EEOC Rescinds Financial Incentive Rules for Wellness Programs in 2019

Employers that offer wellness programs with incentives should consult legal counsel.

The new year brings a major change that affects employer wellness programs – the EEOC is rescinding regulations under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) relating to the use of financial incentives in employer-sponsored wellness programs.

The EEOC published notices in the Federal Register on December 20, 2018 stating that it was removing the financial incentive sections of the ADA regulations (29 CFR 1630.14(d)(3)) and the GINA regulations (29 CFR 1635.8(b)(2)(iii)) effective January 1, 2019.

The ADA and GINA regulations, which were issued by the EEOC in 2016, address how those two laws apply to employee health programs, including what constitutes a health program and what it means for a program to be voluntary.

The now EEOC-rescinded portion of regulations had set limits on incentives that could be offered by wellness programs that required employees to answer disability-related questions or undergo medical exams to earn a reward or avoid a penalty. The financial incentive rules were the subject of a federal lawsuit filed against the EEOC by the AARP. The court ultimately sided with AARP and held that the EEOC didn’t provide sufficient reasons justifying the financial incentive rules. The court ordered the EEOC to reconsider the rules, and set aside the existing rules effective January 1, 2019.

While the EEOC previously indicated that it would issue a notice of proposed rulemaking, it simply removed those portions of the regulations instead.

Because of this action by the EEOC, employers are left with no express guidance in the regulations as to how they may offer financial incentives in wellness programs, including what level of incentives may affect the voluntary nature of the program. Employers with wellness programs that include financial incentives should consult with legal counsel in light of this new development.

Erika Pickles, Employment Law Counsel/HR Adviser

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