Three Employer Takeaways from EEOC Proposed Wellness Program Regulations

May 18, 2015 | dehs

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By Jean H. Bender

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As we previously reported, the Equal Employment Opportunity Commission (EEOC) recently filed three lawsuits against employers asserting the employers’ wellness programs, which included disability-related questions and/or medical exams, were not “voluntary” and thus violated the Americans with Disability Act (ADA), the Genetic Information Nondiscrimination Act (GINA), or both. The lawsuits raised substantial concern for employers because the EEOC had issued no regulatory guidance explaining when a wellness program was “voluntary.”

Finally, on April 20, 2015, the EEOC issued a notice of proposed rulemaking indicating when the EEOC will consider a wellness program to be “voluntary” and thus in compliance with the ADA. The following are three important takeaways from the proposed rule:

1. Financial incentives are permissible under the ADA.

An employer may offer a financial incentive of up to 30 percent of employee-only coverage in order to promote participation in the wellness program. A tobacco-related wellness program may offer an incentive as high as 50 percent; however, if this higher incentive is offered, the employer cannot medically test for tobacco use and instead must rely on an employee’s representation.

2. There is a new notice requirement.

Employers must provide a written notice to employees if a wellness program includes disability-related inquiries or medical examinations. In the notice, the employer must clearly explain what medical information will be obtained, who will receive the medical information, how the medical information will be used, the restrictions on its disclosure, and the methods the employer will use to prevent improper disclosure.

3. The proposed rule does not address other federal laws.

It remains unclear whether an employer can condition incentives on an employee’s family member’s participation in the wellness program without violating GINA. Moreover, the wellness program must still be structured to comply with other laws such as the Health Insurance Portability and Accountability Act.

Although the proposed rule is not final, the EEOC indicated that it is unlikely that either a court or the EEOC would find that an employer violated the ADA if an employer complies with the proposed rule.

For assistance reviewing your company-sponsored wellness program for compliance with the proposed rule, or for general questions regarding your wellness program, contact Jean Bender at jbender@dehs.com.

Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is one of the State’s largest law firms. The firm’s attorneys provide business and litigation counsel to individuals and corporate clients in a variety of practice areas. For more information about Davenport Evans, visit www.DEHS.com.