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, with consideration for factors both inside and outside the workplace. 

“Gone are the days when companies can expect that employees leave the pressures of the world behind when we come to work every day,” said Rachel Hutchisson, CEO of Common Impact. “Life is fast, news is constant and the concerns people feel are real. As a result, wellness programs are a must-have, beginning with quality benefits but also including other services to help employees feel connected and supported.”

There are no hard-and-fast rules about what these programs should include, and they often differ from one company to another. Here are some common examples of wellness program elements: 

• Gym or health club memberships offered for free or at a reduced rate to participating employees
• Other staff discounts and incentives that 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
• Therapy services for both physical and mental health, including stress management therapy
• Paid leave for fitness efforts and initiatives
• Company-specific wellness schemes, including group support, challenges, and 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, according to Vikrant Bhalodia, head of marketing and people ops at WeblineIndia. “When done right, these programs help reduce overall stress, improve work focus and promote energy levels,” he said.

Bhalodia noted that these effects can translate to less absenteeism, better engagement and lower healthcare costs. “But the real victory is a workplace where people feel valuable and supported, and employees are more likely to stay and grow with the company,” he added.

Here are just a few ways a corporate wellness program can benefit your company and its employees.

Corporate wellness programs can help a business save money. 

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. 

Wellness programs can improve morale and productivity.

If employees are healthier and take less time off due to illness, you’ll likely see 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.”

Wellness programs increase employee retention.

For many companies, corporate wellness programs add value to the total employee benefits package. This incentivizes current and future workers to join and stay with the company, which increases employee retention and helps the company remain competitive in the labor market.

“Offering a wellness program to your staff demonstrates your care for their health and happiness,” said Paul Somerville, director of business development and product marketing for North America at Vmax E-scooter. “[Employees] are more inclined to stay rather than look for work elsewhere when you view [them] as valuable assets of your business.”

Risks and federal laws pertaining to corporate wellness programs

Having a wellness program shows your business really cares about the health and happiness of your employees, but it can also bring up issues related to fairness and privacy at work. 

“When considering wellness programs, it’s vital that companies think about how people of all different skills and abilities can engage in a way that’s equitable,” Hutchisson said.

There are also legal risks involved with wellness programs, because they involve employees’ health. The following regulations are the core federal laws that pertain to corporate wellness.

HIPAA

The Health Insurance Portability and Accountability Act (HIPAA) sets core standards governing the collection of personally identifiable information about employees, including their health. HIPAA laws also cover data usage and storage.

According to David Reischer, attorney at Reischer & Reischer, 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 [who] 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 (ADA) prohibits discrimination against employees on the basis of health or health status, with certain exceptions 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; 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 percent of the cost of health coverage, according to Healthcare.gov. For smoking cessation programs, this increases to a maximum of 50 percent.

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.”

Best practices for corporate wellness programs

To ensure you and your employees get the most out of your corporate wellness programs, follow these best practices.

Assess your employees’ needs.

According to Hutchisson, it can be challenging to figure out what kind of wellness program to offer. “When developing wellness programs, companies have a lot of options — from apps that help promote mindfulness and programs to help people relax, to one-on-one coaching sessions and deeper training on resilience,” Hutchisson said.

To determine which programs will gain the most traction in your organization, go right to the target audience: your employees. “Ask [your employees] what they actually need,” Bhalodia recommended. “Some may prefer financial wellness coaching over yoga classes; others might want mental health support or nutrition guidance. A mix of options ensures no one is left out.”

Prioritize informed consent and confidentiality.

Employers must consider informed consent and confidentiality with their wellness programs. It’s advisable to incorporate a comprehensive, legally compliant waiver into corporate wellness programs to reduce the risk of lawsuits by employees who may become injured or otherwise harmed by wellness program participation. This waiver should also allow employees to opt out of the program if they don’t wish to participate.

Privacy is a key part of many federal and state regulations. When you set up a wellness program for staff, ensure that privacy is highlighted in your wellness program’s guide and directions. “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,” said Shaun Martin, a real estate investor.

If 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, it’s a good idea to consult an employment attorney. 

Continuously assess your program’s impact.

Once you’ve implemented your wellness program, determine whether it’s making its intended impact. Hutchisson recommended incorporating questions about your wellness initiatives into employee engagement surveys. This will allow you to look across data points and determine which factors are (or are not) moving the needle.

“Employee survey providers can help you understand what to ask and how to ask it to ensure the data you end up with is meaningful and actionable,” Hutchisson added. Similarly, Bhalodia suggested tracking participation rates, collecting employee feedback and monitoring subtle productivity shifts to understand the impact of your program.

Make sure your program is aligned with your company culture.

Your wellness program is unlikely to be effective if your overall company culture doesn’t prioritize wellness. Instead of treating your corporate wellness initiative as a “one-off checklist item,” Bhalodia advised incorporating wellness initiatives into the daily workflow through things like walking meetings, five-minute mindfulness breaks and flexible work schedules.

“A great wellness initiative isn’t about perks; it’s about creating a work environment where people can do their best without burning out,” he said.

Danielle Fallon-O’Leary and Justin Walker contributed to this article. Some source interviews were conducted for a previous version of this article.