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January 23, 2018Client Alert

EEOC Voluntariness Standards for Wellness Programs Vacated

Rules on wellness programs issued in May of 2016 by the Equal Employment Opportunity Commission (EEOC) under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) regarding voluntariness have been vacated effective January 1, 2019. Specifically, the vacatur invalidates the incentive limits used to determine whether an employer’s wellness plan is voluntary or coercive.

Background

Wellness programs involving medical exams or inquiries must be voluntary in order to comply with the ADA and GINA. In 2016, the EEOC issued regulations under the ADA and GINA that, among other rules, specify that a program will only be voluntary where the wellness incentive does not exceed 30 percent of the cost of self-only coverage for employees. Note, however, that this limit applies only where the wellness program solicits ADA- or GINA-protected information (separate rules apply under HIPAA). A complete discussion of the EEOC’s rules regarding employer-sponsored wellness programs can be found here.

The AARP challenged the EEOC regulations, arguing that the voluntariness standard was inconsistent with the ADA and GINA (AARP’s challenge was that 30 percent was too high). In August 2017, the District Court for the District of Columbia held that the regulations governing wellness program incentives are “arbitrary and capricious,” and remanded the regulations back to the EEOC for reconsideration. In its decision, the Court stated that the EEOC did not provide a reasonable explanation as to why the incentive limit rendered an employee wellness program voluntary rather than involuntary.

In a status report to the District Court in September, the EEOC announced that it intended to issue a notice of proposed rulemaking by August 2018, issue a final rule by October 2019, and that the new final rule would likely not take effect until at least 2021. Subsequently, upon the AARP’s request, the Court agreed to reconsider its original decision. In a new opinion issued in December 2017, the Court agreed to vacate the EEOC’s final regulations regarding voluntariness, citing the Court’s view that a 2021 applicability date for new rules would not be sufficiently timely. The Court further recognized that a vacatur is the usual solution when an agency fails to provide reasoned explanations for its regulations. Nevertheless, the vacatur was stayed until January 1, 2019.

Impact on Employer Wellness Programs

As a result, for 2018 employer-sponsored wellness programs, there is no change. Such programs must comply with the 2016 EEOC regulations.

However, for employer-sponsored wellness programs provided after December 31, 2018, absent new guidance or regulations from the EEOC (which based upon EEOC statements appear unlikely until late in 2019), employers can rely on the voluntary standards set forth under the HIPAA regulations. Nevertheless, the EEOC’s other ADA and GINA wellness regulations still apply. Because of the shifting landscape, employers will want to carefully vet their wellness programs in their benefit planning for 2019.

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