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EEOC Proposes New Guidelines on the Value of Wellness Program Incentives

April 6, 2021

Earlier this year the U.S. Equal Employment Opportunity Commission (the “EEOC”) delivered to the Federal Register, for publication and public comment, its Notices of Proposed Rulemakings (the “Rule”) on wellness programs under the Americans with Disabilities Act (the “ADA”) and the Genetic Information Nondiscrimination Act (the “GINA”).  The proposed rules address the dollar value of incentives employers may offer to employees to encourage participation in wellness programs that require disclosure of medical information. 

The amount of such incentives has been at the center of wellness program design for years as too large an incentive violates the ADA and GINA.  After the public comment period closes, the EEOC will review comments and do a comment analysis to decide whether to move forward with the proposed rules.  Barring some extraordinary action or event, it is expected the proposed rules will be adopted.

Under current law, employers are allowed to provide incentives to employees for their participation in certain types of wellness programs. These incentives can be up to 30 percent of the employee’s total cost of health insurance. However, the ADA requires an employee’s participation in a wellness program that includes medical questions and exams be “voluntary.” Unfortunately, the ADA does not define “voluntary.” This begs the question of whether an incentive can be so large as to make the employee’s participation no longer voluntary? Previously it was argued that a large incentive for participating or penalty for not participating in a wellness program effectively compelled participation and thus void claims that participation is voluntary. To address this, the Rule proposes, with few exceptions, employers may offer no more than a de minimis incentive to encourage participation.  Of course, de minimis is not defined here so other definitions of it will have to suffice.

Unofficial versions of the Rules can be found here (https://www.eeoc.gov/regulations/wellness-rulemaking).  After publication in the Federal Register, the public will have 60 calendar days to submit comments.

Brody and Associates regularly advises management on complying with the latest state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.