• EEOC Issues a Proposed Rule on Employer Wellness Programs and ADA
  • July 24, 2015 | Authors: Christen C. Blackburn; J. Gregory Grisham
  • Law Firm: Leitner, Williams, Dooley & Napolitan, PLLC - Nashville Office
  • On April 20, 2015, the Equal Employment Opportunity Commission (“EEOC”) issued a proposed rule that amends the regulations and interpretive guidance for Title I of the Americans with Disabilities Act (ADA) as they relate to employer wellness programs.

    Employers and insurers are increasingly offering and encouraging employee participation in wellness programs not only to promote a healthier workforce but also to lower healthcare and insurance costs. Typically, employers offer incentives to those employees who participate in these programs, such as gift cards and reduced insurance premiums. However, when these wellness programs include a health questionnaire or biometric screening, the ADA may be implicated. In three lawsuits filed in August and October 2014 against Orion Energy Systems, Flambeau, and Honeywell, the EEOC argued that the employer’s wellness programs were involuntary and violated the Americans with Disabilities Act by requiring that employees submit to medical examinations and inquiries that were not job related. The EEOC has been criticized for prosecuting these cases without first issuing formal guidance on this topic. 

    EEOC’s Proposed regulations:

    The proposed regulations would apply to wellness programs that are part of an insured or self-insured group health plan. The proposed regulations contain the following key provisions, many of which will need to be further explored during the comment period:

    First, wellness programs must be reasonably designed to promote health and prevent disease (a requirement that is similar to that imposed under the HIPAA/ACA rules). A program that collects a substantial level of sensitive personal health information without assisting individuals to make behavioral changes such as stopping smoking, managing diabetes, or losing weight, may fail to meet the requirement that the wellness program must have a reasonable chance of improving the health of, or preventing disease in, participating individuals. In addition, employers may not require an employee to participate in a wellness program and are prohibited from retaliating against, interfering with, coercing, intimidating, or threatening employees who choose not to participate.

    Second, the EEOC permits the employer to offer incentives in the form of rewards or penalties as long as the incentives do not exceed 30% of the cost of employee-only coverage (including both the employee and the employer share of the cost of coverage). While this is a win for employers and a significant departure from the EEOC’s position in recent litigation, this will seriously limit an employers’ ability to offer wellness incentives for covered spouses and dependents. The EEOC’s interpretive guidance also raises a question about tobacco cessation programs. The EEOC’s proposed rule allows incentives that encourage employees to participate in a smoking cessation program are not covered by the 30% ADA limitation so long as the program merely asks the employees to disclose smoking status, rather than requiring a test for nicotine or tobacco. These issues will likely be developed further during this comment period. 

    Third, the EEOC’s proposed rule requires all wellness programs to provide reasonable accommodations for employees with disabilities to earn any financial incentive offered. The HIPAA/ACA regulations included a reasonable alternative standard requirement that applied to health-contingent programs and EEOC’s regulations would extend that requirement to all wellness programs.

    Fourth, an employer must provide employees with a written notice that clearly explains (1) what medical information will be obtained, (2) how the medical information will be used, (3) who will receive the medical information, (4) restrictions on the medical information’s disclosure, and (5) the methods used to prevent improper disclosure of the medical information. This new notice will add to the numerous required health and welfare notices already distributed by employers

    Comments regarding this proposal must be received by the EEOC on or before June 19, 2015

    Joint Department’s FAQ’s

    On April 16, 2015, Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury issued a set of FAQs about wellness programs, which clarify that (i) health-contingent wellness programs will not comply with applicable rules and regulations if they are designed to dissuade or discourage enrollment in the plan or program by individuals who are sick or potentially have high claims experience and (ii) compliance with guidance issued by the Joint Departments does not ensure compliance with other laws, including ADA.

    Additional concerns:

    Employers will likely make decisions regarding 2016 health plan design in mid-2015, without the benefit of EEOC’s final regulations. The EEOC has stated that compliance with the proposed regulations will be treated by the EEOC as compliance with the ADA, pending the issuance of final regulations. If, however, the EEOC issues its final regulations in late 2015 with a January 1, 2016 effective date, employers may be scrambling to make last-minute changes to their 2016 plans to conform to any clarification to these requirements made under the final regulations.