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EEOC issues rules on employee wellness programs, even as court fights rage over its take on the law

By Jamie Kelly | Jun 2, 2016

Medical malpractice 07

CHICAGO — The federal Equal Employment Opportunity Commission issued regulations last month about what employers can and cannot do to encourage or even require employee participation in employer-sponsored wellness programs, while still complying with the Americans with Disabilities Act (ADA) and the Genetic Information Non-discrimination Act (GINA).

But those new rules have come amid pitched legal battles over whether the commission’s interpretation of those law is even correct.

“The EEOC now has issued wellness regulations under the ADA and GINA, but they're being challenged in court,” said Mark Casciari, a partner with Seyfarth Shaw LLP, of Chicago, in a recent interview with the Cook County Record.

Cascari pointed particularly to the case of EEOC vs Flambeau Inc.. In that case, the EEOC asserted Flambeau violated the ADA by requiring employees to participate in a health risk screening and so-called “biometric tests,” including height, weight, blood pressure measurements and a blood draw. An employee declined to participate and the company refused to offer him health insurance coverage. A federal district court judge dismissed the case and the EEOC’s appeal before the U.S. Seventh Circuit Court of Appeals in Chicago is now pending.

Cascari said that case "will be an important decision to keep track of, because the Seventh Circuit is going to pass judgment on the EEOC's reading of the ADA, which is a stated basis for its wellness regulations.”

“This decision will impact whether the EEOC's regulations on wellness programs are the correct reading of the statute,” Casciari said. “The district court judge, Barbara Crabb, said the EEOC's reading of the Americans with Disabilities Act is wrong and not consistent with the statute, which undermines the regulations.”

The rules the EEOC issued allows employers to use a certain amount of money as either a reward or a penalty to encourage participation in a wellness program. Under the rule, employers are limited to offering an incentive of up to 30 percent of the total cost of a health insurance plan that covers a single person. The commission’s stated goal with the regulations is to ensure that employees with disabilities aren’t forced to disclose health information or undergo medical testing in order to obtain health insurance.

In a detailed explanation of the rule, the commission said, “(T)he rule is consistent with the commission's objective of ensuring that incentives for answering disability-related questions or undergoing medical examinations do not become so high as to render the employee's participation involuntary.”

Cascari said that employers have fought the EEOC’s interpretation because wellness programs can help reduce costs and boost productivity.

“There are a lot of employers who think wellness is good and that health risk assessments are good, that biometric screening is good, and that people should know about their risks so they can change their behavior and reduce health expenses,” he said. “If you take away wellness incentives, which the EEOC would want you to do in substantial part, it may be counter-productive in promoting wellness.”

Wellness programs are already subject to regulations under both the Affordable Care Act, and the Health Insurance Portability and Accountability Act. Following those regulations, which are already settled, is important for employers to protect themselves, Cascari said.

“When it comes to the EEOC, the question is whether any litigation from the EEOC about non-compliance with the regulations will continue to be unsuccessful,” he said. “If the employer wants to reduce all risk of EEOC litigation, it could comply with the EEOC regulations. On the other hand, the EEOC regulations could be illegal, so you may unnecessarily be complying.”

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Organizations in this Story

U.S. Court of Appeals for the Seventh CircuitSeyfarth Shaw, LLPU.S. Equal Employment Opportunity Commission