EEOC Must Reconsider its Wellness Regulations

The U.S. District Court for the District of Columbia invalidated the EEOC’s final regulations on the operation of voluntary wellness programs under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). The court ordered the EEOC to further consider its rules as required by the Federal Administrative Procedures Act (APA), but it did not vacate the regulations. 

On August 22, 2017, in AARP v. EEOC, the AARP alleged that the EEOC's wellness regulations were invalid under the APA because the EEOC failed to adequately explain why it determined that an incentive or penalty of up to 30% of the cost of self-only coverage was the appropriate maximum incentive or penalty that would be considered “voluntary” under the ADA and GINA, and why incentives or penalties over the 30% threshold are “too high to give employees a meaningful choice” in whether to participate in a wellness program.  The AARP also contended that the EEOC did not reasonably justify the reversal of its previous position that no incentive may be offered under a “voluntary” wellness program.1 

The EEOC argued that the 30% level was chosen for three reasons: (1) it would harmonize the ADA and GINA standards with the Health Insurance Portability and Accountability Act (HIPAA)/Affordable Care Act (ACA) wellness regulations; (2) the 30% level was appropriate in light of “current insurance rates”; and (3) it was consistent with a comment letter from the American Heart Association.   

The court rejected the EEOC’s arguments, noting that the 30% of the cost of self-only coverage level for voluntariness was in fact inconsistent with the final HIPAA/ACA wellness regulations, and noted that the ADA and GINA have markedly different purposes than the benefits statutes.  The court further noted that the EEOC cited only a single Kaiser Family Foundation study in support of its position that current insurance rates supported the 30% mark, and that the EEOC’s reliance on the American Heart Association’s endorsement of the 30% mark was inadequate in light of the fact that most of the other commenters opposed the EEOC’s choice, either because the commenters thought it was too low or too high.

The court argued that the EEOC did not respond to “substantial criticism” of its choice of the 30% threshold and did not consider its financial and economic impact, such as the impact on specific premium levels, personal income, and other factors. 

The court ordered that the regulations be remanded to the EEOC for further consideration, but in so doing, did not vacate the regulations, citing the substantial disruption such an order would create.  Therefore, the EEOC’s ADA and GINA wellness regulations remain in effect until the EEOC takes further action, subject to any ruling on appeal of the court’s order.

What Does this Mean for Employers?

Since the court only remanded the regulations, but did not vacate them, employers with incentive-based wellness programs should continue to comply with the EEOC’s ADA and GINA wellness regulations, in addition to the HIPAA/ACA wellness rules, and should carefully monitor developments.  Littler will keep you advised of further news on this case and the status of the EEOC’s ADA/GINA wellness regulations.

See Footnotes

1 For more information on the ADA and GINA's wellness rules, see Ilyse Schuman, Judith Wethall, and Russell Chapman, EEOC Issues Final Rules on Wellness Programs, Littler Insight (May 20, 2016), and Russell Chapman, Double Whammy, Part II: EEOC Stance and ACA Final Regulations Impose New Burdens on Wellness Programs, Littler Insight (Aug. 8, 2013).

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.