Wellness Program Opt-Out Fees Lead to $1.3 Million Settlement for Yale

Author: Michael Cardman, Brightmine Legal Editor

March 11, 2022

Yale University has agreed to pay about $1.3 million to settle a class-action lawsuit over its employee wellness program.

Under the program, some employees covered under Yale's health insurance were required either to participate in the program, which included detailed requirements for medical testing with results shared with the university's wellness vendors, or pay an opt-out fee of $25 per week (or $1,300 per year). Some employees who were identified as having certain health risk factors were also required to work with a health coach or risk being charged the fee.

In a lawsuit filed in 2019, the AARP Foundation alleged that Yale's wellness program violated both the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA), which prohibit employers from getting medical or genetic information from their workers unless the information is provided voluntarily. "The weekly penalty imposed by Yale has a coercive effect on its employees, forcing them to either pay a fine to protect their civil rights or participate in a wellness program against their will," the suit alleged.

The settlement highlights the risks of penalizing employees who do not participate in wellness programs or rewarding those who do participate with incentives that could be considered coercive.

In early 2021, during the waning days of the Trump administration, the Equal Employment Opportunity Commission (EEOC) proposed rules that would have prohibited employer-sponsored wellness programs that include disability or genetic information inquiries or medical exams from offering anything more than a de minimis incentive, such as a water bottle or a gift card of modest value. However, soon after the Biden administration withdrew the proposed rules under a regulatory freeze - leaving employers in limbo without clear guidance.