In spring 2016 we notified you that the Equal Employment Opportunity Commission’s (EEOC) finalized regulations aimed at ensuring employer wellness programs comport with the Genetic Information Nondiscrimination Act (GINA) and Americans with Disabilities Act (ADA) would take effect as of the first day of the first plan year beginning on or after January 1, 2017.
In October 2016 the American Association of Retired Persons (AARP) filed a federal lawsuit challenging both regulations, claiming that they violated anti-discrimination provisions by punishing employees who choose to keep confidential health information private. In December 2016 the court denied a motion for a preliminary injunction to stay applicability of the rules, and the new regulations went into effect on January 1, 2017.
A federal judge has now ruled that both the ADA rule and the GINA rule are arbitrary and capricious. While the court agreed that there is plenty of evidence to support the EEOC’s conclusion that these areas need regulation to clarify employer obligations with respect to wellness programs, and also that there is evidence that the use of incentives increases participation in wellness programs, the court did not believe the EEOC adequately explained its rationale behind the regulations. Specifically, the court held that the EEOC had not justified its decision to interpret “voluntary” in the ADA and GINA to permit incentives of up to 30 percent, because it had not adequately explained how it determined that the 30 percent incentive level is an adequate measure of voluntariness.
Rather than vacating the rules, which would likely have significant disruptive consequences, the court chose to remand the rules to the EEOC for reconsideration.
Employers should be mindful of the uncertainty surrounding these rules when implementing and administering wellness programs. Please contact our employment and labor team if you have any questions.
For more information on the impact of this new law, please contact: