A federal judge ruled on Tuesday that the Equal Employment Opportunity Commission (EEOC) must revisit regulations governing employee wellness programs because the agency did not provide adequate supporting information for the rules.
In AARP v. EEOC, U.S. District Judge John Bates agreed with AARP—a lobbying group for older Americans—that the EEOC had failed to justify how it arrived at its definition of when wellness programs are “voluntary” and, therefore, valid under federal law.
Current regulations permit employers to offer workers an incentive of up to 30 percent of the cost of an employee’s individual health insurance plan if they participate in wellness programs—which often include such activities as losing weight, quitting smoking, or participating in preventive health screenings.
The EEOC concluded that any greater incentive would violate the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA), which prohibit inquiries about employees’ medical histories. The EEOC said that it drew the 30 percent limit from other federal laws governing health insurance plans, and that it had garnered support from numerous stakeholders in public comments.
AARP contended that the EEOC could point only to a single comment letter—received from the American Heart Association—backing its proposal, and had failed to cite any studies or data. AARP argued that the wellness program regulations permit companies to penalize employees who opt out of participation in wellness programs because they do not wish to disclose medical information. As a result, according to AARP, the rules allow employers to violate the ADA and GINA.
In siding with AARP and denying the EEOC’s motion to dismiss the suit, Judge Bates concluded that the EEOC had failed to offer a reasoned explanation for its arrival at the 30 percent threshold—nor had it offered concrete data, studies, or analysis that supported any particular incentive level as the threshold after which an incentive becomes involuntary.
EEOC Chair Victoria A. Lipnic issued a statement that the agency is “assessing the impact of the court’s decision and order, and options with respect to these regulations going forward.”
Despite his ruling, Judge Bates declined to immediately vacate the EEOC’s regulations in order to avoid disruption and confusion for both employers and individuals—noting that to do so would call into question the legality of numerous existing wellness programs.
Attorneys in Ballard Spahr’s Employee Benefits and Executive Compensation Group help clients design and implement compensation and benefits packages that comply with today’s complex regulatory requirements, attract and retain a quality workforce, and maintain fiscal and fiduciary responsibility.