United States: Proposed Wellness Plan Legislation Responds To Lawsuits Filed By EEOC

The United States House of Representatives' Education and the Workforce Committee will conduct a hearing on March 24, 2015 about the House version of a bill proposed to the Senate two weeks earlier—the "Preserving Employee Wellness Programs Act" (S. 620) (H.R. 1189) (the "Bill").1

The Bill was introduced to the Senate on March 2, 2015 by Sen. Lamar Alexander (R-Tenn.) and Rep. John Kline (R-Minn.) with Sens. Mike Enzi (R-Wyo.), Johnny Isakson (R-Ga.), Tim Scott (R-S.C.), Orrin Hatch (R-Utah), Pat Roberts (R-Kan.), and Rep. Tim Walberg (R-Mich.).2 The Bill seeks to clarify the law relating to "nondiscriminatory employer wellness programs" in the wake of several lawsuits filed by the Equal Employment Opportunity Commission ("EEOC") that have created uncertainty about the legality of these programs.

Background

The Americans with Disabilities Act of 1990 ("ADA") authorizes employers to conduct medical examinations and to obtain employee medical histories as part of wellness programs as long as participation by employees is voluntary.3 In addition, the ADA contains a "safe harbor" that exempts "bona fide" benefit plans from the ADA's general prohibitions when the terms of such plans "are based on underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law."4

Like the ADA, Title II of the Genetic Information Nondiscrimination Act of 2008 ("GINA") contains an exception that permits employers to request and acquire genetic information in connection with voluntary wellness programs.5 Congress directed the EEOC to enforce these protections. In July 2000, the EEOC stated that "a wellness program is 'voluntary'"—and therefore lawful—"as long as an employer neither requires participation nor penalizes employees who do not participate."6

In 2006, the U.S. Departments of the Treasury, Labor, and Health and Human Services issued regulations that exempted wellness programs from the nondiscrimination requirements of the Health Insurance Portability and Accountability Act ("HIPAA") if they met certain requirements.7 Those regulations authorized employers to offer financial inducements to participate in wellness plans of up to 20 percent of the cost of coverage.8 On January 6, 2009, the EEOC announced that it agreed with this 20 percent standard. The EEOC reasoned that "[b]orrowing from the HIPAA rule is appropriate because the ADA lacks specific standards on financial inducements, and because it will help increase consistency in the implementation of wellness programs."9 On March 6, 2009, however, the EEOC rescinded this statement and announced that it was "continuing to examine what level, if any, of financial inducement to participate in a wellness program would be permissible under the ADA."10

In 2010, Congress passed the Patient Protection and Affordable Care Act ("ACA"). The ACA regulates wellness plans and says that "[a] reward may be in the form of a discount or rebate of a premium or contribution, a waiver of all or part of a cost-sharing mechanism (such as deductibles, copayments, or coinsurance), the absence of a surcharge, or the value of a benefit that would otherwise not be provided under the plan."11 Specifically, the ACA states that the reward for a wellness program "shall not exceed 30 percent of the cost of the coverage in which an employee or individual and any dependents are enrolled. ... The Secretaries of Labor, Health and Human Services, and the Treasury may increase the reward available under this subparagraph to up to 50 percent of the cost of coverage if the Secretaries determine that such an increase is appropriate."12

On August 20, 2012, the U.S. Court of Appeals for the Eleventh Circuit rejected an ADA challenge to a wellness program that imposed a $20 charge on each biweekly paycheck issued to employees who refused to participate in the program.13 The court reasoned that the ADA's "safe harbor" exempted the wellness plan from the ADA's prohibitions.14

On January 18, 2013, the EEOC reiterated that "[t]he EEOC has not taken a position on whether and to what extent a reward amounts to a requirement to participate, or whether withholding of the reward from non-participants constitutes a penalty, thus rendering the program involuntary."15 The EEOC held a hearing about wellness plans on May 8, 2013.16 During the hearing, Commissioner Victoria Lipnic complained that the EEOC "has not adopted nor articulated a position on these matters, I believe leading to uncertainty and confusion and I am certain frustration."17 The EEOC still did not clarify its position.

On June 3, 2013, the U.S. Departments of the Treasury, Labor, and Health and Human Services issued rules that permit employers to "reward" employees who participate in wellness plans, including plans that involve health-related questionnaires or biometric tests, by offering financial inducements up to 30 percent of the cost of health coverage and as high as 50 percent for "programs designed to prevent or reduce tobacco use."18      

From August through October 2014, the EEOC filed three lawsuits that alleged that particular wellness programs violated the ADA and GINA.19 In one case, EEOC v. Honeywell International, Inc., the EEOC asserted that a wellness program violates the ADA and GINA even if the program fully complies with the standards set out in the ACA. The court in that case declined the EEOC's request for preliminary relief.

The EEOC is considering issuing regulations about wellness plans and may do so later this year.

