The COVID-19 pandemic has been an ongoing concern for employers. As new variants of the virus emerge, many employers are trying to navigate workplace laws and requirements regarding COVID-19 prevention while keeping employees safe. This article provides an overview of the benefits and challenges employers face when paying for COVID-19 testing for their employees.

Benefits of Paying for Testing
Despite Governor David Ige’s proclamation stating employers are not required to pay for COVID-19 testing for employees who choose testing in lieu of vaccination, there are several reasons employers may want to cover the costs of COVID-19 tests for their employees. Paying for COVID-19 testing may help employers better retain their unvaccinated workforce, or meet collective bargaining obligations.

First, doing so can allow employers to perform the testing on-site and control the length of time their employees are off work to obtain testing.  As such, employees who have to cover their own testing costs could eventually seek other employment to reduce their personal expenses.

By paying for and providing testing within the workplace, employers can create fewer hassles for their employees. This way, when the tests are completed, they are read by employers, and employees don’t need to find a telehealth proctor or go to the doctor to be tested or confirm their test results.

Challenges with Paying for Testing
To start, employers with a low percentage of vaccinated employees may face issues finding enough tests all or most of these employees are completing testing regularly. In certain areas, there are shortages of COVID-19 tests.

In addition, testing costs may be high, depending on demand. If tests are hard to come by, their associated prices could increase, which could cause a financial burden for employers if they administer a large number of tests. This may pose significant strains on employers if they did not budget for testing, or worse—do not have the workforce to continue generating revenue.

Another issue employers may encounter from paying for and providing tests to employees is finding individuals to administer or witness these tests. This creates additional job tasks that have to be filled by employees spending time away from their other responsibilities. Otherwise, if employers don’t have employees available to conduct tests, they may have to create entirely new positions to oversee the completion of tests and handle recordkeeping requirements.

Traps for Employers to Avoid with Paying for Testing
Providing such coverage, however, can create traps for the unwary employer. By paying testing costs (outside of a group health plan) an employer may create its own ERISA plan under the Employee Retirement Income Security Act of 1974.  A COVID-19 test would most likely be considered medical care under ERISA. So, when an employer pays for testing, regardless of the reason (i.e., diagnostic or screening), it likely pays for medical care, and creates an ERISA-covered welfare benefit. Such plans may then require compliance with complex rules and regulations, some of which may override state laws. In addition to these burdensome compliance issues, employers may get roped into litigation as the alleged plan sponsor and/or fiduciary.

To avoid this result, employers that want to pay for COVID-19 testing may want to consider labeling their programs as a standalone “Employee Assistance Plan” (EAP). Recent federal guidance provides that employers can offer testing through an EAP without the EAP offering “significant” medical care. EAPs that do not offer “significant” medical care are “excepted benefits” and not subject to ERISA.

Further, if not properly administered, on-site testing programs may raise HIPAA (Health Insurance Portability and Accountability Act of 1996) and other privacy concerns. Employees’ testing information is considered sensitive medical information that employers are required to safeguard appropriately. Before releasing results to an employer, a testing provider will need a proper HIPAA medical release form authorization from the employee. Otherwise, the testing provider could provide test results directly to the employee, who then would provide the test results to the employer. Nonetheless, this medical information should be safeguarded by the employer and kept separate from employee records. 

Employers paying for employee COVID testing should consult with an employment law attorney to review the provisions of their health plans and federal and state law, carefully follow ERISA’s requirements and the application of standalone EAPs, and coordinate with their service providers to ensure the proper administration of COVID-19 testing.

Summary
Ultimately, there are many factors employers must consider when it comes to paying for employee COVID-19 testing. To determine whether they should do so, employers should consult with an employment law attorney and:

• Weigh the pros and cons of paying for testing for their employees.
• Refer to any applicable federal and state laws to determine what their requirements are.
• Make the decision based on what will work best for their workplace.

Contact your assigned HR Consultant for additional COVID-19 guidance and workplace resources.