American Benefits Council
Benefits Byte

2015-036

March 24, 2015

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

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Council Testifies Before House Panel: Wellness Programs Need Regulatory Certainty

At a U.S. House of Representatives Education and the Workforce Subcommittee on Workforce Protections hearing on March 24, Tamara M. Simon, Managing Director of the Knowledge Resource Center and Career Practice at Buck Consultants, a Xerox Company told lawmakers that public policy, at the legislative and regulatory level, should continue to support bipartisan efforts to expand workplace wellness programs.

Simon, testifying on behalf of the American Benefits Council, said “Notwithstanding employers’ interest in establishing legally compliant wellness programs, and the bipartisan support of Congress and the Administration, a great deal of uncertainty exists in current guidance regarding what constitutes a voluntary wellness program.”

The focus of the hearing was a series of measures designed to improve oversight of the Equal Employment Opportunity Commission, which has recently stepped up its scrutiny of workplace wellness programs with regard to enforcement under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA).

As we have previously reported, in November 2014 the U.S. District Court for the District of Minnesota denied an EEOC request to issue a temporary restraining order and preliminary injunction against Honeywell International Inc.’s wellness program. It was the third lawsuit filed by the EEOC in recent months challenging employer-sponsored wellness programs, alleging that the employers were violating ADA and GINA by imposing penalties on employees who decline participation in the company’s biometric screening program.

At that time, the Council criticized the EEOC for pursuing litigation before issuing guidance on what constitutes a “voluntary” wellness program. On March 20, the EEOC announcedthat it has formally submitted a proposed rule to the Office of Management and Budget (OMB). The OMB will take up to 90 days to review the proposed rule. Assuming it is approved at that stage, it will be published in the Federal Register. There would be expected to be 60 days for receiving formal comments and then further evaluation of those comments by the EEOC, and very likely a public hearing, before it promulgates a final rule.  

The four bills under discussion at the March 24 hearing were intended, according to a news advisory issued by the Education and the Workforce committee, to “strengthen EEOC enforcement through enhanced transparency and accountability.”

Among these measures was the Preserving Employee Wellness Programs Act (H.R. 1189), introduced by full Committee Chairman John Kline (R-MN). As we detailed in the March 6 Benefits Byte, H.R. 1189 (and its Senate counterpart, S. 620) clarifies that if an employer-sponsored wellness program’s financial incentives comply with the Patient Protection and Affordable Care Act and its regulations, then the program is also in compliance with the ADA and GINA.

The Council served as a resource to the authors of the legislation and has written lettersinsupport of the bill to Kline and his fellow sponsors. As Simon told the subcommittee, “The Council believes that H.R. 1189 strikes the right balance between providing certainty to employers and ensuring an appropriate role for the EEOC to protect employees from discrimination,” Simon said.

The other measures under discussion by the committee were all introduced by Subcommittee Chairman Tim Walberg (R-MI):

  • The Certainty in Enforcement Act (H.R. 548) would provide a safe harbor to employers complying with a federal or state law mandating they perform criminal background checks before hiring for certain jobs.
                       
  • The Litigation Oversight Act (H.R. 549) would require EEOC commissioners to approve or disapprove, by majority vote, EEOC-initiated litigation involving multiple plaintiffs or an allegation of systemic discrimination. It also gives individual commissioners the power to require the commission, by majority vote, to approve or disapprove any litigation.
                         
  • The EEOC Transparency and Accountability Act (H.R. 550) would require the EEOC to post on its website and in its annual report any case in which EEOC was required to pay fees or costs, where a sanction was imposed against it by a court and whether the cases were authorized by the commission or brought solely on the general counsel’s authority.

The Council has not taken a position on these three measures, which are outside the direct purview of employee benefits policy.

In his opening statement, Wahlberg said the “enforcement and regulatory approach adopted by the EEOC in recent years raises serious doubts about whether our nation’s best interests are being served.” With regard to wellness programs, he suggested that “litigation pursued by the commission is actually discouraging employers from implementing these programs, even though Congress on a bipartisan basis has expressed its clear support for employee wellness programs.”

The subcommittee also heard from the following witnesses:

  • Paul Kehoe, Senior Counsel at Seyfarth Shaw LLP, testifying on behalf of the U.S. Chamber of Commerce, described the recent history of EEOC enforcement activity. He noted that the recent legal action initiated by certain district offices “will likely have a chilling effect on employer sponsorship of wellness programs.”
  • Gail Heriot, Professor of Law at the University of San Diego School of Law, focused on recent EEOC guidance limiting employers’ ability to conduct background checks for hiring purposes.
  • Tanya Clay House, Director of Public Policy for the Lawyers’ Committee for Civil Rights Under Law, opposed all of the measures, saying that they would significantly undermine the EEOC’s enforcement authority. House rejected the notion that the EEOC is a rogue agency that “must be contained.”

During the question and answer period, Kline asked Simon what she hoped to see in the forthcoming EEOC proposed rule. Simon emphasized that the rule should, first and foremost, not impose new requirements on employers. She suggested that the rule should deem group wellness programs that offer incentives (in keeping with the PPACA standard) as compliant with the ADA and GINA.

Kline also asked whether employees should be concerned about privacy violations. Simon noted that – for programs that are part of a group health plan – the HIPAA privacy requirements are very specific and provide substantial protection of personally identifiable information. For any program not under the group health plan, the ADA’s confidentiality provision provides adequate protection. Furthermore, in cases where a large employer uses a third-party vendor, contracts specify that the employer will only receive de-identified data from the vendor.

The Council also testified before the U.S. Senate Health, Education, Labor and Pensions (HELP) committee in a January 29 hearing on employer wellness programs and the impact of the EEOC’s actions. Dr. Catherine Baase, Chief Medical Officer for The Dow Chemical Company, provided testimony on behalf of her company and the Council.

As outlined in the Council’s recently released strategic plan, A 2020 Vision, a critical component of encouraging employers to offer meaningful wellness programs is consistent federal policy that promotes the health of Americans and is aligned across multiple agencies and Congress.

For more information, contact Katy Spangler, senior vice president, health policy, or Kathryn Wilber, senior counsel, health policy, at (202) 289-6700.

 

 



The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.

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