Federal Court Vacates Incentive Provisions of EEOC Wellness Regulations Beginning in 2019

On December 20, 2017, Judge John D. Bates of the United States District Court for the District of Columbia issued an order vacating the incentive provisions of the United States Equal Employment Opportunity Commission (“EEOC”) final wellness program regulations effective January 1, 2019. Employers can operate their wellness programs under current guidance for 2018, but will want to consider adjusting their wellness programs for 2019 if no applicable EEOC guidance is issued before then.

In 2016, the EEOC issued wellness program regulations, including regulations detailing the percentage limits on wellness incentives. These regulations were promulgated under the Americans with Disabilities Act (“ADA”) and the Genetic Information Nondiscrimination Act (“GINA”) with respect to employer-sponsored wellness programs, and permitted incentives generally up to 30% of the cost of plan coverage.The American Association of Retired Persons (“AARP”) sued the EEOC, alleging that the final regulations were inconsistent with the requirement that such wellness programs be “voluntary,” as used under the ADA and GINA. Last August, the District Court denied the AARP’s initial request for injunctive relief, but did order the EEOC to reconsider the limits it placed on wellness program incentives. The Court found that the EEOC did not properly consider whether the percentage limit on incentives would ensure the program remained “voluntary,” as required by the ADA and GINA, and sent the regulations back to the EEOC for reconsideration. However, at that time the Court decided that the final regulations would remain in place while that determination proceeded. The EEOC subsequently gave the Court a timetable of its proposed review and issuance of revised proposed and final regulations and indicated that it did not expect the revised final rules to take effect until early 2021.

In its December 20, 2017 decision, the court found that the EEOC’s proposed timetable to reissue the new regulations was not satisfactory. In light of the decision, the Court concluded that the proper remedy was to vacate the incentive provisions of the EEOC’s wellness regulations. But to accommodate employers, the Court did not vacate them until 2019. Although the incentive provisions of the regulations will be vacated as of January 1, 2019, the Court did not agree to AARP’s request to block their enforcement before that date. Therefore, the rules continue to be in effect until vacated.

If you have any questions, please contact Ed Hammond at ehammond@clarkhill.com | (248) 988-1821; Doug Ellis at dellis@clarkhill.com | (412) 394-2367; or another member of Clark Hill's Labor and Employment Practice Group.