EEOC Issues Proposed Regulations Clarifying Parameters of Employee Wellness Programs

What you need to know:

The EEOC recently issued proposed regulations and guidance describing how the Americans With Disabilities Act applies to employer-sponsored wellness programs. The proposed changes clarify the extent to which an employer may offer incentives or penalties for participation in wellness programs, while still complying with the ADA.

What you need to do:

Employers should review their wellness programs to ensure that they comply with the proposed regulations and guidance. Although the proposed changes do not yet have the force of law, they provide insight into the EEOC’s approach to regulating employer-sponsored wellness programs.

Overview of Proposed Regulations and Guidance

On April 20, 2015, the EEOC issued proposed regulations and guidance regarding employer-sponsored wellness programs and their interaction with the ADA. Title I of the ADA restricts employers’ ability to obtain medical information from employees, such as health risk assessments and biometric screenings. The ADA permits, however, medical examinations of employees if they are part of a “voluntary” employee health program, such as an employer-sponsored wellness program.

The proposed regulations list several requirements that must be met in order for participation in such a program to be voluntary. Specifically, an employer may not:

• Require employees to participate;
• Deny access to health coverage or limit coverage under its health plans for non-participation; or
• Take other adverse action against employees, such as by threatening to discipline an employee who does not participate or who fails to achieve certain health outcomes.

The proposed regulations also provide that a wellness program may use incentives (financial or in-kind) in the form of a reward or penalty to encourage employee participation. In order for the program to be voluntary, however, the incentive must not exceed 30 percent of the total cost of employee-only coverage under the employer’s group health plan. In other words, if the group plan’s total annual premium for employee-only coverage (including both employer and employee contributions) is $5,000, the maximum allowable incentive an employer could offer to an employee is $1,500 (30 percent of $5,000).

Additionally, if the wellness program is part of a group health plan, an employer must provide a notice clearly explaining what medical information will be obtained, how it will be used, who will receive it, and the restrictions on disclosure.

What Proposed Changes Mean for Employers

Although the proposed changes are in a 60-day comment period and do not yet have the force of law, they establish the general standard under which the EEOC will conduct investigations and pursue charges in the future. Moreover, in the meantime it is very unlikely that a court or the EEOC would find that an employer violated the ADA if the employer complied with the proposed regulations while final regulations were pending. Therefore, employers should work closely with their employment counsel in formulating wellness programs and making employment decisions that comply with the proposed regulations and guidance.

Finally, the EEOC is accepting public comments on the proposed regulations until June 19, 2015. Employers impacted by the proposed regulations should consider submitting comments to the EEOC.