The 30% Rule: Proposed EEOC Guidance on Corporate Wellness Programs Would Set Cap on Incentives

For employer-sponsored wellness programs, when do incentives become punitive, making the use of biometric screening or other medical exams unlawful under the Americans with Disabilities Act (ADA)? That question is at the heart of three lawsuits that were filed recently by the EEOC against several large employers, alleging that their workplace wellness policies violated the ADA. Although employers aim to encourage positive health outcomes by implementing wellness programs, these lawsuits are proof that despite good intentions, employers should tread carefully when designing incentives for those programs. In April, the EEOC unveiled its long-awaited proposed regulations, saying that employers may use medical exams as part of a wellness program only if the incentives equal no more than 30 percent of the total cost of employee-only coverage. “Employers have a brief window, until June 19, 2015, to comment on the EEOC’s proposed rules,” says Mark Girouard of Nilan Johnson Lewis. Girouard advises and defends employers on issues associated with ADA compliance, including potential liability arising out of medical exams. “The EEOC’s proposed rule provides some much-needed clarity, but raises additional concerns for employers.” Among those concerns is the EEOC’s suggestion that an employer may be required to test affordability for each of its plans, for each employee. “If that suggestion becomes the rule,” says Girouard, “then the same wellness plan incentives could be voluntary for some employees, and non-voluntary for others, which would obviously create significant administrative headaches.” In addition to considering submitting comments regarding the pros and cons of the proposed rule, Girouard recommends that employers begin scrutinizing their wellness programs and incentives on the assumption that the EEOC’s proposal will soon become law. Contact Mark Girouard at (612) 305-7579 or mgirouard@nilanjohnson.com, or Angela Deeney at (651) 789-1277 or angela@kohnstamm.com.

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