United States: EEOC Issues New Guidance On Employee Wellness Programs

Employee wellness programs are becoming increasingly popular in the workplace as a way to boost employee morale and increase productivity. If not carefully crafted, however, employee wellness programs can run afoul of Title I of the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). In a Final Rule published on May 17, 2016, effective on July 16, 2016, the Equal Employment Opportunity Commission (EEOC) amended its regulations implementing the ADA and GINA to provide further clarification as to what is and what is not an acceptable employee wellness program.

ADA Amendments Limit Purpose and Scope of Wellness Programs

The amendments to the ADA focus on limiting the purpose and scope of permissible wellness programs. Generally, 29 C.F.R. § 1630 outlines the circumstances under which voluntary medical examinations and inquiries are permitted. An employee wellness or health program must be "reasonably designed to promote health or prevent disease"; this criterion is evaluated case-by-case based on the relevant facts and circumstances. Of note, programs that would not meet this standard are those that measure, test, screen or collect information but do not provide any follow-up advice as to how to improve health or prevent disease. A program designed to provide the employer with information to estimate future health care costs also does not meet this standard.

ADA Amendments Protect Employee Choice and Accessibility

The amended regulations require that employee health programs be voluntary, which means the employer must not (1) require employees to participate, (2) deny health care coverage to employees who do not participate, or (3) take any form of adverse employment action against or coerce employees who do not participate. In addition, employers must provide employees with a notice written in plain language that advises the employee what medical information will be obtained, how it will be used and restrictions on its use. Information obtained under employee wellness programs is still considered protected health information for purposes of HIPAA compliance. It is important to ensure that all information is kept confidential and that employees handling the information are well trained on their confidentiality obligations. Employers also must ensure that they do not receive the information in a manner that would disclose the identity of specific individuals.

Employers may offer incentives, including financial incentives, to encourage employees to participate in employee wellness programs. To help ensure that the incentive is not so great as to "coerce" employee participation, thus making the program involuntary, incentives may not exceed 30 percent of the cost of self-only coverage under the group health plan. Where an employer offers multiple health care coverage options, the incentive may not exceed 30 percent of the cost of the lowest self-only coverage of all the plans offered, even if the employee is not enrolled in the lowest-cost health care plan. Of note, the 30 percent limit on permissible incentives does not apply in the case of smoking cessation programs enacted pursuant to the regulations implementing the Affordable Care Act, which permit a financial incentive of up to 50 percent of the cost of self-only coverage.

Employers also are required to provide a reasonable accommodation to employees who want to participate in wellness programs and earn the financial incentives, but cannot do so due to a disability. For example, an employer who provides incentives for employees to attend nutrition classes would have to provide a sign language interpreter for a deaf employee, provided that doing so does not constitute an undue burden.

Finally, employers who implement an acceptable employee wellness program are not relieved of their statutory obligations not to discriminate against employees under Title VII of the Civil Rights Act, the ADA, the Equal Pay Act, the Age Discrimination in Employment Act or GINA.

GINA Amendments Enact Similar Limitations to Protect Employees and Their Families

Generally, 29 C.F.R. § 1635.8 bars an employer from obtaining genetic information about an employee or an employee's family member. This general prohibition does not apply to an employer's voluntary wellness program. To ensure that this exception applies, the program must be "reasonably designed to promote health or prevent disease." This standard, like that set out in the ADA guidelines, is evaluated by looking at all the relevant facts and circumstances. For example, programs that penalize an individual because his or her spouse suffers from a disease or disorder will not meet this standard. Information collected under the program actually must be used to design services that address the conditions identified in the information collected.

Employers may not offer incentives for employees to provide their genetic information, with two important exceptions:

  • Employees who have voluntarily provided genetic information indicating that they are at an increased risk of developing a condition in the future may receive incentives to participate in a disease management program. Employers also may offer incentives to employees for completing health risk assessments, so long as the receipt of the incentive is not conditioned on providing genetic information.
  • An employer may provide an incentive to an employee whose spouse completes a health risk assessment, except when the incentive is conditioned on receiving genetic information.

Nothing in the amended regulations eliminates an employer's obligation to treat genetic information as confidential and to maintain it in a medical file that is separate from the personnel file.

The amendments to the regulations implementing GINA adopt the same percentage limits on the value of incentives as those implementing the ADA. It is important to note, however, that GINA also contemplates spousal participation in a wellness program. In that case, the limitation on incentives is not aggregated per family. Thus, an employer may provide an incentive of up to 30 percent of the cost of the self-only coverage to both the employee and his or her spouse.

Employers may not ask employees to agree to permit the sale of their genetic information in exchange for participation in the wellness plan. Similarly, employers are prohibited from denying access to health insurance benefits or retaliating against an employee because his or her spouse refuses to provide information as part of the wellness program.

As with the ADA regulations, employers must make reasonable accommodations to allow an employee to participate in a wellness program so long as doing so does not constitute an undue burden. In addition, where an employer's wellness program provides medical care and rewards an individual for meeting a health standard, the employer must provide a reasonable alternative to earning any financial incentive. For example, a wellness program that rewards an employee for reaching a certain body mass index (BMI) must modify that standard for any employee who cannot reach that BMI for medical reasons, such as a thyroid condition, so that the employee can still earn the financial incentive.

Compliance

The new guidance and changes to the regulations are designed to facilitate employer-sponsored wellness programs, a worthy benefit for both employers and employees. However, employers who sponsor such programs must ensure that the program is in complete compliance with what remain complicated legal requirements to avoid liability under the ADA and GINA.

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.

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