The more a company’s wellness program is formally structured and involved, the more it risks running afoul of federal laws. 

The core federal laws that pertain to corporate wellness programs include the following:

• HIPAA: The Health Insurance Portability and Accountability Act (HIPAA) sets core standards governing the collection of personal and identifying information about employees, including their health. HIPAA laws also cover data usage and storage. According to David Reischer, attorney at LegalAdvice.com, a wellness program is subject to HIPAA only if it’s part of a group plan. If not, it may be subject to other state or federal laws, but not HIPAA. “A health program cannot discriminate based on a health factor for eligibility or for receiving discounts,” Reischer said. “As such, a wellness program cannot offer a reward or rebate or a penalty under HIPAA to target health standards. For example, a discount in premiums cannot be offered to persons that have cholesterol levels under 220.”
• ERISA: Under the Employee Retirement Income Security Act (ERISA), 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 (GINA) 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. “For example, if there is a company program to participate in ‘Walk 5 Miles a Week’ or a charity walk-a-thon that offers incentives to participate, this may be unlawful if there is no alternative program for disabled employees,” Reischer said. “The wellness program would be unlawful even under a plan that is not a group plan under HIPAA.” Under 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 or penalize employees for refusal to partake.
• ACA: The Affordable Care Act (ACA) specifically restricts the allowable cost of corporate wellness program incentives to 30% of the cost of health coverage.
• ADEA: Under the Age Discrimination in Employment Act (ADEA), a wellness program can’t discriminate against a person because of their age. “Wellness programs must be designed so that older workers are able to meet the criteria for eligibility and participation,” Reischer said. “For example, if the program had health standards that did not take the individual person’s age into consideration, that program would be unlawful even under a plan that is not a group plan under HIPAA.”

Other legal considerations regarding wellness programs

It’s also crucial for employers to consider informed consent and confidentiality. 

1. Employers should ensure participants give informed consent.

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

“It is important to make sure that employees give their informed consent,” said Shaun Martin, owner and CEO of Denver Real Estate Solutions. “This means that they should be aware of what the program entails and what their rights are. Furthermore, they should be given the opportunity to opt out of the program if they do not wish to participate.”

2. Wellness programs must prioritize confidentiality.

Confidentiality is crucial in any wellness program. “Employees should be assured that their personal health information will be kept confidential and will not be used for any purpose other than the wellness program,” Martin said.

Small business owners should make note that privacy is a key part of many federal regulations. When setting up a wellness program for staff, it’s not enough to rely on workers having a full understanding of federal discrimination laws. Instead, ensuring privacy is highlighted in your wellness program’s guide and directions is a smarter move. 

Should you need assistance in setting up a wellness program that meets all legal standards, need advice, or are dealing with a legal dispute due to your wellness program, consulting with an employment attorney might be beneficial. 

Justin Walker contributed to the writing and reporting in this article.