Five Things to Know about the EEOC’s New Rules on Employer Wellness Programs

Employers are increasingly offering wellness programs to their employees as part of their benefits package. These practices are already facing legal challenges. In 2015, the EEOC filed a lawsuit in federal court in Wisconsin (EEOC v. Flambeau, Inc.), alleging the employer’s wellness program was discriminatory under the ADA. On December 31, 2015, the federal District Court issued a decision finding the wellness program did not violate the ADA. Though this one ruling is favorable to employers, it is just one decision and the EEOC is appealing it. With the EEOC’s increasing scrutiny on corporate business programs, here are five things employers should know about the EEOC’s new rules released on May 16, 2016.

ADA and GINA Regulate Employer Wellness Plans

Title I of the American with Disabilities Act (ADA) prohibits employers from discriminating against employees on the basis of a disability and generally restricts employers from obtaining and using medical information from applicants and employees. Similarly, Title II of the Genetic Information Nondiscrimination Act (GINA) prohibits covered employers from using genetic information in making employment decisions and limits employers from obtaining and disclosing genetic information about applicants or employees. However, both the ADA and GINA allow employers to obtain health-related information from employees or their family members and perform medical examinations as part of a voluntary wellness program.

Must be Voluntary

Employer wellness programs must be voluntary. Employers’ failure to make their wellness programs voluntary may violate the ADA. The EEOC’s fact sheet published in conjunction with its final rule says participation is voluntary only if: 

• The employer does not require participation;
• The employer does not deny access to health insurance or benefits to an employee who does not participate;
• The employer does not retaliate against, interfere with, coerce, intimidate, or threaten any employee who does not participate or fails to achieve certain health outcomes;
• The employer must provide notice to all employees that explains the medical information that will be obtained, how it will be used, who will receive it, and the restrictions on disclosure; and
• The employer must comply with the incentive limits.

Limits on Financial Incentives

Under the ADA rule, for wellness programs that are part of a group health plan, employers may offer a maximum incentive of 30% of the total cost of self-only coverage to provide information on the employee’s health and participate in medical examinations.

The GINA rules has similar limits; it allows up to 30% of the total cost of self-only coverage for an employee or an employee’s spouse to provide information about their health status.

Both rules provide wellness programs must be “reasonably designated to promote health or prevent disease.” That means the EEOC may scrutinize the programs to ensure employers are not using the programs to impermissibly collect health-related information or allocating health insurance costs to employees. 

Accommodations

The ADA requires employers to make all wellness programs available to all employees and to provide reasonable accommodations to employees with disabilities, unless the employer can show “undue hardship.” But, the EEOC’s rule does not define undue hardship. The accommodations need to “enable employees with disabilities to earn whatever financial incentive the employer offers” for participation in the wellness plan. 

Confidentiality

In addition to the existing EEOC ADA regulations on confidentiality, the new rule contains three more requirements:

• An employer may only receive information collected by a wellness program in aggregate form that does not disclose, and is not reasonably likely to disclose, the individual’s specific identity, except then the data is necessary to administer a health plan.
• The employer must provide notice to all participating employees that explains the medical information that will be obtained, how it will be used, who will receive it, the restrictions on disclosure, and how it will be kept confidential.
• An employer may not require an employee to agree to sale, exchange, transfer, or other disclosure of medical information or to waive confidentiality protections in exchange for an incentive or as a condition for participating in a wellness program, except as allowed by the ADA to perform specific activities related to the wellness program.

GINA already requires statutory notice and consent provisions, and the EEOC did not add any new confidentiality requirements in the GINA final rule.

The EEOC is scrutinizing employer wellness programs and unless they are well versed in the EEOC’s new rules, employers with existing wellness program or who are considering implementing one may be subject to the EEOC’s scrutiny. Thus, we encourage employers to anticipate and prevent legal problems with wellness programs by familiarizing themselves with the EEOC’s new rules. 

For more information contact Cesar Juarez at juarezc@goosmannlaw.com or the Goosmann Law Firm.

Also, you can continue to follow our HR Legal Insider blog here.