Last year, the Equal Employment Opportunity Commission (EEOC) published final rules clarifying the circumstances in which employers may offer incentives to employees for participation in workplace wellness programs under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA). A recent court decision issued in AARP v. U.S. EEOC held that the agency’s 30 percent incentive rules are inconsistent with ADA and GINA’s requirements that information disclosure associated with wellness program participation be “voluntary” and not coerced.

The ADA rule established that use of penalty or incentive of up to 30 percent of the cost of self-only coverage would not render a wellness program that seeks disclosure of ADA-protected information as “involuntary.” The GINA rule allowed employers to offer incentives of up to 30 percent of the cost of self-only coverage for disclosure of information about a spouse’s manifestation of disease or disorder as part of a voluntary wellness program. The agency implemented these rules in part because neither the ADA nor GINA contained clear definitions of what constituted “voluntary” disclosure.

In ruling that the EEOC’s implementation of 30 percent incentive rules was not consistent with the rules’ voluntary disclosure requirements, the United States Court of Appeals for the District of Columbia held that the agency failed to offer a reasoned explanation for its decision that 30 percent was a reasonable level. In its motion for summary judgment on this issue, the AARP argued that the 30 percent level “is inconsistent with the “ordinary meaning” of voluntary because this incentive is too high to give employees a meaningful choice regarding whether or not to participate in wellness programs” requiring disclosure of protected information. While the court did not address the issue of whether the 30 percent level was too high, it did conclude that “neither the final rules nor the administrative record contain any concrete data, studies, or analysis that would support any particular incentive level as the threshold past which an incentive becomes involuntary in violation of the ADA and GINA.” As such, the court found that the EEOC’s rules were arbitrary and capricious and remanded the rules to the agency for reconsideration. In so doing, the court declined to vacate the rules out of concern for the “significant disruptive consequences” that would result from attempting to restore the status quo that existed prior to the implementation of employers’ 2017 health plans, which were designed to comply with them.