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EEOC Withdraws Proposed Wellness Plan Incentive Rules

on Thursday, 11 March 2021 in Labor & Employment Law Update: Sarah M. Huyck, Editor

The EEOC recently withdrew its proposed wellness plan incentive rules, leaving great uncertainty for employers offering incentives for participation in wellness plans that provide medical care or make disability-related inquiries.

Many employers offer incentives to employees to participate in a wellness plan. Oftentimes, these incentives relate directly to the employer’s group health plan, such as discounted premium rates; other times, the incentives are in the form of cash or other benefits, such as gym memberships. Similarly, employers are offering incentives, such as a $100 gift card, cash bonus, or additional paid time off, to employees to get a COVID-19 vaccine. But incentivized wellness programs (including incentivized COVID-19 vaccination programs) may need to comply with a number of laws, including the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).

The ADA prohibits employers from making disability-related inquiries or requesting medical examinations designed to elicit information about a disability, except in limited circumstances. GINA prohibits employers from requesting genetic information from employees, except in limited circumstances. Accordingly, when an employer offers an incentive for employees to participate in a wellness program that requires a “medical examination” or makes disability or genetic-related inquiries, the program may need to comply with the EEOC’s rules requiring participation to be “voluntary.”

The EEOC’s “voluntariness” rules are in a state of uncertainty. As background, in 2016, the EEOC issued regulations permitting employers to incentivize employees to “voluntarily” participate in wellness programs. Participation was generally considered voluntary if the incentive was less than 30% of the cost of self-only coverage in the employer’s group health plan. The regulations were struck down by a federal court effective in 2019. In January 2021, the EEOC issued new proposed rules which would have required that, to be considered voluntary, any incentive must be “de minimis,” such as a t-shirt.

But before the proposed rules were published, the Biden Administration issued a regulatory freeze, preventing the proposed rules from being finalized. And more recently, the EEOC announced that the proposed regulations have been formally withdrawn.

While the withdrawal of the proposed regulations at least indicates that an incentive may be more than “de minimis” to be considered voluntary, the rule is still uncertain. Employers should be cautious when incentivizing employees to participate in a wellness program (including, in many cases, a COVID-19 vaccination program). Additional guidance from the EEOC is highly anticipated.

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