Employer wellness programs are often touted as part of the answer to rising health insurance costs. However, a recent federal district court decision suggests that employers must tread carefully when seeking to control health insurance costs by policing employees’ conduct outside of work.
In Rodrigues v. The Scotts Company, the employer maintained a corporate policy prohibiting smoking by its employees at any time, whether or not in the workplace or during work hours. Pursuant to that policy, the company terminated the plaintiff’s employment when a urine test confirmed the presence of nicotine. After his termination, Rodrigues brought a claim in federal district court in Massachusetts for violation of Section 510 of ERISA. This provision makes it unlawful for an employer to take any employment action against an employee for exercising any right to which the employee is entitled under an ERISA plan, or to interfere with the employee’s attainment of any such right. Rodrigues claimed that, by terminating his employment, the employer “interfer[ed] with the attainment of [a] right” to which he would have become entitled if he had remained employed, that being the right to participate in the employer’s benefit plan.
The employer argued that the claim should be dismissed because indirectly excluding an employee from participation in its benefits plans because of his termination for smoking, rather than because he was making or was expected to make a claim for benefits, was outside the scope of Section 510. The court acknowledged that Section 510 only prohibits acts specifically intended to interfere with employees’ ERISA-governed benefits, not instances where the loss of benefits was simply a consequence of termination of employment. Nonetheless, the court refused to dismiss the claim, noting that the complaint had specifically alleged that the employer’s purpose in adopting the policy was to “save money on medical insurance costs and to promote healthy lifestyles among its employees.” Thus, the court ruled that Rodrigues should be given an opportunity to prove facts at trial to show that the employer fired him with the specific intent of interfering with his right to ERISA benefits.
Many states, including Missouri, ban employment discrimination against employees on the basis of lawful outside-the-workplace conduct, including smoking. In these states, employers are unlikely to even adopt an employment policy such as the one adopted by The Scotts Company. Nevertheless, this case illustrates that employers should be careful that their wellness programs, even if designed with the best of intentions, do not go too far.