EEOC Update: New Wellness Program Regulations Create New Employer Obligations

    Locke Lord Publications

    New technologies and increased awareness of health-related costs continue to drive growing use of employee wellness programs, which can provide significant benefits to employers and employees alike. Accordingly, employers have long awaited the Equal Employment Opportunity Commission’s (EEOC) recently released regulations and guidance under the Genetic Information Nondiscrimination Act (GINA, regulation here) and Americans with Disabilities Act (ADA, regulation here), which help clarify how genetic and disability information may be collected and used in connection with employee wellness programs.

    The ADA prohibits employment discrimination based on disability, and generally also prohibits asking employees about their medical conditions and requiring medical examinations. General prohibitions notwithstanding, the ADA historically permitted such inquiries so long as they were part of “voluntary” wellness programs. However, until now, the EEOC has not provided clear guidance as to what makes a wellness program voluntary. The new regulations fill this gap.

    The regulations set forth the following four-part test for determining whether a wellness program is voluntary:

    1. The program must not require employees to participate.
    2. The program must not deny coverage under a group health plan for employees who do not participate.
    3. Employers must not take adverse action, retaliate against, or coerce employees who do not participate.
    4. Employers must provide notice regarding what medical information will be obtained, how it will be used, who will receive it, how its disclosure will be restricted, and how improper disclosure will be prevented.

    In addition to the new standard for voluntariness, the regulations provide employees various other protections. An employer may only receive information collected by a wellness program in aggregate form, such that the employer cannot identify a particular individual associated with such information, except as necessary to administer a health plan. Additionally, employees generally cannot be required to waive confidentiality rights with respect to further sale, exchange, sharing, or other transfer in order to participate in the wellness program or receive an incentive for participation. Information about employees remains subject to the requirements of other laws that might govern its treatment, such as HIPAA. Finally, the regulations clarify that in order to maintain “voluntary” status, the financial incentives for participation in wellness programs generally cannot exceed 30% of what would be the total cost of self-only coverage (including both the employee’s and the employer’s contribution).

    Wellness programs are likely to maintain their popularity with both employees and employers. As such, employers making use of those programs should be careful to ensure compliance with the new regulatory requirements and make provision for appropriate handling of employee information.

    Sean Killian is an Associate in Locke Lord’s Dallas office. He can be reached at skillian@lockelord.com.

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