Is Your Wellness Program “Well” According to the EEOC? Part III

Who says sequels are never as good as the original? Previously we wrote on the topic of employer wellness programs here and here. These posts concerned proposed regulations put forth by the Equal Employment Opportunity Commission to address when a wellness program complies with the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act and active litigation by the same federal agency over alleged violations by certain employers taking place through wellness plans. In the last month, however, a number of important developments have come out that employers with wellness programs should know.

First, on May 16, 2016, the EEOC released its final new rules concerning wellness programs. A big issue addressed by the rules is the question of how much is too much? In other words, how much of a financial incentive can an employer offer to an employee to participate in a wellness program for it to remain voluntary? Generally, the answer employers will find in the EEOC’s final regulations is 30%. That is, the financial incentive cannot exceed 30% of the plan’s cost for the employee. There are some nuances in what numbers you look at depending on the health plan and wellness program offered by the employer, but 30% is the general rule. The rules go into effect on July 18, 2016.

Second, on June 16, 2016, the EEOC issued a sample notice for employers offering wellness programs. One of the new requirements of wellness programs is that employers must disclose to employees who are subject to disability-related inquiries or medical examinations a notice that explains what medical information will be obtained, how it will be used, who will receive it, the restrictions on its disclosures, and the methods the employer will use to prevent improper disclosure of it. The EEOC’s sample notice can be a cost-effective tool, but employers should take care to be sure that it makes sense for their workplace.

Although the EEOC’s enforcement efforts with respect to wellness programs have proven to be controversial, employers with wellness programs are likely best positioned to avoid the agency’s wrath or other private litigation by updating policies and practices to conform to these new rules. With the release of the EEOC’s final rules, now is an ideal time to self-audit your wellness program with counsel to ensure legal compliance.