Court Orders EEOC to Redraw Wellness Incentive Rules

Court Orders EEOC to Redraw Wellness Incentive Rules

In May 2016, the US Equal Employment Opportunity Commission adopted new rules that allowed organizations to incent employees to share their health information as part of a workplace wellness program, determining that wellness programs would still be considered voluntary as long as these incentives or discounts did not exceed 30 percent of the cost of an employee’s individual health coverage. This Tuesday, a court in Washington, DC, determined that these rules were arbitrary and ordered the EEOC to rewrite them, SHRM’s Allen Smith explains:

Rather than vacate the rules, the court sent them back to the agency for redrafting in an attempt to avoid business disruptions. But the decision still creates “confusion and uncertainty” about employer wellness programs, said Ilyse Schuman, an attorney with Littler in Washington, D.C., and co-chair of the firm’s government affairs branch, the Workplace Policy Institute. HR professionals should know that the decision threatens the viability of wellness programs, and an employee may push back on an employer that uses financial incentives or penalties to encourage wellness program participation, said Ann Caresani, an attorney with Tucker Ellis in Cleveland and Columbus, Ohio.

“The EEOC’s regulations were helpful to employers because they finally resolved the long-pending question of what EEOC would consider to be a permissible incentive under ADA [Americans with Disabilities Act] and GINA [Genetic Information Nondiscrimination Act],” said Frank Morris Jr., an attorney with Epstein Becker Green in Washington, D.C. “This permitted employers who wanted to use incentives to design [them] with reasonable certainty that they would be lawful under the two statutes.”

The court ruled that the EEOC had failed to provide a well-reasoned justification for setting the limit for incentives at 30 percent of the cost of a health insurance plan, a figure it had simply borrowed from Health Insurance Portability and Accountability Act (HIPAA) regulations. Furthermore, the rules address information protected by the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act, but did not consider the potential for employers to stack incentives for disclosing their own ADA-protected information and their spouses’ GINA-protected information.

The ruling stems from a lawsuit first filed last October by the AARP, a group that advocates for older Americans, which sought to prevent the rules from coming into effect, arguing that they violated the ADA and GINA. A judge declined to issue a preliminary injunction blocking the rules in December on the basis that the AARP had not shown that its members would suffer irreparable harm if the rules went into effect and were subsequently overturned in court.

Meanwhile, federal lawmakers are looking at rewriting GINA protections to make it easier for employers to collect genetic data as part of a wellness program. House Republicans advanced a bill in March that would exempt these programs from GINA, which the American Benefits Council and SHRM say is necessary to provide the legal clarity for employers to continue offering wellness programs. Detractors, however, argue that this change would render GINA protections effectively meaningless, giving employees no choice but to provide whatever data their employers demand as long as the organization could claim to be collecting it as part of a wellness program.