Employers Give It A “Shot” - How the Covid-19 Vaccine May Impact the Workplace: Part 2: Can You Offer Employees Incentives for Vaccination?

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There’s a legal answer and a practical one. Because we’re lawyers, let’s start with the legal answer.

Yes, an employer can offer employees incentives to get vaccinated. But doing so potentially creates a wellness program. And wellness programs are subject to several federal laws—HIPAA, the ADA, and GINA, and possibly Title VII (religious discrimination) and the FLSA—which make legal compliance tricky.

Under HIPAA, a vaccine incentive is likely to be considered a health-contingent wellness program. This kind of program is required to, among other things, (1) limit rewards to not more than 30% of the total cost of coverage under the employer’s group health plan and (2) offer a reasonable alternative to satisfying the main condition, i.e., allowing an employee to receive the reward without getting vaccinated if there is a medical reason the employee cannot satisfy the condition (i.e., get vaccinated). To comply with HIPAA, a vaccine incentive program can be (1) incorporated into a HIPAA-compliant group health plan or (2) designed to be voluntary.

The ADA generally restricts employers from obtaining medical information from employees, but it does allow inquiries about employees' health that are part of a voluntary employee health program. Asking for proof of vaccination is not considered asking about a disability. But asking why an employee didn’t get vaccinated is a disability-related inquiry. (One reason an employer might ask this question is to comply with HIPAA’s requirement to offer a reasonable alternative.)

A vaccine incentive program that’s incorporated into a group health plan is limited to employees who participate in the plan. Meanwhile, a program that is considered “voluntary” under the ADA must only offer limited incentives. The EEOC has not yet provided definitive guidance on what constitutes a “limited incentive.” The EEOC initially proposed to define “limited incentive” to include a water bottle, before withdrawing that guidance and promising to provide clearer guidance in the future.

GINA applies if your vaccine incentive program requests genetic information. This might happen, say, during intake in an onsite clinic.

Given these legal requirements, designing a vaccine incentive program—even a simple one like offering a $50 gift card to employees who get vaccinated—can be tricky. Despite the legal risk, some employers are offering vaccine incentives anyway. If you are considering providing any incentives to employees for getting vaccinated, it is a good idea to consult with legal counsel to make sure that you are properly assessing the risks.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. 

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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