Fair Labor Standards Act (FLSA) & Employee Compensation for Time Spent Voluntarily Participating in Wellness Activities

The following article does NOT constitute legal advice and should not be used as such. It is for educational purposes only. Readers should retain legal counsel to obtain definitive answers.

On August 28, 2018, the US Department of Labor (DOL) issued an opinion letter regarding whether the Fair Labor Standards Act (FLSA) requires an employer to pay employees for their time spent participating in various wellness activities. This particular employer who sought the opinion letter offered decreased health insurance deductibles and premiums to employees who participated in a biometric screening, health education classes, health coaching, use the gym, or attend a health fair. The opinion letter noted that even though the employer offered financial incentives related to the employee’s cost of health coverage, the employer did not make the wellness activities “mandatory,” the activities were not related to the employees’ jobs, and that it was the employee’s choice whether to participate. The opinion letter also noted that the employer did not receive any direct financial benefit from employee participation in the wellness activities.

The employer asked for the opinion letter because it has been posited, including by this author, that one could argue any incentive tied to a wellness activity makes that activity compensable under the FLSA. Generally speaking, the FLSA requires employers to minimally compensate employees for time spent working. 29 CFR § 785 et seq. The key question for wellness programs is whether an employee who is participating in a wellness program in order to earn an incentive is “working,” even if his or her participation occurs outside of work. According to the DOL, the U.S. Supreme Court has determined that the compensability of an employee’s time depends on whether it is spent predominantly for the employer’s benefit or for the employee’s.” Opinion letter, at 2 (citing Armour & Co. v. Wantock, 323 U.S. 126, 133 (1944).

The DOL decided that in the case of this employer who asked for the opinion letter, only the employees who participated in the wellness activities financially benefited, not the employer. The DOL also noted that the wellness activities helped employees make more informed decisions about matters unrelated to his or her job. The DOL also found employees to participate in wellness activities during noncompensable “off duty” time under 29 CFR § 785.16. The employer does not restrict the amount of time an employee may participate in the wellness activities; rather, the employee is allowed enough time to participate in the activity for his or her own purposes. The DOL states that its opinion would be the same regardless of whether the wellness activity occurred at the worksite or offsite, during regular working hours or while the employee is off-duty.

This opinion is quite interesting. It does not mention the size of the deductible or premium incentive tied to wellness activity participation. Thus, we do not know if the incentive is worth hundreds or thousands of dollars, or less than $100, for example. Rather, the DOL assumes that the size of a financial incentive does not influence whether an employee feels compelled to participate. Another relevant provision of the FLSA not mentioned by the DOL in its opinion letter concerns payment for attendance at lectures, meetings, training programs and similar activities. The employer in this particular opinion letter listed as some of its wellness activities attending health education classes or coaching. The FLSA considers attending meetings or training programs “working time,” and therefore subject to FLSA minimum wage and overtime provisions, unless the following four criteria are met:

1. Attendance is outside of the employee’s regular working hours;
2. Attendance is in fact voluntary;
3. The course, lecture, or meeting is not directly related to the employee’s job; and
4. The employee does not perform any productive work during such attendance.

All four of these criteria must be met. 29 CFR § 785.27. Thus, if the wellness program takes place during the employee’s regular working hours or attendance is mandatory, the employer should consider such participation compensable work time.

Despite failing to address this important provision of the FLSA, the current DOL opinion can weigh heavily when making decisions about whether to pay employees for participating in workplace wellness activities.

Barbara J. Zabawa

President of the Center for Health and Wellness Law, LLC
wellnesslaw.com