Human Resource & Labor News
www.agc.orgJune 22, 2016 / Issue No. 03-16
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On the Inside
Wage & Hour Law
FLSA Salary Threshold Increases to $47,476/Year; Duties Test not Changed
Labor Department Issues New FMLA Guide and Poster for Employers
Labor Relations
AGC Urges Court to Overturn NLRB Expansion of Joint Employer Standard
NLRB Decision Limiting Right to Replace Strikers May Signal a New Paradigm
Common Control for Purposes of Withdrawal Liability is Determined at Time Covered Work Resumes Rather than Time of Withdrawal, 10th Circuit Rules
Equal Employment Opportunity
EEOC Issues Final Rules on Employer Wellness Programs
EEOC Issues Guidance on Leave as a Reasonable Accommodation for People with Disabilities
OFCCP Finalizes Sex Discrimination Rule
OFCCP Sets 2016 VEVRAA Hiring Benchmark at 6.9 Percent
HR & Labor Education
10 Reasons to Attend AGC’s 2016 Construction HR and Training Professionals Conference
Labor Lawyers & Managers Gather to Hear Latest Developments in Construction Labor Law
Equal Employment Opportunity
EEOC Issues Final Rules on Employer Wellness Programs
 

On May 16, 2016, the U.S. Equal Employment Opportunity Commission (EEOC) issued final rules on employer-sponsored wellness programs. The final rules clarify the EEOC’s position on wellness plan compliance with the Americans with Disabilities Act (ADA) and Title II of the Genetic Information Nondiscrimination Act of 2008 (GINA). The final rules also attempt to reconcile differences between the Health Insurance Portability and Accountability Act of 1996 (HIPAA), as amended by the Affordable Care Act, and the EEOC’s proposed rules relating to wellness programs, which were released last year. Employers now have a clearer roadmap to follow when designing voluntary workplace wellness programs.

Here are several points about the new rules that are worth noting.

Applicability

In a departure from the proposed rules the EEOC released last year, the final rules relating to the ADA apply to all employer-sponsored wellness programs that include disability-related inquiries or medical examinations—whether those programs are part of, or outside of, a group health plan.

Incentives

The final rules confirm the EEOC’s position that wellness programs cannot offer financial incentives in excess of 30 percent of the total cost of self-only coverage (including both the employee and employer contributions).

However, if the employee and the spouse both are offered the opportunity to participate in the wellness program, the 30 percent threshold applies to the employee and the spouse individually. To illustrate how this works, the final GINA rule provides the following example:

[I]f an employee is enrolled in health insurance through the employer at a total cost (taking into account both employer and employee contributions toward the cost of coverage) of $14,000 for family coverage, that plan has a self-only option for $6,000, and the employer provides the option of participating in a wellness program to the employee and spouse because they are enrolled in the plan, the employer may not offer more than $1,800 to the employee and $1,800 to the spouse.

If the employer does not offer group health plan coverage, the reward cannot exceed 30 percent of the cost of self-only coverage under the second lowest cost Silver Plan for a 40-year-old non-smoker on the state or federal health care Exchange in the location that the covered entity identifies as its principal place of business.

Smoking Cessation Reward Discrepancy

The final rules acknowledge the discrepancy between the EEOC’s 30 percent reward limit and HIPAA’s 50 percent reward limit for smoking cessation programs but state that the EEOC and HIPAA limits are not at odds because the EEOC’s lower limit does not apply to smoking cessation programs that merely ask employees or spouses whether they use tobacco (or whether or not they ceased using tobacco upon completion of the program). The EEOC’s 30 percent reward limit does apply, however, to any smoking cessation program that includes a medical examination (for example, a wellness program that uses a blood test to measure nicotine levels). The EEOC states in a footnote it is issuing the final rules after review by and consultation with the U.S. Department of the Treasury, the U.S. Department of Labor, and the U.S. Department of Health and Human Services, which means that employers should consider which plan designs permit a 30 percent limit and which permit a 50 percent limit when designing their 2017 smoking cessation programs.

Notice Requirement

The final rules require employers to provide notices with specific content requirements in connection with wellness programs. The EEOC will publish a model notice on its website within 30 days. 

The final rules will apply as of the first day of the first plan year that begins on or after January 1, 2017.

Editor’s Note: This article was drafted by attorneys Jeanne E. Floyd and Karen Trapnell Shriver of Ogletree Deakins, a labor and employment law firm representing management, and is reprinted with permission. This information should not be relied upon as legal advice.

For information on AGC’s comments to the proposed rule, click here.  For additional information on the final rules including Q&A documents and information for small employers, visit the EEOC’s website.

For additional resources related to wellness programs, GINA, and the ADA, visit AGC’s Labor & HR Topical Resources webpage.  On the AGC website, first login as an AGC member, then select the primary category “EEO” and the secondary categories “Americans with Disabilities Act” and/or “Genetic Information.” Information on wellness programs may be located in the primary category “Wages and Benefits” and the secondary category “Wellness Programs.”
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