By Lorene D. Park, J.D.
In a perfect world, employees maintain a healthy weight, exercise, refrain from smoking or drinking alcohol, properly manage their health conditions, never lose productivity or miss a day of work due to illness, and cost little in terms of healthcare. This is not a perfect world, however, and employers are increasingly relying on wellness programs (according to a 2014 SHRM/EBRI survey, among other indicia) to encourage employees to improve their health. Usually this is done as a cost-saving measure, and it is certainly encouraged by the Patient Protection and Affordable Care Act, as noted by a DOL fact sheet. But are wellness programs worth it?
Effectiveness of wellness programs questioned. According to a 2014 Chief HR Officer Data Survey compiled by Consero Group, nearly half of HR chiefs reported that their wellness programs are ineffective and more than half indicated the programs have not significantly reduced costs. In addition, a study released by the RAND Corporation, which investigated the experiences of over 67,000 employees of PepsiCo over the course of seven years, suggested that while wellness programs may reduce health care costs for employees who have chronic illnesses, the lifestyle management aspects of the programs do not exhibit a similar return.
Medical inquiries challenged by EEOC. In addition to these reports, which call into question the effectiveness of wellness programs, the EEOC has been giving wellness programs special attention—and not in a good way. The latest challenges have taken issue with their “involuntary” nature. Basically, medical inquiries of current employees that are part of wellness programs are acceptable under the ADA if they are voluntary and if the results are kept confidential and separate from personnel records. But the ADA and its implementing regulations do not define “voluntary,” leaving room for doubt—expensive, lawsuit-worthy doubt. According to an EEOC guidance, a “wellness program is ‘voluntary’ so long as an employer neither requires participation nor penalizes employees who do not participate.” But penalties come in a variety of forms.
In EEOC v. Honeywell, the EEOC has alleged that biomedical testing associated with a wellness program violates the ADA because employees face penalties to induce them to go through screening for health risks like high blood pressure and high cholesterol. The EEOC further alleged that Honeywell violated the Genetic Information Nondiscrimination Act (GINA) by penalizing employees whose spouses did not complete the screening. Among other penalties, employees who do not participate face the withholding of health savings account contributions. Moreover, employees (and spouses) who refuse to undergo biomedical testing are presumed to be tobacco users and face a $1,000 nicotine surcharge. The court in Honeywell recently denied the EEOC’s motion for a preliminary injunction barring the penalties at issue because it found no risk of irreparable harm (employees could be compensated monetarily) and noted that the likelihood of success on the merits was an open question.
In addition to Honeywell, the EEOC issued an October 2014 press release announcing a suit against Flambeau, Inc., a plastics manufacturing company. The Flambeau complaint alleged that the company violated the ADA by requiring medical testing and assessment in connection with its wellness program at the risk of “dire consequences,” including unspecified “disciplinary action.” The agency also recently announced a similar suit filed against Orion Energy Systems. The Orion complaint alleged that the company violated the ADA by requiring medical exams that were not job-related and consistent with business necessity as part of its wellness program and then firing an employee when she objected.
Based on the foregoing, it appears that wellness programs are moving to the forefront of the EEOC’s enforcement efforts.
Are wellness programs worth it? Given the studies questioning whether wellness programs are having the desired results; the potential for liability under the ADA, GINA, HIPAA, and other applicable law; and the apparent uncertainty in what exactly is expected from employers in this evolving area of law, the question is: Are wellness programs worth it? Obviously, individual employers must answer that question for themselves. But it clearly is a question they should be asking.
One would hope the proposed rules that the EEOC plans to publish in February 2015 for the ADA and for GINA will provide further guidance in evaluating a future course of action. In the meantime, employers should assess existing wellness program requirements to ensure that the program is voluntary, that it imposes no penalties on those who do not participate, that any medical inquiries are job-related and consistent with business necessity, and that results of medical inquiries are kept confidential and separate from personnel records.
