Federal Court Vacates EEOC Wellness Program Rules, Giving Employers Until January 1, 2019 to Update Programs

  A federal court has vacated the Equal Employment Opportunity Commission’s (“EEOC”) rules that allow employers to provide incentives of up to 30% of the cost of an employee’s health insurance premiums for employee participation in wellness programs.[1] The effective date of the ruling is January 1, 2019, which gives employers just under a year to ensure compliance.

    As described in a previous post,[2] last year, the United States District Court for the District of Columbia held that the EEOC had not adequately explained why programs that allowed incentives of up to 30% of the cost of health insurance premiums were truly voluntary, as required by the Americans with Disabilities Act (“ADA”) and Genetic Information Nondiscrimination Act (“GINA”). Although the court initially remanded the rules to the EEOC for reconsideration and revision,[3] it recently vacated the EEOC’s rules, effective January 1, 2019.[4] The court also ordered the EEOC to file a status report by March 30, 2018, disclosing the EEOC’s proposed schedule for reviewing the rules.

Practical Takeaways

    Employers that offer incentive-based wellness plans may keep their plans in place in 2018, but should plan to review their plans in the second-half of 2018, based on any guidance issued by the EEOC. Campbell Litigation will continue to monitor the progress of this issue and provide updates on guidance issued by the EEOC.

[1] The ADA and GINA rules are set forth in 29 C.F.R. § 1630.14(d)(3) and 29 C.F.R. § 1635.8(b)(2)(iii). The Americans With Disabilities Act (“ADA”) rule provides that the use of a penalty or incentive of up to 30% of the cost of self-only coverage will not render “involuntary” a wellness program that seeks the disclosure of ADA protected information.  ADA Rule 81 Fed. Reg. at 31, 133-34.  The Genetic Information Nondiscrimination Act (“GINA”) rule allows employers to offer incentives of up to 30% of the cost of self-only coverage for disclosure of information in accordance with a wellness program about a spouse’s manifestation of disease or disorder, which falls within the definition of “genetic information” under GINA.  GINA Rule, 81 Fed. Reg. at 31, 144.

[2] See EEOC’s Rules Allowing 30% Reduction in Health Coverage Premiums for Employees Health Information, Kicked Back to EEOC for Reconsideration, The Rocky Mountain Employers Blog, August 31, 2017, http://www.rockymountainemployersblog.com/blog/2017/8/31/eeoc’s-rules-allowing-30%-reduction-in-health-coverage-premiums-for-employees-health-information-kicked-back-to-eeoc-for-reconsideration.

[3] AARP v. United States Equal Employment Opportunity Commission, --F.Supp.3d--, 2017 WL 3614430 (D.D.C. Aug. 22, 2017).

[4] AARP v. United States Equal Employment Opportunity Commission, --F.Supp.3d--, 2017 WL 6542014 (D.D.C. Dec. 20, 2017).