EEOC Endorses Incentives To Employees For Participation In Qualified Wellness Programs

On April 20, 2015, the United States Equal Employment Opportunity Commission (“EEOC”) issued proposed guidance concerning employer wellness programs. The proposed rule would amend the EEOC’s regulations and interpretive guidance implementing Title I of the Americans with Disabilities Act (“ADA”). Prior to the proposed rule, the EEOC was silent as to whether employers may offer financial incentives to encourage employees to participate in wellness programs. The proposed rule clarifies that the ADA permits employers to offer incentives to employees who participate in wellness programs and/or for achieving health outcomes. Under the proposed rule, employers will be permitted to offer participating employees a maximum incentive of 30% of the total cost of the employee-only coverage.

The proposed rule applies only to employee health programs that include disability-related inquiries or medical examinations. These programs must be “voluntary” and must be reasonably designed to promote health or prevent disease. In order for an employee’s participation to be deemed “voluntary,” the employer may not require employees to participate, may not deny health coverage to those who do not participate, and may not take adverse action against employees who do not participate. In addition, the employer must clearly explain:

1. What medical information will be obtained;
2. Who will receive the medical information;
3. The restrictions on disclosure; and
4. The methods the covered entity uses to prevent improper disclosure of employee’s medical information.

The proposed rule provides that an employer’s act of providing incentives to employees to participate in wellness programs will not render the program “involuntary.”

Members of the public have 60 days, or until June 19, 2015, to comment on the proposed regulations. At the end of the comment period, the EEOC will evaluate the comments and make revisions, if necessary. Assuming the proposed rules are adopted, employers can now provide financial incentives to increase employee health through qualified wellness programs. Stay tuned to see whether these proposed rules are in fact adopted.