Yale University and some of its employees have settled a class-action lawsuit over the university’s employee wellness program for US$1.29 million net of lawyers’ fees.

The Healthy Expectations Program required its 5,000 unionized staff and their spouses to pay US$25 for every week they declined to participate in the program, for a total penalty of US$1,300 per year. It also obligated participants to submit to medical tests and consent to having their insurance claims data released to numerous third-party wellness vendors.

Yale agreed to stop collecting fines for employees who declined to participate in the plan as part of the settlement. It’s also instituting privacy protections for employees, including instructing third-party vendors to purge prior health coaching data from their records for employees who are no longer participating in the program and getting the express consent of those still engaged in health coaching to retain their records.

Read: Employees suing Yale over fines for not participating in wellness program

“[This is] a great result for everybody. I think it really helps everybody move forward,” says Dara Smith, senior attorney for the American Association of Retired Persons Foundation, who represented the employees. “This model of how Yale is proceeding with this wellness program under the settlement is what they should be doing and is basically the way to ensure your program is voluntary. There may be services people want to take advantage of and they should feel free to choose to do so or not to do so.”

The class action, filed in 2019 by the AARP Foundation and law firm Garrison, Levin-Epstein, Fitzgerald and Pirrotti LLP on behalf of employees who objected to the fines, alleged that punishing staff for failing to participate violated two federal statutes, the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. One of the major points of contention between the parties was regarding whether the wellness program was truly voluntary, says Smith.

The disagreement is the result of changing guidance from the U.S. Equal Employment Opportunity Commission. Up until 2016, the EEOC said programs were only considered voluntary if they had no associated penalties or incentives for participation. That year, it updated its guidance to say programs would be considered voluntary as long as financial incentives or penalties didn’t exceed more than 30 per cent of the cost of health insurance. The rule was struck down after the AARP Foundation sued the EEOC, arguing the percentage was high enough that programs would not truly be voluntary for many employees.

Read: Head to head: In workplace wellness programs, is it better to use the carrot or the stick?

Yale’s wellness program was developed while the 2016 rule was still in place, says Smith, but the rule was on its way out by the time it was launched. The university argued the 2016 rule was the best way to determine a program’s voluntariness given the ambiguities in the law; the AARP Foundation strongly disputed that and said the university should return to the previous guidance.

The EEOC initially intended to introduce new regulations but hasn’t yet done so, meaning there’s currently no guidance on voluntary programs, says Smith.

In a previous article, she told Benefits Canada the foundation had chosen to sue Yale under the AODA and GINA because they prohibit discrimination on the basis of disability or genetics and there’s a genuine concern in the U.S. that employers could terminate employees if they or their families have costly health conditions even though it’s illegal to do so. Forcing employees to participate in a wellness program that collected their health data and required taking medical tests exposed them to that risk, she said.

Yale continues to deny that its wellness program violated any statutes, said the settlement.

While the university didn’t respond to Benefits Canada’s request for comment, Stephanie Spangler, its vice provost for health affairs and academic integrity, told BenefitsPro the program was designed with union partners and “the advice of health care and legal experts. Nevertheless, we feel it is best to resolve what would have been expensive litigation and move forward. Our relationship with our employees is an important priority.”

Read: New study finds ROI in workplace wellness programs