How far is too far in managing workplace wellness? We asked the same question last fall after the U.S. Equal Employment Opportunity Commission (“EEOC”) launched its third lawsuit challenging employer-sponsored wellness programs. Finally, the EEOC has provided some guidance.

Previously, the EEOC had only issued vague guidance regarding wellness programs and compliance with the ADA. As neither the ADA nor the EEOC’s regulations addressed the extent to which incentives affected the “voluntary” nature of wellness programs, for a long time—and despite a steep rise in wellness initiatives—employers were left guessing. Today, the EEOC issued a long-awaited proposed rule addressing how Title I of the Americans with Disabilities Act (“ADA”) applies to employer wellness programs that are part of group health plans and that include questions about employees’ health (e.g., health risk assessments) or medical examinations (e.g., biometric testing for cholesterol levels, BMI, or nicotine levels). Although the ADA limits circumstances in which employers may inquire about employees’ health or require them to undergo medical examinations, it allows these inquiries and exams if “voluntary” and part of an employee health program.

Importantly, the EEOC’s proposed rule offers much-needed guidance on the extent to which employers can incentivize employees to participate in wellness programs or achieve certain health outcomes, particularly how to do so in a manner that ensures wellness programs are still deemed “voluntary” under the ADA. The EEOC’s proposed rule clarifies that employers may offer limited incentives to employees that may not exceed 30 percent of the total cost of employee-only coverage, whether offered as a reward or penalty. In a posted Question and Answer document, the EEOC explains:

The total cost of coverage is the amount the employer and employee pay, not just the employee’s share of the cost. For example, if a group health plan’s total annual premium for employee-only coverage (including both employer and employee contributions towards coverage) is $5,000, the maximum allowable incentive an employer could offer to an employee in connection with a wellness program that includes disability-related questions (such as questions on a HRA) and/or medical examinations is $1,500 (30 percent of $5,000).

Reflecting the EEOC’s desire to harmonize the ADA and the federal Health Insurance Portability and Accountability Act (“HIPAA”), this 30 percent incentive limit is consistent with the incentive cap allowed under HIPAA.

Moreover, the proposed rule provides certain requirements for participation in wellness programs that include disability-related inquiries or medical examinations. Specifically, the employer: (1) may not require employees to participate; (2) may not deny access to health coverage or generally limit coverage for non-participation (except pursuant to permitted incentives); and (3) may not take any adverse employment action or retaliate against, interfere with, coerce, intimidate, or threaten employees. Furthermore, the proposed rule imposes a responsibility on employers to provide notice to employees participating in an employee health program clearly explaining what medical information will be obtained, who will receive it, how it will be used, and methods to prevent its disclosure.

The EEOC’s Notice of Proposed Rulemaking will be officially published in the Federal Register on Monday, April 20, 2015. Members of the public will have 60 days from the date of publication (until Friday, June 19) to submit comments. Thus, although the proposed guidance is not final, it is likely that the actual promulgated rule will be quite similar to the proposal. Armed with additional clarity, employers should review their own workplace wellness initiatives to ensure that incentives and other wellness practices comply with the EEOC’s new proposed guidelines.