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Saturday, January 31st, 2009
EMPLOYMENT LAW TIP SHEET

WELLNESS – WEIGHT LOSS LOTTO – WILL IT WORK FOR YOU?

Company-sponsored wellness programs, including weight loss incentives, are increasing in popularity, despite a few legal challenges as noted in the June 2008 Tip Sheet. The April 28 Wall Street Journal contains a report on a comprehensive study of the incentives offered by weight loss programs – what works and what works better.

Traditional weight loss programs offer employees cash incentives for achieving and maintaining weight loss goals, with the amount of incentives increasing as employees shed more pounds. The study, led by researchers at McKinsey & Co., the University of Pennsylvania, and Carnegie Mellon University, suggests that employers need to rethink these incentives.

The study used three separate control groups, with each group being large enough to provide statistically significant results.

Group 1 – were given traditional incentives – cash awards for pounds lost.

Group 2 – was structured so that the participants who achieved weight loss goals were placed in a pool from which “winners” were selected at random (weight loss lotto) with substantially bigger payouts for those selected. The others who met their goals got nothing.

Group 3 – participants had to pay to enter the program – putting their own cash at risk – but got significantly higher individual rewards for meeting weight loss goals.

THE COMPANY CONTRIBUTION WAS THE SAME FOR ALL THREE GROUPS.

The biggest losers were Group 3, who averaged 14 pounds each. Group 2 was a close second at 13.1 pounds each. Group 1 was far behind at 3.9 pounds.

Behavioral psychologists said the results were expected and easily predictable. Requiring people to put their own cash on the line creates greater psychological buy-in, and humans have a natural tendency to assume (despite knowing the odds) that they will win the lottery and thereby receive the big payoff for meeting their goals.

One wonders what would happen if the approaches taken with Groups 2 and 3 were combined – requiring employees to pay to participate and offering a really big lotto prize for the winners. The result could be a skinny company.

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Disclaimer regarding legal advice: The information in this newsletter should not be construed as legal advice. This information is not intended to create or constitute an attorney-client relationship. For more information or an explanation about the matters discussed in this newsletter, please contact an attorney in this practice group.