In December 2024, the U.S. Equal Employment Opportunity Commission ("EEOC") published a fact sheet addressing how federal nondiscrimination laws, such as the Americans with Disabilities Act ("ADA"), may apply to an employer's use of wearable devices that it furnishes to employees. The fact sheet is important because, while it is not focused on wellness programs and group health plans, the concepts addressed in the fact sheet may be applicable to wellness programs and group health plans that utilize wearable devices in connection with financial incentives (or penalties) or as a step to access other covered benefits, such as prescription drugs.
Background
Under the ADA, employers are prohibited from making disability-related inquiries or requiring medical examinations. The EEOC warns in the fact sheet that an employer's wellness program that collects physical or mental health condition data via a wearable device may amount to a prohibited medical examination or disability-related inquiry under the ADA. Significantly, the ADA excepts disability-related inquiries or medical exams that are part of a qualifying voluntary wellness programs or bona fide underwriting activities (i.e., the bona fide benefit plan safe harbor).
In 2016, the EEOC issued final regulations on requirements for a wellness program to be considered voluntary under the ACA. See our prior alert here. One requirement under these regulations was that any incentive under a wellness programs tied to a disability-related inquiry or a medical examination could not exceed 30% of the total cost of self-only coverage. The regulations also specifically stated that the ADA's bona fide benefit plan safe harbor does not apply to wellness programs. However, a court struck down the incentive portion of the regulations in 2017. The EEOC subsequently withdrew the incentive portion of the regulations in 2018. Thus, currently, there is no guidance on what incentive amount is permitted in order to meet the voluntary requirement, and this has left employers and wellness providers in a substantial "gray" area regarding financial incentives that can create material ADA compliance, enforcement, and litigation risk.
Wearable Devices
Under the fact sheet, "wearable devices" are "digital devices embedded with sensors and are worn on the body that may keep track of bodily movements, collect biometric information, and/or track location." The EEOC gives a non-exhaustive list of examples: smart watches or rings that track employees' activities or monitor their physical or mental condition in the workplace; environmental or proximity sensors that alert wearers of nearby hazards; smart glasses and smart helmets that detect emotions or measure brain electrical activity; exoskeletons and other aids that provide physical support and reduce fatigue; and GPS devices that track location.
GROOM INSIGHT: Some employer wellness programs offer incentives for employees to use wearable devices, such as tracking steps and/or sleep with a Fitbit or smart watch or ring. Often, as part of the group health plan, employers also provide incentives for diabetics to track and monitor their blood sugar and/or glucose. Due to the increased utilization and high cost of GLP-1 drugs, it has also become more common for group health plans to require that, to access the drug, participants participate in a wellness program, including tracking their activity via a fitness tracker watch and tracking their glucose with a continuous glucose monitor ("CGM"). Although the EEOC did not specifically list a glucometer or CGM as an example of a wearable device, it seems likely that the EEOC would also consider these wearable devices since they involve sensors on the body to collect biometric information.
Fact Sheet
In the fact sheet, the EEOC states that wearable devices have become increasingly common in the workplace due to technological advancement. The EEOC states that employers using wearable devices to collect information about an employee's physical or mental conditions may be conducting medical examinations under the ADA. And, employers may be making disability-related inquires under the ADA if they direct employees to provide health information in connection with using wearables. Regarding wellness programs, the EEOC reiterates that disability-related inquiries and medical examinations are permitted when they are voluntary and part of an employee health program that is reasonably designed to promote health or prevent disease. The EEOC includes an example:
Marco's employer tells him that he must wear a company-issued tracking watch. The watch collects Marco's vital signs, information about his gait, and other medical information. This mandatory use of the watch does not satisfy the ADA's requirements for employee health programs that are voluntary, and it also may be a medical examination under the ADA.
The EEOC also reminds employers that the medical- or disability-related data collected from wearable devices must be maintained in separate medical files and treated as confidential medical information, with limited exceptions. Also, an employer cannot use this information for discriminatory purposes, such as making adverse employment decisions.
The fact sheet also notes that, even if the ADA permits a wearable device, employers are expected to provide a reasonable accommodation (e.g., for religious beliefs under Title VII or for a disability under the ADA or Pregnant Workers Fairness Act).
GROOM INSIGHT: While not binding guidance, the fact sheet gives us good insight into the EEOC's position on wearable devices. Employers that have, or are thinking of using, wearable devices as part of a wellness program should consider the ADA when designing these programs. Employers that have, or are thinking of adding, requirements related to GLP-1 drugs that involve wearable devices should also consider whether the incentive limit (often, the cost of the drug itself) is within the voluntary threshold and, if not, whether the employer can take the position that the program is not a wellness program and thus the bona fide benefit plan safe harbor applies.
Finally, the EEOC stated that employers should consider the following:
- what data wearables collect, including their accuracy and validity across different protected bases;
- how those data are stored; and
- whether and how those data are used in employment-related decision-making, including whether there use impacts employees of different protected bases differently.
GROOM INSIGHT: Employers may wish to consider their data storage techniques and cybersecurity practices to assess whether medical- or disability-related data is adequately safeguarded to protect confidentiality. Employers may also need to consider whether their contracts with vendors adequately address their cybersecurity expectations and address nondiscrimination requirements. Employers may also wish to consider evaluating information management practices to assess whether employees' medical- or disability-related information could possibly be inappropriately used in contexts outside the wellness program, such as in employment-related decision-making.
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