federal court on Tuesday threw out a rule allowing employers to call their workplace wellness programs “voluntary” when employees stand to lose thousands of dollars for not participating — a win for groups that challenged what they argue are coercive programs that have not been shown to improve employees’ health.
The ruling, a summary judgment for the group that challenged the federal rule, orders the U.S. Equal Employment Opportunity Commission to come up with a “reasoned explanation” for deeming workplace wellness programs voluntary even if the programs impose steep penalties on workers who opt out, calling the absence of such an explanation when the EEOC issued its rule last year “a serious failing.”
The U.S. District Court for the District of Columbia, in an opinion by Judge John Bates, allows the 2016 EEOC rules to stay in place for now, however. Immediately unwinding the penalties and incentives in workplace wellness programs, which are built into employer-based health insurance plans, would be too disruptive, he ruled, since those plans have been in effect for months.
“Employees who received incentives from their employers would presumably be obligated to pay these back, which may not be feasible for many; employers who imposed a penalty rather than an incentive would likewise be obligated to repay to employees the cost of the penalty, which again, may or may not be feasible,” he said. In addition, “any employees who have chosen to disclose their protected medical information have already done so; this information cannot be made confidential again.”
EEOC Acting Chair Victoria A. Lipnic told STAT that the agency is “assessing the impact of the court’s decision and order, and options with respect to these regulations going forward.” Deborah Chalfie of AARP, the group that challenged the EEOC, said it “will be difficult” for the agency to come up with a “reasoned explanation” for its view on what makes a workplace wellness program voluntary (or not) “given the judge’s decision.”
The ruling “is unlikely to be the end of the story and for now nothing changes for employer wellness initiatives,” said Steven Wojcik, vice president for public policy at the National Business Group on Health, an association for large employers which supports the wellness programs. “Though the EEOC rules are not perfect, they do clarify underlying ambiguities in the law and have helped assure that employees and their families can benefit from these programs that promote their well-being.”
The controversy over the meaning of “voluntary” stems from apparent conflicts among at least three landmark laws. The 1990 Americans with Disabilities Act (ADA) and the 2008 Genetic Information Nondiscrimination Act (GINA) both prohibit employers from asking for or collecting medical or genetic information from employees. But the ADA allows employers to conduct medical examinations and collect employee medical history as part of an “employee health program,” as long as participation in the program is “voluntary” — a term the law does not define. GINA has an analogous prohibition on employers asking for, requiring, or purchasing “genetic information” from employees, again with a carve-out for a “voluntary” (again, undefined) wellness program.
Because the EEOC administers both ADA and GINA, it stepped in to define “voluntary” in the context of workplace wellness programs. The programs have become increasingly popular as employers seek ways to reduce their health care spending. In addition, the Affordable Care Act allows employers to offer even higher workplace-wellness incentives than had previously been permitted. Last year, the agency issued a rule saying that “use of a penalty or incentive of up to 30 percent of the cost of self-only coverage will not render ‘involuntary’ a wellness program that seeks the disclosure” of workers’ ADA- and GINA-protected medical or genetic information.
AARP, the membership organization for older Americans, filed its lawsuit challenging that rule last in October. The group argued that when employers are permitted to offer incentives to participate in workplace wellness programs — which often require workers to take blood tests, report their weight and blood pressure and other “biometrics,” and disclose other information that landmark laws made private — those programs are not “voluntary,” since workers who cannot afford the penalty will be forced to disclose health and genetic information that they would otherwise choose not to share with their employer.
AARP attorney Dara Smith said the group “is very pleased with this victory for workers’ rights. The court’s opinion thoroughly dismantled the agency’s reasoning, and we expect the agency to have a tough time justifying this rule or a similar one while staying faithful to the purpose of the civil rights statutes.”
In issuing a summary judgment against the EEOC, the court noted that the agency had long viewed the use of incentives for workplace wellness participation as making such participation no longer truly voluntary, and took the agency to task for not explaining why, in its 2016 rule, it reversed course. “The Court can find nothing … that explains the agency’s conclusion that the 30 percent incentive level is the appropriate measure for voluntariness,” Bates wrote. The penalty for not giving an employer medical information “is the equivalent of several months’ worth of food for the average family, two months of child care in most states, and roughly two months’ rent,” suggesting that such steep penalties make workplace wellness participation less than voluntary.
Business groups that support workplace wellness programs are working with congressional Republicans on legislation that would remove the restraints that the ADA and GINA place on the programs. It is not clear if congressional leaders plan to move the bill, H.R. 1313, forward when they return to Washington next month.
Attorney Barbara Zabawa, president of the Wisconsin-based Center for Health and Wellness Law, said she “was surprised that the Court found the EEOC’s administrative rules to be arbitrary and capricious.” Recent U.S. Supreme Court cases have deferred to federal agencies’ interpretations of what various laws allow. But President Trump’s appointee, Neil Gorsuch, “is known to have questioned the validity” of such deference, Zabawa said, raising the possibility that “courts will be more critical of an agency’s interpretation.”
This story was updated with comments from additional organizations.