Senate Hearing

On January 29, 2015, the Senate Committee on Health, Education, Labor and Pensions conducted a hearing on "Employer Wellness Programs: Better Health Outcomes and Lower Costs." During the hearing, both Democratic and Republican members expressed frustration with the EEOC. At the hearing, Eric Dreiband—a partner in Jones Day's Washington Office and former General Counsel of the EEOC—testified before the Committee. Mr. Dreiband explained that:

  • The ADA authorizes employers to conduct medical examinations and to obtain employee medical histories as part of wellness programs as long as participation by employees is voluntary;
  • The ACA specifies that the reward for a wellness program may be up to 30 percent of the cost of coverage, with the potential for that to increase to 50 percent;
  • The U.S. Departments of the Treasury, Labor, and Health and Human Services have issued standards for wellness programs that likewise endorse the ACA's 30 and 50 percent standards20; and
  • The U.S. Court of Appeals for the Eleventh Circuit has determined that the ADA may exempt wellness plans from that law.21

Mr. Dreiband cautioned that "compliance with the ACA may not eliminate the risk of ADA liability for employers, at least according to the U.S. Equal Employment Opportunity Commission. Since March 2009, the Commission has declined to endorse any definition of what the ADA's 'voluntary' standard means, and in a recent court case, the EEOC asserted that the decision by the Eleventh Circuit is wrong. So employers and employees throughout the United States are left with the rather bizarre situation in which the Congress and one part of the Executive Branch of the Government have endorsed a set of standards that it says govern wellness plans and comply with the law while the EEOC has failed or refused to explain what it will treat as a lawful 'voluntary' wellness plan. The Commission's silence about this issue is perplexing, and the Congress, the EEOC, or both should clarify exactly how a wellness plan will comply with the ADA."22

The Proposed "Preserving Employee Wellness Programs Act"

The Bill seeks to respond to two positions taken by the EEOC: (i) that a wellness program that offers incentives or rewards in compliance with the ACA may still violate the ADA or GINA, and (ii) offering incentives for the collection of an employee's spouse's genetic information for participation in the employee's wellness program violates GINA.

Specifically, the Bill proposes that a workplace wellness program does not violate the ADA or titles I or II of GINA if the program complies with Section 2705(j) of the Public Health Service Act ("PHSA")—which was amended by the ACA to provide that an employer may offer a lawful financial incentive of "30 percent of the cost of the coverage," or up to 50 percent if approved by the Secretaries of Labor, Health and Human Services, and the Treasury. The Bill specifically finds that when Congress enacted the ACA, it "intended that employers would be permitted to implement health promotion and prevention programs that provide incentives, rewards, rebates, surcharges, penalties, or other inducements related to wellness programs, including rewards of up to 50 percent off of insurance premiums for employees participating in programs designed to encourage healthier lifestyle choices."

The Bill also provides that offering incentives for the "collection of information about the manifested disease or disorder of a family member" for use in another family member's workplace wellness program does not violate GINA.

Additionally, the Bill would allow employers to implement a deadline of up to 180 days for an employee to request and complete an alternative wellness program if it is unreasonably difficult or medically inadvisable for the employee to participate in the original wellness program.

Next Steps

The Bill has been referred to the Senate Committee on Health, Education, Labor and Pensions. The language of the proposed legislation specifically finds that "Congress has a strong tradition of protecting and preserving employee workplace wellness programs." As proposed, the Bill would be retroactive to March 23, 2010—the date that the ACA was signed into law.

The United States House of Representatives Education and the Workforce Committee will conduct a hearing on March 24, 2015 about the House version of the Senate's Bill.

And, finally, the EEOC is working on proposed regulations. Any regulations by the EEOC may or may not address compliance with the ACA, the ADA, and GINA.

Footnotes

1.http://edworkforce.house.gov/calendar/eventsingle.aspx?EventID=398555.

2.See https://www.congress.gov/bill/114th-congress/senate-bill/620. See also http://www.help.senate.gov/newsroom/press/release/?id=7d5490e3-3f7a-46d5-b812-e8acc94e4d5b&groups=Chair.

3.42 U.S.C. §§ 12112(d)(4)(B) & 12201(c)(2).

4.42 U.S.C. § 12201(c)(2).

5.42 U.S.C. § 2000ff–1(b)(2).

6.http://www.eeoc.gov/policy/docs/guidance-inquiries.html.

7.See Department of Labor Regulations, 29 C.F.R. § 2590.702(f).

8.See 78 Fed. Reg. 33158.

9.See EEOC Opinion Letter, Jan. 6, 2009 at 2, rescinded on March 6, 2009, http://pdfserver.amlaw.com/cc/WellnessEEOC2009.pdf.

10.See http://www.eeoc.gov/eeoc/foia/letters/2009/ada_disability_medexam_healthrisk.html.

11.42 U.S.C. § 300gg-4(j)(3)(A).

12.Id.

13.See Seff v. Broward Cnty., 691 F.3d 1221 (11th Cir. 2012).

14.Id. at 1223-24.

15.See http://www.eeoc.gov/eeoc/foia/letters/2013/ada_wellness_programs.html.

16.See http://www.eeoc.gov/eeoc/newsroom/release/5-8-13.cfm;

http://www.eeoc.gov/eeoc/meetings/5-8-13/index.cfm.

17.http://www.eeoc.gov/eeoc/meetings/5-8-13/transcript.cfm.

18.See http://webapps.dol.gov/FederalRegister/HtmlDisplay.aspx?DocId=26880&AgencyId=8&DocumentType=2.

19.EEOC v. Orion Energy Sys., Inc., Case No. 14-1019 (E.D. Wis. filed Aug. 20, 2014); EEOC v. Flambeau, Inc., Case No. 14-638 (W.D. Wis. filed Sept. 30, 2014); EEOC v. Honeywell Int'l, Inc., Civil No. 14-4517 (D. Minn. filed Oct. 27, 2014).

20.See http://webapps.dol.gov/FederalRegister/HtmlDisplay.aspx?DocId=26880&AgencyId=8&DocumentType=2.

21.See Seff v. Broward Cnty., 691 F.3d 1221 (11th Cir. 2012).

22.http://www.help.senate.gov/imo/media/doc/Dreiband2.pdf.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions