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Court to the Equal Employment Opportunity Commission: “Try Again” on Wellness Rules

In October 2016, the American Association of Retired Persons (AARP) sued the US Equal Employment Opportunity Commission (EEOC) in the US District Court for the District of Columbia seeking an injunction against the latest iteration of wellness program regulations. The final EEOC regulations issued last year offer employers a roadmap for offering employee wellness programs that pass muster as “voluntary” examinations under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act of 2008 (GINA). In response, AARP argued that the EEOC failed to adequately justify the new rules and abused its regulatory power by reversing course on its long-standing position against wellness programs.  

This week, in yet another twist in the long and winding road of wellness program rules, the DC District Court agreed with AARP. The DC District court declined to vacate the regulations and instead ordered the EEOC to revisit the regulations, reasoning that that an abrupt change in the law would cause wide-spread disruption for employer-sponsored wellness programs. Key points in the DC District Court’s opinion include:

  • EEOC wellness regulations defined the 30 percent cap on incentives differently from the HIPAA definition of the 30 percent incentive cap.

  • The incongruity between the Health Insurance Portability and Accountability Act of 1996 (HIPAA) wellness regulations and the EEOC wellness regulations has caused plan sponsors confusion and additional issues in administering wellness programs as wellness programs must be analyzed under both HIPAA and EEOC regulations for compliance.

  • The DC District Court found nothing in the EEOC’s administrative record that explains the agency’s conclusion that a 30 percent incentive level is the appropriate measure for voluntariness.

While the EEOC reviews and responds to the DC District Court’s decision, the current EEOC wellness regulations remain in effect.

© 2020 McDermott Will & EmeryNational Law Review, Volume VII, Number 240
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About this Author

Emily Rickard, McDermott Will Emery, Employee Benefits Matters Lawyer, ERISA Litigation Attorney
Associate

Emily Rickard is an associate in the law firm of McDermott Will & Emery and is based in the Firm’s Washington D.C. office. She focuses her practice on employee benefits matters.

Outside of the ESOP context, Emily’s practice spans a wide range of national and international employee benefits matters. This includes qualified plans, nonqualified plans, executive compensation, health and welfare arrangements, and Employee Retirement Income Security Act of 1974 (ERISA) litigation. She advises employers in connection with fiduciary issues under...

202 756 8370
Erin Turley McDermott Will employee benefits law attorney
Partner

Erin Turley focuses her practice on employee benefits matters. She has extensive experience handling issues pertaining to the Employee Retirement Income Security Act of 1974 (ERISA) and employee stock ownership plans (ESOPs).

With respect to ERISA, Erin focuses on employee benefits, including qualified, nonqualified, and executive and deferred compensation and welfare benefit plans, as well as on regulatory compliance with the Internal Revenue Code, ERISA, the Consolidated Omnibus Budget Reconciliation Act (COBRA), the Health Insurance Portability and Accountability Act (HIPAA) and the Patient Protection and Affordable Care Act (PPACA). She also advises employers on the design, implementation and administration of tax-qualified and nonqualified retirement plans, and health and welfare benefit plans.

Erin regularly represents clients before the Internal Revenue Service and the Department of Labor in audit and correction matters and has successfully concluded over five large case audits by the IRS for both publicly traded and privately held plan sponsors auditing their health and welfare plan compliance. Erin is experienced in working with employers, vendors and health plans to design and implement a variety of health and welfare plans structures including medical, prescription drug, wellness programs, disability, mental health benefits, cafeteria plans health reimbursement arrangements and health savings accounts and consumer-directed health plans such. She also has experience in other welfare benefit programs including commuter benefit plans and paid time off banks. She also advises employers on issues raised in connection with corporate mergers, acquisitions and divestitures as they relate to the various benefit plans maintained by the affected corporate entity or entities.

Erin focuses her Employee Stock Ownership Plan (ESOP) practice on the design and implementation of ESOP transactions and provides ongoing legal counsel to ESOP-owned companies. She has been involved in hundreds of transactions, including leveraged buyouts, mergers, acquisitions, and the structuring and financing of ESOPs using private equity. Erin also has extensive experience representing lenders in designing and negotiating credit facilities specifically tailored to the needs of ESOP-owned companies.

214-295-8020
Judith Wethall, McDermott Law Firm, Chicago, Labor and Employment Law Attorney
Partner

Judith Wethall focuses her practice on employee benefits, specifically health and welfare programs. She counsels employers, plan administrators, insurers and consultants on a wide range of ERISA compliance issues. Judith's clients include sole proprietors to Fortune 100 companies and cover a variety of industries including health care, technology, manufacturing, insurance and financial.

Judith has extensive experience advising clients on health care law reform; wellness programs; Medicare secondary payor rules; fiduciary compliance; disability...

312-984-7577
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