Since the U.S. Equal Employment Opportunity Commission (EEOC) released its updated COVID-19 guidance on May 28, 2021 greenlighting vaccine incentives, many employers seized the opportunity to offer incentives to employees to both get vaccinated and voluntarily provide proof of vaccination. These incentives run the gamut from direct cash payments to extra paid time off.

One incentive trend that could be problematic, however, is the popularity of employer-sponsored raffles that provide significant prizes to a smaller group of employees rather than a uniform incentive for everyone. Employers conducting such drawings should proceed with caution as this type of incentive plan could run afoul of state and federal gambling laws as well as the EEOC’s own guidance.

For instance, the EEOC’s updated guidance makes clear that the Americans with Disabilities Act (ADA) and Genetic Information Non-discrimination Act (GINA) are generally not implicated where an employer provides an incentive to its employees or employees’ family members to provide documentation or other confirmation that they obtained a COVID-19 vaccination on their own “in the community.” However, the EEOC cautions that if an employer offers an incentive to employees to receive a vaccination administered by the employer or its agent, then such incentives should not be so substantial “as to be coercive.” As the EEOC explains, “[b]ecause vaccinations require employees to answer pre-vaccination disability-related screening questions, a very large incentive could make employees feel pressured to disclose protected medical information” in violation of the ADA.

Thus, a company-wide raffle whereby every employee who provides proof of vaccination is entered into a drawing for the chance at a large prize could run afoul of the ADA, and the EEOC’s guidance.

Such drawings also implicate state and federal gambling laws. The three basic elements of gambling are consideration, chance, and prize. Generally, most states define gambling or “games of chance”¹ as any contest or scheme where a person risks or provides something of value for the chance of winning a prize where chance cannot be eliminated through skill.

Providing proof of vaccination status or receiving the shot are both actions that could qualify as consideration. A random drawing introduces the “chance” element. And, of course, incentives such as money or extra vacation days are prizes.

With all three elements present, employers should consult counsel before proceeding with such drawings.  For example, the employer may need to offer an alternative method of entering the drawing for those who are not vaccinated or who cannot be vaccinated for religious or health reasons. In addition, some states such as Florida and New York have registration and bonding requirements when prize values exceed a certain threshold, i.e., prizes valued at more than $5,000. Most states also preclude minors from participating in such drawings while others only permit qualified non-profits from conducting games of chance.

Additionally, if conducting an incentive prize plan across state lines (particularly if using the Internet for collecting entries and paying prizes), then the Interstate Wire Act and Unlawful Internet Gambling Enforcement Act may come into play.

Incentivizing vaccinations have laudatory goals for ensuring healthy workforces and returning employees to the office, but employers should weigh whether offering larger incentives through random drawings is worth the cost of ensuring compliance with assorted gaming laws as opposed to providing rewards to all employees uniformly. By doing the latter, employers eliminate the “chance” element and avoid any gambling pitfalls.

In addition to potential gambling violations, the EEOC’s guidance does not explain to what extent an employer must provide a vaccine incentive to employees who are unable to obtain a vaccination offered by the employer or its agent due to a medical or religious-based reason.  Given the lack of clarity in the EEOC’s guidance (not to mention the state and local wage and hour laws which certain incentives may implicate), employers that are utilizing incentive programs will want to ensure that they do so in consultation with counsel.

We expect that the EEOC will continue to update its guidance relating to COVID-19, vaccinations, and incentives, and will keep readers apprised of relevant developments.