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The Positives and Pitfalls of Employee Wellness Programs

The Positives and Pitfalls of Employee Wellness Programs

Author: Walker J.J. Stutzman

Wellness programs are extra benefits companies provide to their employees to increase employee health. These programs help reduce health insurance claims, as well as worker’s compensation claims. The Wisconsin legislature recognized the benefit of these programs when it enacted Wis. Stat. §102.03(1)(c)(3), to encourage employers to offer wellness programs without fear of additional worker’s compensation liability. It was part of the “Grand Bargain,” balancing both workers’ and employers’ interests. The specific statutory language states, “An employee is not performing services growing out of and incidental to employment while engaging in a program, event, or activity designed to improve the physical well-being of the employee, whether or not the program, event, or activity is located on the employer’s premises, if participation is voluntary and the employee receives no compensation for participation.” While this statute can insulate insured employers from worker’s compensation liability, there are other instances where liability attaches to activities performed as part of a “wellness program.”

Wellness Programs “Work Out” for Employees and Employers

The noted benefits of wellness programs are increased productivity, prevention of musculoskeletal injuries, work-hardening on-site or at closely monitored fitness facilities, job safety analyses prior to employee placement, and a reduction in overall healthcare and worker’s compensation insurance costs. Several employers, both in the private and public sector, have seen the benefits of these programs. One manufacturer in Wisconsin saw a drastic reduction in its number of on-the-job injuries by focusing on access to fitness and preventative health. The employer offers employees over 35 fitness classes per week with personalized health coaches. As a result, they reported that 90% of muscular injuries at work were detected in early stages of treatment, and those injuries were appropriately addressed through on-site health facilities like physical therapy, work hardening, and stretching. Aa another example, a public sector entity implemented a wellness program and reported after just two years, it saw a 30% reduction of worker’s compensation claims. Another public entity implemented its wellness program in 2005. They reported biennial investments in wellness programs totaled $173,000; performance measurements indicated a return on investment of 7:1. Meaning, for each dollar spent, they saw a return of investment of $7.00. Those savings came from a reduction in sick leave, fewer worker’s compensation claims, and reduced health insurance premiums.

The Pitfalls: Compensable Injuries arising from Wellness Programs

There are, however, potential pitfalls to employee wellness programs. These may occur when employers make participation mandatory as opposed to voluntary, or where other factors create a scenario that falls outside the statutory language. Obvious instances are when the wellness program or activity is performed “on-the-clock,” participation is mandatory, the employer offers bonuses or incentives for participation, or the employer offers lower insurance premiums paid by the employer. But there are other not-so-obvious examples: attendance and tracking of employees participating in wellness programs, rewards for top performers, disparate treatment of employees (e.g. special parking), or offering any benefit to participating employees that is not available to those not participating in the wellness program or activity. The courts have also held that the location of the injury is immaterial (meaning, on-site or off-site), and additional compensation is not required to fall outside the statutory exception.

Even if the activity is off-premise and off-the-clock, an injury can fall outside the statutory protection if there is some evidence that participation is not purely voluntary. One notable case, City of Appleton v. LIRC, 2012 WI App 50, 340 Wis.2d 720, involved a police officer who was doing push-ups at home off-the-clock to prepare for a mandatory fitness test that was part of his job requirements. The Court of Appeals found his shoulder injury was compensable because even though his at-home training was self-directed, the officer could face disciplinary action if he failed to prepare for the fitness test, and the activity (push-ups) was a specific area that was tested by the employer. The Appeals Court noted, “It would be difficult to imagine how an employee could even prepare for a physical fitness test without engaging in the components of that test prior to the actual testing.” ¶25. As such, the injury was found to fall outside the statutory requirements and was deemed a compensable injury.

The Takeaway

The benefits of wellness programs have been demonstrated across both private and public employers through the overall reduction in work-related injuries, the reduced longevity of those injuries, and the reduction in worker's compensation insurance premiums. The best evidence also shows these programs are working to create a healthier general population, which has overarching positive effects on the entire medical insurance/healthcare industry. However, in evaluating a wellness program, employers must evaluate whether employee participation is truly voluntary. Employers can reap the benefits of implementing a wellness program or maintaining an existing one, as long as it does not create an environment where participation becomes involuntary.

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