Avoiding the Legal Landmines of 3 Popular Employee Benefits
1. Wellness programs and the ADA
While every employer wants to promote healthier lifestyles for its employees, some wellness initiatives run afoul of the Americans with Disabilities Act — if the initiatives are constructed in a manner that makes it more difficult for certain employees to participate.
Example: A company unveils an on-site exercise program; participants can bring home perks like extra vacation days, cash bonuses, gift cards, etc.
Problem: The company has several disabled employees who are physically unable to participate and, therefore, can’t reap the benefits of the rewards.
Fix: If your wellness program includes certain features in which disabled employees can’t participate, create some alternatives where these employees can earn the rewards — like attending a class on the benefits of doing the cardiovascular exercises permitted by their disability.
2. Domestic partner benefits
While domestic partner benefits are highly coveted by many employees, domestic partners aren’t generally granted the same protections as spouses under ERISA and the IRS regs. For example, unlike spousal health coverage, domestic partner benefits are taxable.
However, there are two exemptions:
1. If the employee’s partner qualifies as a dependent, or
2. If the partner is recognized as a spouse or the benefits are protected under state law.
And there are more restrictions surrounding the rules for flexible spending accounts (FSAs). However, ERISA trumps state law, and flex accounts are subject to the Defense of Marriage Act (DOMA), which only recognizes traditional marriages.
The effects: Flex accounts may not reimburse workers for domestic partner medical care, care of a domestic partner’s dependent, etc.
To get around the red tape, many companies require the employee to cover the entire cost of the partner’s health coverage. To balance this out, some employers adjust the worker’s pay to make up for the difference.
3. Employee referral programs and the EEOC
The Equal Employment Opportunity Commission has already addressed the problems that accompany word-of-mouth recruiting. According to the EEOC, employee referrals can limit workplace diversity and increase the risk for discrimination because employees tend to only recommend colleagues of the same race, gender ethnicity.
Potential legal problems: Even in cases of accidental discrimination, companies that do extensive hiring based on employee referrals can be fined or sued by the EEOC. To add to more pressure to employers, EEOC compliance manuals now recommend that most firms scale back — or eliminate altogether — their employee referral programs.
Safeguard: If your company has no intention of scrapping its employee referral program, make sure to measure its effect on employee diversity and encourage widespread participation.
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