On August 22, 2017, the U.S. District Court for the District of Columbia sided with AARP in its Administrative Procedure Act challenge to the U.S. Equal Employment Opportunity Commission’s (“EEOC”) rules allowing employers to provide incentives to employees who participate in employer-sponsored wellness programs. AARP v. U.S. Equal Employment Opportunity Commission, No. 1:16-cv-02113-JDB (August 22, 2017). District Court Judge John D. Bates found that the EEOC failed to demonstrate how wellness programs that provide participation incentives of up to 30% of the cost of an employee’s health insurance premiums are consistent with the prohibitions on seeking or collecting employee medical or genetic information under the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”).
Employer-sponsored wellness programs have been on the rise over the past several years, as employers seek to reduce healthcare costs and encourage employees to lead healthy lifestyles. Such wellness programs must comply with the ADA and GINA, both of which prohibit employers from requesting or collecting medical or genetic information from employees unless an employee voluntarily submits to an employer’s wellness program. In connection with such wellness programs, employers are permitted to offer certain incentives to an employee in return for the employee’s voluntary participation in the wellness program.
In 2016, the EEOC changed its stance on wellness program incentives, publishing rules that allow employers to reward up to 30 percent of the cost of an employee’s health insurance premiums for their participation in the program. With incentives like these, AARP argued, non-participants are left to choose between receiving a substantial savings in health insurance premiums and disclosing their and their family’s personal health information to their employer.
The District Court Decision
Reviewing the EEOC rules, Judge Bates was convinced by the AARP argument, and questioned whether employer-sponsored wellness programs that would provide incentives of up to 30% of the cost of an employee’s health insurance premium were coercive as opposed to truly voluntary. As a result, Judge Bates decided that the EEOC failed to explain how its election to allow incentives or to cap such incentives at 30% of an employee’s health insurance premiums passes muster under the ADA and GINA. Therefore, Judge Bates remanded the rules back to the EEOC, and instructed the EEOC to issue a status report by September 21, 2017 that would propose a schedule for the EEOC’s review of the rules.
Impact for Employers
Notably, the court did not vacate the EEOC’S rules on incentives, particularly because many employers have already offered the incentives and employees have already disclosed their confidential medical information. With these rules intact while the EEOC undertakes its court-ordered review, employers may proceed as before with their wellness programs for 2017. Employers should, however, remain cognizant that the rules are subject to change in light of the decision in AARP v. EEOC, which may require employers to alter their wellness programs for 2018. Leech Tishman’s Employment Practice Group attorneys will continue to monitor this case and the EEOC’s wellness incentive rules and provide any necessary updates.
Leech Tishman’s Employment Practice Group has extensive experience advising employers on EEOC rules and guidelines, including wellness programs.
Lisa Schonbeck is a partner at Leech Tishman in the Employment and Litigation Practice Groups and is based in the Pittsburgh office. Lisa can be reached at 412.261.1600 x 233 or firstname.lastname@example.org.
Please feel free to contact Lisa or Emily with any questions regarding employee wellness program incentives and the EEOC.
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