EEOC Wellness Rules Apply for Now

Courts, businesses will likely revisit question of fees charged to workers who opt out of wellness programs

By Allen Smith, J.D. Jan 11, 2017
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The Equal Employment Opportunity Commission's (EEOC's) new rules governing the fees employers can assess employees who do not participate in wellness programs took effect Jan. 1. In October of last year, AARP, acting on behalf of its members, objected to the rules and filed a motion to block them, which a district court denied. But AARP's lawsuit isn't dead.

The regulations, issued under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA), permit employers to increase premiums for employee self-only coverage by up to 30 percent if employees choose not to participate in employer-sponsored wellness programs that solicit ADA- or GINA-protected information.

AARP argued that its members will suffer irreparable harm because many of them will be unable to afford premium increases, forcing them to disclose confidential information they otherwise would not have shared.

The preliminary injunction AARP requested to block the rules "would have caused a great deal of additional uncertainty for employers in what are already uncertain times in the health and welfare benefits arena," said Garrett Fenton, an attorney with Miller & Chevalier in Washington, D.C.

No Irreparable Harm

AARP did not satisfy the high burden of showing irreparable harm if the rules weren't preliminarily barred. But the court made a point that it "was not, by any means, indicating that the EEOC had a substantial likelihood of success on the merits"—which is another hurdle that the plaintiffs must overcome to achieve an injunction. Instead, the opinion emphasized that the case raises significant questions at the intersection of the ADA, GINA, the Affordable Care Act (ACA) and the Health Insurance Portability and Accountability Act.

The court noted that one AARP member said he did not participate in his employer's wellness program in 2016 and, as a result, will be forced to pay a higher premium in 2017. He won't participate in the wellness program in 2017 either. A higher premium is economic harm, not irreparable harm, the court said. If the rules are permanently barred later in 2017, higher premiums imposed on this person while the rules were in effect could be reimbursed through premium adjustments, the court stated.

So, "the case likely is far from over," Fenton said. "To be sure, AARP does face an uphill battle, as it can be very difficult, in general, to persuade a court to invalidate regulations implementing statutory provisions that are ambiguous or open to interpretation, in light of the strong judicial deference typically afforded to government agencies."

Employers Welcome the Ruling

The EEOC's rules have been largely welcome by employers since they "provide definitive guidance in an area that had been shrouded in uncertainty for several years," Fenton said.

So, the U.S. District Court for the District of Columbia's Dec. 29 ruling "is good news for employers," most of whom have planned and implemented wellness programs to comply with the new EEOC regulations, said Tiffany Downs, an attorney with FordHarrison in Atlanta.

Frank Morris Jr., an attorney with Epstein Becker Green in Washington, D.C., agreed that the decision is "excellent news for employers because an injunction at the very end of 2016 would have created chaos for wellness plans with plan years commencing on or after Jan. 1." He believes "the various factors that [the court] identified in denying a preliminary injunction strongly suggest that it will ultimately reject the request for a permanent injunction."

Wellness programs may be participatory, such as reimbursements for gym membership, or outcome-based, where rewards are offered if an employee satisfies a particular health goal such as reducing his or her cholesterol, noted Ilyse Schuman, an attorney with Littler in Washington, D.C., and co-chair of the Workplace Policy Institute, the firm's government affairs branch.

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

While employers are glad the court did not rule in the other direction, she said, the wellness rules are inconsistent with ACA rules. So, the wellness rules might be re-evaluated after Democrats lose their majority among EEOC commissioners in July, she predicted.

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