All isn't well when it comes to wellness programs in 2019

When the clock struck midnight and ushered in a new year, employers were plunged into a strange limbo when it comes to maintaining wellness programs. Because of a federal court ruling, the Equal Employment Opportunity Commission's final rules providing concrete guidance for maintaining wellness plans were wiped off the books on the first day of 2019. That means plans in place might no longer be valid or ideal plans might now be permissible. How did we get to this point? And what can employers do in the interim while waiting for the next round of laws to take effect? ----- Goodbye, wellness program rules Let's go back in time to May 2016, when the EEOC finally stepped up to provide a set of rules for employers to follow for implementing increasingly popular wellness programs. These programs offered incentives to workers who achieved fitness goals, participated in stress-release activities, or ceased smoking or other poor lifestyle choices, among other things. And many of them required workers to submit to health risk assessments and biometric screenings at certain points along the way. Employers liked them because they generally led to more productive employees, less employee stress, reduced sick days, fewer injuries, and happier workers. Employees liked them because they provided monetary incentives and others for adopting a healthy lifestyle a true win-win. The sticking point had always been developing rules to ensure that employers didn't force employees into activities they didn't want to voluntarily participate in; if the programs were found to be involuntary, they would violate both the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). In order to provide some assurances, the EEOC issued rules that permitted employers to use an incentive or penalty of up to 30 percent of the cost of self-only coverage to encourage participation in an employer-sponsored wellness program without rendering the program "involuntary" in violation of the federal laws. Put a bit differently, they allowed employers to discount insurance costs for participants and increase them for nonparticipants. These rules were scheduled to take effect on Jan. 1, 2017, but they were blocked by a federal court as the result of a lawsuit filed by the AARP. The association argued that such an incentive (or penalty) was too great and, in effect, forced employees to participate in the wellness programs, removing them from the realm of voluntary. A federal court in Washington, D.C., agreed with the AARP and struck down the regulations in December 2017, asking the EEOC to take another stab at them. However, the court didn't strike them down immediately. After hearing further arguments about how many businesses had already implemented wellness programs in reliance upon the EEOC rules, the court provided a long lead-up time before the rules would become invalid. The date for them to be officially off the books: Jan. 1, 2019. ----- Three options for what to do now So now that the clock has struck midnight, employers will need to decide their level of risk tolerance when it comes to implementing wellness program rules. Three options exist for handling a wellness program in 2019: stick with the current plan, lower the incentives/penalties to avoid legal trouble, or scrap it altogether. If a company has a wellness incentive and penalty program that complied with the old EEOC rule providing a 30 percent level it could be retained but obviously risk a lawsuit given that a federal court has already concluded that such a high reward/punishment violated the ADA and GINA. So proceed with caution! And speak with a lawyer first. The second option: significantly reduce the incentive/ penalty to an amount that would (hopefully) be viewed as small enough for the employee's participation to be considered voluntary. One may still end up being a test case for what level is low enough to pass muster under the law, since we don't yet know what courts will say about wellness programs in the absence of EEOC rules. The lowest risk option: eliminate the wellness incentive/ penalty altogether and wait for further guidance from the EEOC. But it might be a long wait. The agency originally indicated that we could expect a revised set of rules by 2021, but the federal court chided the EEOC for such a long delay and could have spurred it into earlier action. One final word about plans for 2019: The AARP v. EEOC ruling impacts only the components of wellness program that are subject to the ADA and GINA, such as those that request health information from workers like health risk assessments or biometric screenings. So feel free to continue to provide incentives/penalties for other programs for promoting healthier habits and awareness not subject to the ADA or GINA, such as a gym membership or lunch-and-learn programs. These, of course, could be subject to the Health Insurance Portability and Accountability Act (HIPAA) and the Affordable Care Act (ACA) or be considered taxable fringe benefits. ----- To be (legally) healthy, consult counsel While we wait for new guidance from the EEOC, companies should assess current incentives and penalties, as well as the amount of risk they are willing to assume while waiting for the EEOC to issue new rules which could be years from now. Discuss these options with legal counsel when planning wellness strategies for the next few years to come. ----- Rich Meneghello is a partner in the Portland office of Fisher Phillips, a national firm dedicated to representing employers' interests in all aspects of workplace law. Contact him at 503-205-8044 or rmeneghello@fisherphillips.com, or follow him on Twitter @pdxLaborLawyer. Published: Fri, Jan 11, 2019