In March 2011, the U.S. Supreme Court, in Staub v. Proctor Hospital, breathed life into what’s known as the “cat’s paw” theory of liability when it held that if a supervisor performs an act motivated by discriminatory animus that is intended by the supervisor to cause an adverse employment action and is a proximate cause of the ultimate employment action (carried out by someone else, with no evident discriminatory intent), then the employer is liable. In that case, the High Court overruled a decision by the Seventh Circuit, which held that a court cannot admit evidence of a nondecisionmaker’s animus unless it has first determined whether a reasonable jury could find the nondecisionmaker exerted a “singular influence” over the ultimate decisionmaker.
Although the Staub case involved a claim under USERRA, the cat’s paw theory has since been advanced by employees with ever increasing popularity. How have the courts responded? A sampling of cases over the past year reveals that employers are still too often relying, without any independent investigation, on their supervisors’ recommendations of adverse action.
Cat’s paw liability. For example, in the following cases, courts have allowed employees to advance their employment discrimination claims under the cat’s paw theory:
- Reliance on lower-level decisionmaker. A federal district court in Mississippi found fact issues existed as to whether statements by a history professor’s department head, a lower-level decisionmaker, were made with the intent to cause the denial of tenure and a promotion and as to whether he possessed influence or leverage over the provost. Noting evidence that the provost, who delivered the final recommendation to the ultimate decisionmaker, both considered and was influenced by the department head’s statements, the court observed that while the employer argued that the employee’s application was denied for many reasons, the cat’s paw inquiry does not require that the discriminatory act be the only cause of an adverse employment action. Rather, a plaintiff need only create a genuine issue of material fact as to whether the discriminatory act was a proximate cause.
- No verification. Denying summary judgment on a teacher’s ADA and Rehab Act claims against a school district, a federal district court in Georgia found that the superintendent did nothing to verify information about the teacher provided to him by the school’s administrators. Specifically, he never observed her in her classroom or spoke with her about her interactions with the administrators. Although the employer could have been shielded from liability on her retaliation claims if the superintendent had independently investigated and confirmed the criticisms of the employee, because he did not do so, a jury could reasonably conclude that he was nothing more than a cat’s paw.
- HR director as cat’s paw. A 56-year-old employee fired after making two timekeeping mistakes could advance her age discrimination claim based on the contention that her supervisor set up the HR director as a cat’s paw to investigate the “falsification” of timekeeping records so that he could replace her with a 36-year-old worker with no experience. The employee argued that after her supervisor failed to convince his superiors that she should be terminated as part of a restructuring initiative, he alerted the HR director to the time record inaccuracies. The director then investigated, allowed the supervisor to be present when she interviewed the employee, confirmed that she submitted two inaccurate time records, and fired her. Observing that it was it unlikely the director would have investigated without the supervisor’s input, a federal court in Wisconsin found a fact issue as to whether the director depended on the supervisor for the basis of her decision and acted as his cat’s paw.
- No need to show supervisor drove the decision. A federal district court in Illinois found enough evidence in support of a cat’s paw theory to allow an employee’s race discrimination claims to survive summary judgment. Here, there was evidence that his supervisor suggested to at least one of the ultimate decisionmakers that the employee be laid off. Although the employer argued there was no evidence showing that the supervisor “drove the decision” to terminate the employee’s employment, the court held that was not required. All that was needed was that the employee show the supervisor proximately caused his termination on the basis of race. In other words, if the employee could show his supervisor recommended that he be let go because the employee was African American, he did not also need to establish that the supervisor communicated any alleged prejudice to the actual decisionmakers.
- Input in RIF selection process. The discriminatory animus of a supervisor who smiled when African-American employees complained of racism and made a comment about getting rid of the “ni**ers” could be imputed to the manager who made the decision to lay off the employees during a reduction in force, a federal district court in Texas ruled, observing the manager relied on the supervisor’s input through the RIF selection process.
