A Penny for Your Pounds: U.S. Companies are Paying Overweight Employees to Get into Shape

I. Introduction

The Zone, Atkins, liposuction, colonics, the
liquid diet…  Many people have tried and failed at losing those last
five pounds.  However, would the effort be less frustrating if someone
offered you money to lose weight?  Employers across the U.S. have
noticed problems associated with overweight employees, and they are
hoping that monetary incentives will solve the problems.  This article
will first examine the rising healthcare costs in the workplace.  It
will then focus on employer efforts to combat these costs.  Finally,
the article will explain some cautionary steps that employers should
take when implementing weight loss efforts.   

II. America's Rising Healthcare Costs

Obesity is a serious problem plaguing Americans.  About every ninety
seconds, obesity claims a life.  [1]  Not only does obesity affect
one's quality of life, it also has serious implications in the
workplace.  Employers incur huge costs related to their overweight
employees.  "On average, at least twenty-two percent of employees at
any given workplace are overweight or obese."  [2]  Additionally, obese
employees incur thirty-six percent more in healthcare costs than do
employees who are considered normal weight.  [3]

In 1994, employers spent $13 billion for the following costs
associated with obesity-related health problems: "(1) higher use of
health care services; (2) lowered productivity; (3) increased
absenteeism; (4) higher health and disability insurance premiums; and
(5) other weight-related conditions."  [4]  This amount was broken up
as follows: "$8 billion was paid by health insurance, $2.4 billion for
sick leave, $1.8 billion for life insurance, and $1 billion for
disability insurance."  [5]  One can only surmise how much these
numbers have grown in the past thirteen years.

III. Creative Measures to Remedy the Problem

These significant figures spurred employers to take action, and many
of them have turned to perhaps the greatest motivator possible: 
money.  For example, IBM has paid out more than $130 million to the
65,000 employees (about half of IBM's US workforce) who are enrolled in
its fitness programs.  [6]  Bonuses up to $300 a year are paid to
employees who exercise at least three times a week.  [7]  Considering
that the U.S. industry loses thirty-nine million work days through
obesity-related lost productivity, absenteeism, and medical expenses,
[8] this investment is well worth it.  The National Business Group on
Health Care estimates that by reducing healthcare costs and increasing
employee productivity, businesses such as IBM will recoup a $3 return
on every dollar spent on preventive measures.  [9]

Other companies have adopted similarly creative solutions.  The
Container Store in Texas allows its employees to earn points for
completing a required unit of activity (employees can also earn a point
for drinking eight ounces of water); the employees can then exchange
points for gifts cards or money.  [10]  Some employers are handing out
T-shirts and duffel bags to encourage healthful living by employees. 
[11]  Texas Instruments offers its employees a $10 discount per month
off their health insurance premiums provided that they participate in
the company's wellness program.  [12]  Motorola, Pfizer, Union Pacific,
and General Motors offer rewards ranging from iPods to cash to
encourage workers to lose weight.  [13]  Freedom One Financial Group, a
Michigan provider of 401(k) plans, "jump-started its fitness program in
2005 by offering a free four-day cruise to Jamaica for employees who
met certain weight loss or body fat reduction goals."  [14]  The
possibilities are almost endless.  The moral of the story is that if an
employer is willing to dangle the carrot, the employee will likely

IV. Applicablity Beyond Obesity

Offering employees monetary or material incentives is not limited
only to weight problems.  The Federal Reserve Bank of Dallas provides a
program monitoring the prevalence of muscular skeletal disorders which
have increased its healthcare costs.  [15]  By bringing in arthritis
specialists to improve how employees function at their workstations,
the Bank has seen increased employee attendance, leading to a gain of
about $250,000 per year.  [16]  Other companies have launched health
monitoring programs in areas such as diabetes and metabolic syndrome. 
[17]  Finally, there are also companies who implement preventive
measures by trying to get their employees to visit their doctors more
often.  [18]

