In the current environment and with the US Supreme Court knocking out the OSHA rule, employers are looking for creative ways to incentivize COVID-19 vaccination among employees.
Vaccine sweepstakes, where employers offer cash or other prizes to winning employees randomly selected from a pool of vaccinated entrants, are becoming popular. There is no official guidance on sweepstakes as a vaccine incentive tool. However, by observing existing guidance on traditional vaccine incentives and other best practices, employers can run vaccine sweepstakes programs to increase workforce vaccination and boost company morale.
TRADITIONAL VACCINE INCENTIVES
In 2021, the EEOC issued guidance saying employers may offer incentives to employees for voluntarily disclosing they have been vaccinated. How big the incentive can be depends on whether the employer is administering the vaccine or is encouraging vaccination by an unaffiliated third party. Where vaccination is administered by an employee’s physician pharmacy or state-run vaccination center, employers may offer unlimited incentives to employees. If the employer or an agent is administering the vaccine, the incentive must not be so substantial as to be coercive. This is designed to ensure employees are not pressured into disclosing confidential medical information to their employer in violation of the Americans with Disabilities Act (ADA).
Under this guidance, employers have offered small cash prizes and other rewards to employees who provide proof of vaccination. Some employers have used a more intricate incentive plan, offering discounts or imposing surcharges on the cost of group health insurance premiums based on vaccination status. Now, employers are exploring new ways to incentivize employee vaccination.
VACCINE SWEEPSTAKES
Hoping to incentivize employees unmotivated by small rewards to all vaccinated employees, some employers offer more significant incentives to select employees as vaccine sweepstakes winners randomly. There currently is no official guidance on the use of sweepstakes as a vaccination incentive. Employers need to structure their programs to comply with the existing guidance and laws on traditional vaccine incentives, sweepstakes, and best practices.
Per the existing EEOC guidance on traditional vaccine incentives, if the employer or its agent administers the vaccine, the employer’s incentive must not be so substantial as to be coercive. Since sweepstakes incentives are often substantial, employers offering vaccine sweepstakes should not administer the vaccines. Employers should encourage their employees to get vaccinated off-site by their healthcare providers or government agencies.
Some employees may have medical conditions or sincerely held religious beliefs that prevent them from receiving a vaccine and be eligible for a reasonable accommodation under the ADA or Title VII. Some state vaccination laws require reasonable accommodations for unvaccinated employees for reasons beyond a medical condition or religious belief. Excluding accommodated individuals from vaccine sweepstakes would likely expose the employer to discrimination claims.
To avoid this, employers should make accommodations for these employees. One accommodation would be to allow the accommodated employees to enter the same sweepstakes offered to vaccinated employees upon agreement by the accommodated employees to wear a mask, submit to regular COVID-19 testing, or participate in a COVID-19 safety course.
Most states have gaming laws that define and govern sweepstakes, lotteries, contests, and other promotions run in their states. Some states require that sweepstakes be registered with the state if they offer larger prizes. Most states prohibit lotteries - raffles that require consideration for entry. While many states say consideration means only cash for entry, some states say consideration is where the entrant undertakes any burden for entry.
Employers also need to consider state laws that restrict an employer’s ability to distinguish between employees based on vaccination status.
BEST PRACTICES
Employers should condition entry in vaccine sweepstakes on acceptance of official program rules. At a minimum, the rules should clearly define:
Employee eligibility (including residency rules);
The method and period of entry;
The procedure for winner selection and verification;
The prizes to be awarded (and that the winnings will be treated as taxable compensation to the winner); and
Reasonable accommodations for employees with medical conditions sincerely held religious beliefs or other bases for accommodation required by state law that prevent vaccination.
The rules also may include other conditions, like release and indemnification of the employer from claims arising from participation in the sweepstakes, including an employee’s decision to get vaccinated, the acceptance and use of a prize, and the public disclosure of the employee’s identity and vaccination status as a winner of the sweepstakes.
The employer may want to say the prize will not be part of the winner’s base compensation to avoid future claims that overtime is owed based on an artificially inflated base salary or an hourly wage. Employers with unionized employees should consult their collective bargaining agreement and union representatives regarding program details and rules.
The winner should be selected clearly and fairly to avoid any appearance of impropriety of the vaccine sweepstakes being rigged. Ideally, the drawing should be public. Employers may want to invite all employees to observe the drawing, which may increase office morale. If very large prizes are awarded, consider enlisting outside auditors to oversee the process. As an added measure, employers may exclude executives or highly compensated employees. This should be made clear in the official rules.
As a condition of entry in the vaccine sweepstakes, get employee written consent to the disclosure, internally or externally, of the employee’s identity as a winner of the sweepstakes. The consent should permit disclosure of the winner’s name, prize amount, and the winner’s vaccination status. Any announcement that an employee has won the vaccine sweepstakes necessarily discloses the winner is vaccinated or accommodated. Consent is critical if the employer wants media coverage.
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