- Decisionmaker sought out supervisor’s input. A probationary employee who was fired two days after allegedly refusing her supervisor’s offer to increase her production numbers in exchange for sexual favors could advance her sexual harassment claim, a federal district court in Alabama ruled, finding a fact issue existed as to whether the supervisor took adverse employment actions against her or at least influenced the plant superintendent’s decision in a manner that could render the company liable. Here, the court found that while the company insisted that the superintendent alone made the termination decision, there was evidence indicating that the superintendent sought out the supervisor’s opinions.
- Supervisor involved in disciplinary steps. Denying summary judgment on a discharged female employee’s sexual harassment claim, a federal district court in Alabama found that a jury question existed as to whether the decisionmakers relied on her supervisor’s opinion and assistance in making their decision. Not only was the supervisor involved in the disciplinary steps leading up to the discharge, there was evidence showing that the decisionmakers may have delegated decisionmaking power to him. Here, he counseled the employee, her complaint about him led to her written warning, he issued her final warning, and his email about her alleged outburst was what instigated the termination. Thus, he was involved in three of the four disciplinary steps and a jury should determine whether he influenced the final decision based on discriminatory animus.
No cat’s paw. Of course, not all cat’s paw claims have been successful. An employer can defeat the cat’s paw tact by showing that the ultimate decisionmaker conducted an independent investigation or review, as these cases demonstrate:
- Independent grievance panel. A UPS employee who argued that two supervisors began to “systematically” discipline him when he returned to work after an injury-related absence, and that the timing of this “intense discipline” demonstrated the pretextual nature of his subsequent termination, failed to account for the independent assessment of a regional grievance panel, which upheld his discharge for dishonesty, the Tenth Circuit ruled. Although the employee’s supervisor initiated the process that culminated in his termination, his discharge grievance triggered a review process that “appropriately constrained any improper motive” by his supervisor. The neutral panel acted in accord with the company’s written policies, independently assessed the alleged misconduct, and agreed upon the appropriate discipline.
- GM investigated. An employee who was discharged by the general manager the day after he informed his supervisor that he would need to undergo back surgery failed to survive summary judgment on his FMLA retaliation claim. Squarely rejecting his assertion that his supervisor’s comment “here we go again,” after the employee hurt his back, should be attributed to the decisionmaker (the GM) because he was a mere “cat’s paw” for the supervisor’s discriminatory animus, a federal court in Alabama found there was no showing that the supervisor’s actions were the proximate cause of the employee’s discharge. Here, the GM conducted an independent investigation and terminated the employee due to a safety violation.
Employer takeaway. In light of Staub, employers must keep in mind that a supervisor’s biased report may remain a causal factor in an adverse employment action even in the face of an independent investigation where the investigation takes it into account without determining that the adverse action was, apart from the supervisor’s recommendation, entirely justified. If, however, the employer’s investigation results in an adverse action for reasons unrelated to the supervisor’s original biased action, then the employer will not be liable.
Thus, those individuals who make an ultimate employment decision must rely on more than the word of a supervisor or what’s in the employee’s personnel file. They need to conduct an independent investigation to verify that a legitimate nondiscriminatory reason exists before undertaking an adverse job action.
By Lisa Milam-Perez, J.D.
“It’s been a great year! Thanks for being a part of it.” Facebook’s buzz-worthy algorithm spits out random events from users’ posts over the past 12 months, with decidedly mixed results. Here at Employment Law Daily, we’ve endeavored to present the year’s highlights in a slightly more systematic fashion.
Click here for our Employment Law Daily “2014 in review.”
And do let us know if our “algorithm” has missed a big story. Meanwhile, we’re gearing up for what promises to be a big 2015…
Determined to leave well-enough alone, a federal district court in the District of Columbia quashed the Department of Labor’s attempt to implement changes to the third party domestic service employer regulation that would have ended a 40-year old exemption from minimum wages and overtime pay. “Undaunted by the Supreme Court’s decision in Coke, and the utter lack of Congressional support to withdraw this exemption, the Department of Labor amazingly decided to try to do administratively what others had failed to achieve in either the Judiciary or the Congress,” observed the district court in Home Care Association of America v. Weil.
