New Year, New…Changes to EEOC Wellness Rules

By Amelia J. Holstrom - Skoler, Abbott & Presser, P.C.

January 22, 2019

Millions of employees nationwide pledge to get fit at the start of each new year, and 2019 is no different.  In an effort to support those employees, some employers choose to implement wellness programs such as walking and/or workout challenges.  The goal of many employer wellness programs is to identify employee health concerns, develop a plan for helping employees overcome those concerns, and promote a healthier workforce.   It shouldn’t come as any surprise to employers that healthier employees often lead to reduced health insurance costs for the employer.  As a result, employers often ask questions about employees’ health as part of their wellness programs and offer incentives to encourage employees to participate.

Under the Americans with Disabilities Act, which limits employers’ ability to make disability-related inquiries of employees, employers may ask health-related questions in the context of an employer-sponsored wellness program only if the employee’s participation in that program is truly voluntary.    Employers, however, have long struggled with what makes an employee’s participation in the program and response to inquiries related to their health “voluntary.”

Back in 2016, the Equal Employment Opportunity Commission (EEOC) issued regulations relating to employer-sponsored wellness programs.  In those regulations, the EEOC indicated that employers could implement penalties or rewards of up to 30 percent of the cost of self-only health insurance coverage to encourage employees to respond to disability-related inquiries as part of a wellness program without causing the disclosure to be involuntary.

Soon after the implementation of the regulations, AARP filed a lawsuit arguing that 30 percent of the cost of a self-only plan (30 percent rule) as a penalty or incentive made the participation in the program, and disclosure of any health information, involuntary – in other words, that the cost of not participating was so high that employees would feel compelled to participate.  In 2017, a court ruled that the EEOC had not adequately explained how its 30-percent rule converted an employee’s participation from involuntary to voluntary and ordered the EEOC to reconsider the regulations.  When the EEOC informed the court it would not be able to draft and implement new regulations until 2021, the court ordered removal of the 30-percent rule effective January 1, 2019.  

With the elimination of the incentive/penalty section of the regulations, employers are now faced with determining what they can offer as incentives or implement as penalties without making their wellness programs involuntary.  And that is a very big question.  Although the court in the AARP case did not explicitly state that the 30-percent rule made a plan involuntary, some have read the decision to suggest that any incentive/penalty renders an employee’s participation in a wellness program involuntary.  Others believe that some incentive/penalty will still be permitted.  Unfortunately for employers, it might be years before the EEOC answers that question.  Until then, employers should work with counsel to carefully consider what incentives/penalties to implement in their wellness programs without running afoul of the Americans with Disabilities Act.