« Back to News

Legal and Practical Considerations in Offering a Vaccine Incentive Program

May 25, 2021
| Posted in: Labor & Employment Law

By Lisa A. Krupicka

In lieu of a mandatory vaccine program, a number of large employers, including Kroger, Aldi, Target, Amtrak, Walmart, Chobani, and Trader Joe’s, have taken a different approach to getting their employees vaccinated:  a vaccine incentive program that rewards employees for getting the COVID-19 vaccine. 

There have been concerns about whether a vaccine incentive program would be impacted by the EEOC’s rules on the ADA and employee wellness programs. The ADA permits employers to implement wellness programs that require employees to disclose medical information only if participation is voluntary.  Guidance on what level of incentive that may be offered without affecting the voluntary nature of the program has been in limbo for some time now after the Commission’s regulations limiting the value of incentives offered to employees to 30% of the total cost for self-only coverage under their group health plans were struck down by a D.C. federal district court in 2017, causing their subsequent withdrawal.

Immediately prior to President Biden’s inauguration, the EEOC issued new proposed regulations on January 7, 2021, limiting the incentive employers could offer to employees for participation in a wellness program to items of only de minimis value like a water bottle or a gift card of modest amount. Before the proposed rules could be published in the Federal Register, however, President Biden issued a directive to all federal agencies to withdraw all proposed rules not published in the Federal Register by January 20, 2021, pending further review.

On February 1, 2021, a group of business interests and trade groups wrote the EEOC asking for guidance on what ADA-compliant incentives could be offered to employees through a wellness program to persuade them to take the COVID-19 vaccine.  On May 28, 2021, the EEOC issued limited guidance for employers. 

Under this new guidance, employers may offer an incentive to employees to provide documentation that they have been vaccinated for COVID-19 through an employee wellness program as long as the incentive is “not so substantial as to be coercive.”  A “very large incentive” could make employees feel pressured to disclose protected health information. On the other hand, if employees receive the vaccination from someone other than the employer or its agent, such as their local pharmacy, there is no limit on the size of the incentive.

Even prior to the issuance of this guidance, employers have gone forward with vaccine incentive programs, offering incentives that range from paid time off to get vaccinated to $100 cash payments to those who show proof of vaccination. Appropriate accommodations must be made for employees who object to the vaccine on disability-related or religious grounds, such as submitting to regular testing or watching an educational video on COVID-19 safety, in order to receive the same incentive other employees can earn by getting vaccinated.

Based on experience to date, it is unlikely that vaccine incentives alone will accomplish employers’ goal of having everyone in the work force vaccinated.  Fear and mistrust of the vaccine have become deeply entrenched in U.S. culture, and even $100 may not be enough to overcome it.  A recent study by the UCLA Health and Politics Project suggests that, while a cash incentive program may encourage vaccination for some, for others, cash incentives may actually be a disincentive to get vaccinated, as it may confirm their existing suspicion that getting the vaccine is risky. 

It may be up to state governments to get the vaccination rate over this hurdle. The same study suggests that a lottery-type incentive is more effective across the board, so a number of states, including Ohio, California, Colorado, Maryland and New York, have created vaccine lotteries.   Ohio is already claiming a 28% increase in vaccinations as a result.  Stay tuned!