V. Legal Implications

Employers have to be careful when implementing these programs to
make sure that obese employees do not feel like they are singled out. 
Most importantly, employers cannot try to avoid these healthcare costs
simply by refusing to hire obese individuals.  Although there is no
federal law prohibiting discrimination on the basis of one's weight,
this does not mean discriminatory action should be condoned.  [19]  It
is morally questionable to refuse employment based on one's
appearance.  If companies can discriminate based on one's weight, it
follows that they can also discriminate based on one's height or hair
length.  These standards are arbitary and they should not enter into
the hiring process.  Furthermore, companies should be aware of the
goodwill they could lose and the harm to their reputation should they
decide to discriminate against obese individuals.

Additionally, paying obese employees to lose weight seems like a
sound business decision, but what about employees who are not
overweight?  Employers should encourage all employees to participate in
wellness programs because prevention is easier than rehabilitation. 
Given that seventy percent of chronic conditions are preventable,
companies want to keep low-risk employees at low risk.  [20]  A normal
weight employee could very well have health problems such as high blood
pressure, high cholesterol, or diabetes.  Although these problems may
not manifest themselves in the form of obesity, they can still
contribute to decreased work productivity.  Thus, it is a smart
business move to include healthy weight employees in company wellness

Finally, there are privacy concerns.  Employers have to be careful
with the employees' personal information gathered from health
screenings.  Some employers have decided to avoid potential problems by
hiring third-party vendors to conduct the health screening process. 
[21]  Third-party vendors only turn over the health information of the
employees as a group and not of the individual employees.  [22]  This
way, employees do not have to worry about the possibility of the
information being used to deny them health coverage.  [23]

VI. Conclusion

Although employers adopted these measures with cost saving in mind,
it is the employees who end up as big winners.  The workers are
happier, healthier, and live longer.  One employee participating in his
company's wellness program discovered he had prostate cancer during a
routine health screening, and he was able to receive prompt treatment. 
[24]  For such employees, these programs are priceless.


[1] Kelley M. Blassingame, Employers, Government Fight to Curb Obesity Epidemic, Emp. Benefit News, Aug. 2003, at 37.

[2] Peter Neurath, Insurers Tackle Weight Issue with Obesity Programs, Puget Sound Bus. J. July 30, 2004, available at http://seattle.bizjournals.com/seattle/stories/2004/08/02focus8.html.

[3] Workforce Health Improvement Act:  Healthy Employees;
Healthy Bottom Line:  Subcomm. On Tax, Fin. and Exports of the H. Small
Bus. Comm.
, 108th Cong. 35 (2004).

[4] Kathryn Hinton, Note and Commentary, Employer by Name, Insurer by Trade:  Society's Obesity Epidemic and its Effects on Employers' Healthcare Costs, 12 Conn. Ins. L.J. 137, 143 (2005/2006). 

[5] Id.

[6] Richard Luscombe, To State Workers:  Get Fit or Lose Your Job?, Christian Science Monitor, Jan. 30, 2007, at p.3.

[7] Id.

[8] Hinton, supra note 4.

[9] Luscombe, supra note 6.

[10] Roger Yu, Wellness Benefit:  Fitter Workers May Help Trim Costs for Firms, Dallas Morning News, July 7, 2004, at 1D.

[11] Id.

[12] Brendan M. Case, Providing Extra Incentive for Some Local Workers, Dallas Morning News, April 5, 2006, at 3d.

[13] Luscombe, supra note 6.

[14] Melinda Fulmer, Get Paid to Lose Weight, MSN Money, Mar. 16, 2007, http://articles.moneycentral.msn.com/Insurance/InsureYourHealth/GetPaidToLoseWeight.aspx.

[15] Yu, supra note 10.

[16] Id.

[17] Id.

[18] Id.

[19] Jennifer Shoup, Comment, Protecting the Obese Worker, 29 Ind. L. Rev. 206 (1995).

[20] Fulmer, supra note 14.

[21] Id.

[22] Id.

[23] Id.

[24] Yu, supra note 10.