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EEOC wellness program compliance suddenly matters!

Updated: Mar 2, 2021

February 12th update: The EEOC's proposed rules are officially dead. New rules, months away, will propose de miminis incentives and penalties only, for clinical programs. No more loopholes, as in the January 7th version. In the absence of rules, the word "voluntary" itself applies.

If your program heavily weighs screens, risk assessments and coaching in incentives or penalties or premium differentials or incentives-in-kind like vacation days, it is out of EEOC compliance, period. Cut to the chase and contact us directly to fix this now.


Until January 16, 2018, employers could safely tie forfeitures as high as 30% of total premiums to “voluntary” wellness programs. This seeming oxymoron reflects the presure from the US Chamber of Commerce and Business Roundtable placed on the EEOC to define the word “voluntary” as “forced."

On that date, a federal Court in AARP v. EEOC "vacated" this 30% safe harbor, effective January 2019, and directed the EEOC to write new rules capping incentives and penalties at “de minimis” levels.

The Court did not distinguish between incentives and penalties because most significant incentives were not the result of corporate largesse. Rather, most large incentives accompanied equally large increases in deductibles, giving employees the “chance to earn back” the difference.

Absent the safe harbor, basically every clinical program has been out of compliance for the last two years, because basically every clinical wellness program still relies on large incentives or penalties to get employees to submit.


Out of compliance…but (almost) no one cared

If the speed limit is 65 mph and everyone is going 75, no one will get a ticket. Likewise, if everyone is equally out of EEOC compliance, no one will get sued.

That is exactly what happened. Noncompliance was business as usual. The EEOC, heavily influenced by those business lobbies, didn’t initiate any suits. They would have been overwhelmed if they had tried, since almost every substantial program was noncompliant.

However, if you drive your red Ferrari 85 in a 65 zone, you’re basically asking for a ticket. And that’s exactly what Yale University did. They levied massive fines on wage-earning support staff for failing to submit. In one case, their wellness vendor threatened one of the named plaintiff employees with a four-figure fine for not getting a mammogram, even though this particular employee a cancer survivor, had already undergone a double mastectomy.

The EEOC didn’t take note, but AARP did, and helped the employees file a suit against the University on July 16, 2019.

Had that lawsuit been decided in favor of the plaintiffs, the entire wellness industry would have been thrown into chaos. But the suit is still pending. Both sides filed for summary judgment more than a year ago…and the chatter surrounding the suit has since died down.

So once again, no one cared. With no EEOC rules and no case law citing the “vacatur” of the previous rules, everyone still drove 75. Enforcement was nil.


The EEOC is about to care

Two years behind schedule, the EEOC announced new rules on January 7. These rules complied with the letter of the AARP v. EEOC decision by all but eliminating incentives for participatory programs. It did cleverly violate the spirit of the law by carving out an employer-friendly loophole for outcomes-based programs.

Those rules were supposed to be open to public comment for 60 days but then three events in two weeks changed everything:

  • January 8-20, 2021: The dog that didn’t bark in the nighttime: The Federal Register did not publish the proposed rules for public comment. The absence of this routine step suggests this rather tortured loophole was apparently already generating blowback.

  • January 21, 2021: The Biden Administration shook up the EEOC, promoted the two Obama appointees, both of whom have strong pro-employee histories, and demoted the Republicans. Same staff, but the power structure is inverted. Imagine Michael G. Scott suddenly having to report to Ryan.