Court Puts Pressure on EEOC to Revise Wellness Program Rules

The U.S. District Court for the District of Columbia has vacated the incentive portions of the Equal Employment Opportunity Commission’s (EEOC) wellness program rules under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).

 

The AARP had filed suit, alleging that the EEOC’s final wellness program rules implemented at the beginning of 2017 are arbitrary, capricious, an abuse of discretion, and not in accordance with law. The AARP asked that the rules be invalidated. The main thrust of these rules is that employers can implement incentives for participating in workplace wellness programs worth up to 30% of the cost of health insurance.

 

Last August, U.S. District Judge John D. Bates determined that “It is far from clear that it would be possible to restore the status quo ante if the rules were vacated; rather, it may well end up punishing those firms—and employees—who acted in reliance on the rules.” He did not vacate the rules at that time but instead “remanded” them to the EEOC for reform and/or elucidation.

 

In his recent decision, Bates noted that the concerns about disruption that caution against vacating the rules disappear over time. “There is plenty of time for employers to develop their 2019 wellness plans with knowledge that the Rules have been vacated,” he wrote in his opinion.

 

Bates also noted that according to EEOC, the agency does not intend to issue a notice of proposed rulemaking until August 2018, and does not plan to issue a final rule until October 2019. The EEOC also says, because of the time required for employers to come into compliance, any new final rule “likely would not be applicable until the beginning of 2021,” and it hints that the process could take even longer as it starts to look into the substance of the issues involved and as new nominees eventually join the Commission. Bates said this is not the timeline he had in mind when he remanded the rules to the EEOC for form or clarification.

 

So Bates vacated the incentive portion of the EEOC rules, but issued a stay on his decision until January 1, 2019. According to Bates’ opinion, the court “will also hold EEOC to its intended deadline of August 2018 for the issuance of a notice of proposed rulemaking. But an agency process that will not generate applicable rules until 2021 is unacceptable. Therefore, EEOC is strongly encouraged to move up its deadline for issuing the notice of proposed rulemaking, and to engage in any other measures necessary to ensure that its new rules can be applied well before the current estimate of sometime in 2021.”