EEOC Wellness Regulations Vacated Effective Jan. 1, 2019

By Jonathan E. O’Connell, SHRM-SCP January 16, 2018
EEOC Wellness Regulations Vacated Effective Jan. 1, 2019

​The U.S. District Court for the District of Columbia has vacated the Equal Employment Opportunity Commission's (EEOC's) wellness rule effective Jan. 1, 2019, instructing the agency that its goal of revising the rule by 2021 is too slow.

The Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA) protect against the disclosure of an employee's health and genetic-related information. However, both laws contain an exception, permitting the collection of such information as part of employer wellness plans, as long as an employee provides such information voluntarily.

[SHRM members-only toolkit: Designing and Managing Wellness Programs]

In July 2016, the EEOC issued a new rule under ADA and GINA relating to wellness plans. The ADA rule stated that, in connection with such plans, employers could implement penalties or rewards of up to 30 percent of the cost of self-only coverage to encourage employees to disclose ADA-protected information, without causing the disclosure to be involuntary. The GINA rule similarly stated that offering a 30 percent incentive to an employee to disclose certain genetic information would not render the disclosure involuntary. The rule took effect Jan. 1, 2017, to provide employers with enough lead time to structure their wellness plans accordingly.

AARP filed suit seeking a holding that the regulations were invalid. AARP contended that a 30 percent incentive (or penalty) rendered an employee's disclosure of ADA- and GINA-protected information involuntary, in that employees who could not afford to pay such amounts would effectively be forced to provide the information.

Last summer, the court agreed with AARP, holding that the EEOC's rulemaking was arbitrary and did not offer a valid reason to justify the proposed incentive levels. Thus, the court sent the regulations back to the EEOC for further revisions.

The court did not, however, vacate the rule because of concerns that doing so would cause business disruptions. The court observed that many employees may have already provided protected information to employers. So, in those instances in which incentives were given by an employer, employees might be required to pay the money back. Alternatively, in those instances in which penalties were imposed upon employees, employers might have to reimburse such amounts. The court's determination that vacating the EEOC's rule was inappropriate was also based on its assumption that the EEOC would be able to revise the regulations in a timely manner.

After the court's opinion was issued, AARP filed a motion to alter or amend the judgment, requesting the court to reconsider its decision and vacate the EEOC's regulations. Opposing the motion, the EEOC echoed the court's analysis in its initial opinion, asserting that vacating the rule would be too disruptive for employers and employees.

Rejecting the EEOC's argument, the court reasoned that, unlike the 2018 wellness plans for which "the egg has been scrambled," there was ample time for employers to develop wellness plans for 2019 with the knowledge that the rule would no longer be in effect.

Thus, the court agreed to vacate the regulations, but made the effective date of such vacatur Jan. 1, 2019. Also playing into the court's decision to modify its prior judgment was the timeline offered by the EEOC for issuing its revised rule. The EEOC indicated that the new rule would not likely be ready until 2021. The court stated that such a lengthy delay was inconsistent with its expectation that the revised versions of the rule would be issued in a timely manner and thus also supported reconsideration of the court's earlier decision. The court stated that "an agency process that will not generate applicable rules until 2021 is unacceptable" and strongly encouraged the EEOC to take steps to implement revised regulations faster.  

AARP v. EEOC, D.D.C., No. 16-2113 (Dec. 20, 2017).

Professional Pointer: While it remains unclear whether the EEOC will issue its new rule before Jan. 1, 2019, employers should continue to monitor this issue so that they can ensure their future wellness plans comply with federal law.

Jonathan E. O'Connell, SHRM-SCP, is a labor and employment attorney practicing with the federal government in Washington, D.C.


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