Following passage of the 1974 Amendments, DOL promulgated implementing regulations. Those regulations focused on the employees and the nature of the employees’ services. The term “domestic service employment” refers to services of a household nature performed by an employee in or about a private home of the person by whom he or she is employed. “Companionship services” means “those services which provide fellowship, care, and protection for a person who, because of advanced age or physical or mental infirmity, cannot care for his or her own needs.” Finally, “live-in” workers are described as “domestic service employees who reside in the household where they are employed.”
The regulations further specify that the exemptions cover companions and live-in domestic service workers who are “employed by an employer or agency other than the family or household using the services.” That provision was upheld by the Supreme Court in Long Island Care at Home, Ltd. v. Coke, with the Court concluding that the third party rule was valid and binding. Subsequent attempts in Congress to overturn Coke and abolish this exemption failed.
Here, the court agreed with the Home Care Association that the exemption enjoyed by third-party employers over the past 40 years is not an open question and the DOL cannot manipulate its definitional authority in such a way as to effectively rewrite the exemption out of the law. If an employee’s work is encompassed within the statutory terms as defined by the regulations, the employer is not obligated to pay overtime and/or minimum wage. This is the natural reading of the statute, and there is no explicit—or implicit—delegation of authority to DOL to parse groups of employees based on the nature of their employer who otherwise fall within those definitions.
This month, the Department of Education and two universities in Ohio reached agreements regarding access to the universities’ websites for individuals with disabilities. According to the Education Department’s Office for Civil Rights (OCR), the University of Cincinnati and Youngstown State University have agreed to ensure their websites comply with federal civil rights laws prohibiting discrimination on the basis of disability.
University of Cincinnati. As part of its proactive investigation, OCR reviewed how accessible the university’s websites were to persons with disabilities, particularly those with sensory impairments who might use assistive technology to access the sites. The university is a public institution with more than 42,000 students.
OCR determined that the university is not in compliance with Section 504 of the Rehabilitation Act and Title II of the Americans with Disabilities Act (laws enforced by the Department of Education) because portions of the university’s websites were not readily accessible to persons with disabilities. The office also found that the university is not in compliance with regulatory requirements concerning publication of a required nondiscrimination notice in relevant publications and the designation of, and contact information for, coordinator(s) designated to ensure compliance with these laws.
In response to these determinations, and prior to OCR’s review of other areas of the university’s websites, the university entered into an agreement to ensure that content on its sites is accessible to individuals with disabilities and that it is providing an equal opportunity for individuals with disabilities to participate in and benefit from its online learning environment. A copy of the resolution letter and the agreement can be found on the Department of Education’s website.
Youngstown State University. The agreement with Youngstown State University ends an OCR investigation which examined the accessibility of the university’s websites to persons with disabilities, particularly those with sensory impairments who may require the use of assistive technology to access the sites. Located in northeast Ohio, Youngstown State University is a 13,000-student public institution.
OCR concluded that the university was not in compliance with Section 504 of the Rehabilitation Act and Title II of the ADA. In the first instance, Youngstown State’s websites were not readily accessible to persons with disabilities. And in the second, OCR found that the university was not fully in compliance with the regulatory requirements regarding the publication of a notice of nondiscrimination in relevant documents.
The university has agreed to ensure that content on its websites is accessible to individuals with disabilities and that it is providing an equal opportunity for individuals with disabilities to participate in and benefit from its online learning environment. A copy of the resolution letter and the agreement can be found on the Department of Education’s website.
The Department of Education’s Office for Civil Rights is responsible for enforcing federal civil rights laws that prohibit discrimination by educational institutions on the bases of disability, race, color, national origin, sex, and age, as well as the Boy Scouts of America Equal Access Act of 2001. More information on these settlements and how OCR handles civil rights cases, is available on the website, www.ed.gov.