Why it matters

The Equal Employment Opportunity Commission (EEOC) has finally begun the process of establishing rules on the issue of employer wellness programs. After declining to take part in regulations issued by other federal agencies and filing multiple lawsuits challenging employer wellness programs, the agency has issued a Notice of Proposed Rulemaking (NPRM) that would amend existing Americans with Disabilities Act (ADA) regulations and offer interpretive guidance for employers about the interplay of the ADA and the Affordable Care Act (ACA). An employer wellness program must be reasonably designed to promote health or prevent disease and must be truly voluntary, the EEOC said. To be considered “voluntary,” employers may not require an employee to participate in a program and may not deny coverage under any group health plans or particular benefits, or take other adverse actions against employees who do not participate or fail to achieve a health outcome, the NPRM stated. The proposed regulations—currently open for public comment—are important reading for any employer offering a wellness program.

Detailed discussion

In May 2013, the Department of Labor (DOL), U.S. Department of Health and Human Services (HHS), and the Treasury Department issued guidance to employers offering workplace wellness programs that incentivize employees to improve their health. The regulations—which set forth several requirements for employers—took effect January 1, 2014.

However, one agency was notably absent from the guidance: the Equal Employment Opportunity Commission (EEOC). Declining to participate in the regulations, the agency left attorneys and employers unclear about the application of federal laws like the Americans with Disabilities Act (ADA) (which has a general prohibition on asking disability-related questions unrelated to a job) and the Genetic Information Nondiscrimination Act (GINA) (under which employers are forbidden from asking about an employee’s family medical history) to their wellness programs as the EEOC declined to participate in the regulations.

The EEOC further confused the industry by then filing three lawsuits challenging wellness programs and triggering a firestorm of criticism. Even federal lawmakers got frustrated, introducing the Preserving Employee Wellness Programs Act in an effort to harmonize the Affordable Care Act (ACA), ADA, and GINA. Pursuant to the bill, employers would be explicitly permitted to provide wellness programs that offer a financial incentive to employees and their spouses to participate.

Facing criticism and a legislative proposal, the agency stepped up and (finally) released its own proposed regulations. Emphasizing that a permissible wellness program must be voluntary, the EEOC set forth several requirements in the Notice of Proposed Rulemaking (NPRM):

  • Intent of program. The goal of an employer wellness program must be the prevention of disease or the promotion of health. A permissible program must have “a reasonable chance of improving the health of, or preventing disease in, participating employees, and must not be overly burdensome, a subterfuge for violating the ADA or other laws prohibiting employment discrimination, or highly suspect in the method chosen to promote health or prevent disease.”
  • Voluntary participation. Employers may not mandate participation in a program and may not take adverse action against employees that elect not to participate (by denying coverage under a group health plan or particular benefits of a group health plan, for example) or fail to meet a health outcome goal. “Additionally, an employer may not retaliate against, interfere with, coerce, intimidate, or threaten employees” in violation of the ADA by coercing employees to participate or threaten discipline if they do not, the EEOC added.
  • Information use. Notice that clearly explains what medical information will be obtained, how the medical information will be used, who will receive the medical information, and any restrictions on disclosure of the information must be provided to employees when the wellness program is part of a group health plan.
  • Incentive limits. A wellness program that is part of a group health plan, offers limited incentives, and includes disability-related questions or examinations is not per se impermissible, the EEOC said, when two conditions are satisfied: first, if the total allowable incentive offered by the employer under all programs does not exceed 30 percent of the total cost of employee-only coverage (mirroring the regs issued by the DOL, Treasury, and HHS), and second, if the medical information collected through the program is provided to a covered entity under the ADA in aggregate terms (not identifying specific individuals). “Incentives” include both financial and in-kind perks, the EEOC clarified, including time off or prizes.
  • HIPAA. Pursuant to the proposal, individually identifiable health information collected from or created about participants as part of a wellness program constitutes protected health information under the Health Insurance Portability and Accountability Act (HIPAA) Privacy, Security, and Breach Notification Rules. Any such information may only be provided to a covered entity in aggregate terms that do not disclose the identity of specific individuals.
  • Other federal laws. The NPRM clarified that compliance with the ADA and the regulations does not relieve employers of the obligation to comply with other employment nondiscrimination laws. Even if a wellness program complies with the incentive limits, for example, the employer could still violate GINA, Title VII of the Civil Rights Act, the Equal Pay Act, or the Age Discrimination in Employment Act, depending on the terms of the program.
  • Accommodations. Employers must provide reasonable accommodations to enable employees with disabilities to participate and earn offered incentives. Materials for wellness programs may need to be provided in alternate format—such as Braille or large print—for an employee with vision impairment, or a sign language interpreter may be required for a deaf employee to participate in a class where attendance results in receipt of an incentive.

Currently open for public comment, the EEOC has requested feedback on the proposal with the possibility of other requirements for wellness programs.

For example, the agency wondered if employers should be required to offer similar incentives to individuals who choose not to disclose their medical information and provide a note from their doctor. And should the EEOC require that employees provide “prior, written, and knowing confirmation” that their participating in wellness programs is voluntary?

Comments will be accepted until June 19. The agency also provided a question and answer document on the NPRM as well as a Fact Sheet for Small Businesses.

To read the EEOC’s proposed regulations on employer wellness programs, click here.

To read the agency’s Q and A, click here.

To read the Fact Sheet for Small Businesses, click here.