New EEOC wellness rules are already dead

Never have I been proven wrong so quickly.

On January 7^th, the EEOC announced their proposed rules for clinically based wellness programs. The rules, as directed by the 2017 decision in AARP v. EEOC, reduce employee participation in wellness programs by capping allowable incentives at “de minimis.”(Examples of de minimis incentives would be t-shirts and water bottles.)

Yet most employers, especially larger ones, find that employees participate in these programs only if they are highly incentivized, threatened with large fines for non-participation, or forced to make a choice between a more and less attractive health benefit. None of these will be allowed, no matter where the de minimis line is drawn.

This much remains true. “Voluntary,” as defined in the law, will now actually mean “voluntary.” Whereas prior to AARP v. EEOC, failure to participate in a “voluntary” program could have caused a four-figure forfeiture.

Here’s the big difference: I recently reported that “outcomes-based programs would still be allowed.” The Republican EEOC majority, with its tilt towards the Business Roundtable’s demand for high penalties, had carved a large loophole in the 2017 decision, by tying outcomes-based programs to insurance underwriting rather than the fact of employment. That would have allowed employers to maintain most outcomes-based programs by claiming they were not part of employment and hence not covered by the EEOC.

That loophole is now stillborn.

President Biden switched the positions of four of the five EEOC commissioners, granting pro-employee Obama appointees the chairmanship and vice chairmanship. Same commissioners for now, but a different power structure.

He also put a freeze on publication of all proposed regulations while reviewing them.

The bottom line: Clinical wellness programs – which almost by definition require large penalties or incentives to get employees to submit — are dead. A human resources manager would be taking considerable professional as well as personal risk by ignoring this new development.

Note the paragraph above specifies “clinical wellness programs.” That brings us to the good news, such as it is.

The loophole: activity-based programs

This de minimis limit applies only to clinical programs. Activity-based programs are exempted. Examples of activity-based programs are steps challenges, gym memberships, lunch-and-learns, and employee health literacy training.

Those are capped by the Affordable Care Act’s 30% limit. Because they involve no “clinical exam or inquiry,” they are not covered by the Americans with Disabilities Act, and the EEOC has no say in them.

The dividing line between activity-based and clinical is clear and easily understood with an example: You can offer whatever incentive or penalty you like to encourage employees to run around the block. But measuring their pulse afterwards would cross the line into clinical.

The specific loophole is that allowing employees to earn their incentive/avoid a penalty by a combination of activities means you can maintain your current clinical wellness programs, provided it is possible for employees to earn their threshold points by participating only in activity-based programs.

For instance, consider this actual employer list of ways to earn, pre-2021. This largesse is not simply a nice gesture by this employer. They also increased the annual deductible by $1000, giving employees seven ways to “earn it back.”

The first five will simply not be allowed.

Now consider the same chart, but with a “threshold” that you have to earn at least $500 in order to get paid at all. (That is actually what this employer does.) In that case, the entire program would be out of compliance.

Bringing it into compliance would not require ditching the first five programs, even though they are of dubious value to begin with. Rather, simply let employees attend 10 lunch-n-learns, so that employees can earn their threshold $500 just by claiming not to smoke and spending 10 hours learning how to eat more vegetables.

The question about the employees’ supervisors would be fine with losing 10 hours a year, whether employees would cheat on the smoking question, and whether they would benefit is beyond the scope of this article.

What should you do next?

First and most importantly, to go deeper, Quizzify and BenefitsPRO are partnering on a webinar about this very topic Monday, February 1 at 1:00 EST.

Second, as a 64-year-old who gets screened every year now, I strongly believe that screens should remain part of an employer’s offering.

Third, screens should still be made available, but truly voluntary. People who actually want the screens are the ones most likely to benefit from them. Encourage high-risk employees to get screens, while low-risk employees can do something else.

Finally, don’t just multiply your activity alternatives in order to allow employees to get to your magic incentives number. Ask yourself what an employee would learn by sitting seminars being offered?  They know sugar is bad for them. But no number of seminars will convince them it doesn’t taste good.

Al Lewis is CEO of Quizzify, the leading employee health literacy company. He is also author of two trade-bestselling books on wellness, Why Nobody Believes the Numbers and Cracking Health Costs.

[1] Nicotine-related inquiries have not been tagged as “clinical,” even more invasive ones.

[2] Nicotine-related inquiries have not been tagged as “clinical,” even more invasive ones.