Back to the Drawing Board for EEOC Wellness Program Rules

On August 22 the U.S. District Court in D.C. granted summary judgment to the AARP which challenged the EEOC’s rules governing employer wellness programs. The rules allow an employer to offer or impose on an employee financial incentives or financial penalties depending on participation in an employer wellness program. The Court chose not to vacate the EEOC’s rules for the time being, but instructed the EEOC to explain its rationale for setting a 30% maximum on the incentive or penalty, which would be applied to the employee‘s premium cost,  to determine whether disclosure of the employee’s personal medical information is voluntary, instead of determining that any employer wellness program requiring disclosure of personal medical information is involuntary and therefore unlawful. AARP v. U.S. EEOC, (D.D.C. Aug. 22, 2017).

Under ACA, health insurance plans may lawfully offer an incentive of up to 30% of the cost of coverage, in exchange for the employee’s participation in a health-contingent wellness program. These employer-sponsored wellness programs often involve the collection of personal medical information, which implicates substantive protections of the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA), both enforced by the EEOC.

Both the ADA and GINA permit employers to collect personal medical information as part of a wellness program if the employee provides the information voluntarily. In May 2016, the EEOC issued an ADA rule stating that imposing a penalty or offering an incentive capped at 30% of the cost of self-only coverage that requires disclosure of ADA-protected information, does not render participation in the wellness program involuntary. Similarly, the EEOC issued a GINA rule allowing employers to offer the same 30% incentives for disclosure of a spouse’s medical information in the course of wellness program participation.

In 2016 AARP sought a preliminary injunction prohibiting enforcement of the ADA and GINA rules which became effective January 1, 2017. The EEOC’s arguments in opposition to the injunction were:

• The 30% incentive level is in harmony with the ACA incentive level.
• The 30% incentive level is a reasonable interpretation of “voluntary” based on current insurance rates.
• The EEOC relied on comments submitted by the American Heart Association endorsing the 30% incentive level.

The Court determined that the EEOC provided inadequate explanation for determining that a 30% penalty or incentive is an appropriate measure of voluntariness. The Court remanded the rules to the EEOC but without vacating them to avoid disrupting current wellness programs. The Court ordered the EEOC to report back to the Court by September 21, 2017.

If you have any questions or would like to discuss how this decision or the EEOC’s wellness program rules affect you or your business, please contact Patrick W. McGovern, Esq., Partner in the Firm's Labor Law Practice Group  at 973-535-7129 or pmcgovern@genovaburns.com, Firm Counsel Gina M. Schneider, Esq. at 973-535-7134 or gmschneider@genovaburns.com, or Firm Associate Ryann M. Aaron, Esq. at 973-387-7812 or raaron@genovaburns.com.