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EEOC Withdraws Proposed Wellness Incentive Rules — Increasing Employer COVID-19 Vaccination Incentive Uncertainties

We previously discussed the EEOC’s proposed new wellness program incentive rules under the ADA and GINA in our post, How Big Can the Carrot Be?  The proposed rules were to replace the EEOC’s previous “health-contingent” wellness program regulations, which had been struck down by the U.S. District Court for the District of Columbia because they allegedly permitted large incentives that the court found were essentially coercive and thus in violation of the ADA and GINA proscriptions permitting only voluntary disclosures of disability or genetic-related information (absent a business necessity).  The proposed regulations were issued pursuant to a 3-2 EEOC Commissioner’s vote shortly before the end of the Trump Administration, but had not been published in the Federal Register let alone completed the adoption process.  Now as part of the Biden Administration’s regulatory freeze, the EEOC has withdrawn them.

EEOC’s withdrawal of the proposed rules returns employers to the unhelpful status quo that existed prior to January 2021 with no regulatory guidance regarding how large an incentive is too large to meet the ADA and GINA voluntariness requirements with respect to health-contingent wellness programs incentives.  While the HIPAA wellness program rules remain in effect and may be relied upon for compliance with HIPAA, such HIPAA compliance does not assure that wellness program incentives would comply with the ADA and GINA.

One of the EEOC Commissioners, Keith Sonderling (a Trump appointee), stated in an interview on February 18, 2021, that the rules remain under consideration at EEOC and that employers should “stay tuned.”  Commissioner Sunderling did acknowledge that all stakeholders want clarity on the issue of incentives and suggested that EEOC will work to address the issue.

The incentive issue has particular currency and importance today as many employers consider whether to offer incentives to encourage employees to receive COVID-19 vaccinations.  It is unknown, however, when the EEOC will re-propose any incentive regulations; moreover, as a practical matter final adoption of any proposal could not be completed during the time when employers will be considering COVID vaccination incentives because the EEOC must provide a 60-day notice and comment period for any new proposed regulation and then must consider all comments submitted and whether any changes should be made to the proposed regulations before, finally, submitting the final regulation for publication in the Federal Register.

Thus, for now, employers will have to proceed on the issue of vaccination and other wellness program incentives without EEOC guidance.  Given this regulatory uncertainty, prudent employers should carefully consider the nature and value of any vaccination incentives if such incentives could be deemed a part of a health-contingent employee wellness program or otherwise subject to the ADA and GINA and should consider seeking appropriate advice of counsel.