Employment & Labor Insider

The Equal Employment Opportunity Commission is only the latest in a string of federal agencies who've been sued recently in an effort to stop their regulations from taking effect.

We have the two lawsuits against the U.S. Department of Labor challenging the overtime rule that is scheduled to take effect on December 1 (argument in those cases will be heard November 16), the lawsuit that resulted this week in a preliminary injunction against the "Fair Pay and Safe Workplaces" rule that would have required some federal contractors to (in the words of the plaintiffs and the judge) "publicly condemn themselves," and the lawsuit this past summer that resulted in the preliminary injunction blocking the U.S. Department of Labor "Persuader Rule" (now on appeal).

But the AARP suit against the EEOC is the first one in a while that is a challenge from employee, rather than employer, advocates. The AARP essentially accuses the EEOC of not doing enough to protect employees' privacy rights.

What the lawsuit is about

The AARP is challenging the rules issued by the EEOC in May of this year that apply to wellness programs and the Americans with Disabilities Act and the Genetic Information Nondiscrimination Act. Here is a copy of the lawsuit. And here are the motion asking the court to enjoin the rule from taking effect, and the AARP's brief.

Very generally, the EEOC rules issued in May provide that employers can offer "inducements" (rewards for participation, or penalties for non-participation) to get employees and their spouses to disclose personal health information or submit to medical examinations in connection with wellness programs.

To be lawful, the inducements have to be within limits that are roughly, although not exactly, consistent with the limit of 30 percent of self-only coverage set forth in the Health Insurance Portability and Accountability Act and the Affordable Care Act.

It's pretty clear that in its wellness rules the EEOC was trying to reconcile the ADA and GINA -- both of which sharply restrict employers' ability to get medical information from employees or their family members -- with the more or less "pro-wellness" approach taken in the HIPAA/ACA.

The problem

According to the AARP, the problem with the EEOC approach is that the ADA and the GINA say what they say.

First, the ADA says that if a medical inquiry to an employee is not "job-related and consistent with business necessity," then the employer can't inquire, except in connection with a "voluntary" wellness program.

Second, the GINA says that medical information about spouses (as well as kids, step kids, adopted kids, and other specified family members spreading out four degrees of kinship from the employee) is "genetic information" and cannot be requested or required except in specified circumstances indicating that the disclosure is "voluntary."

The AARP's argument

With that brief background, here, in a nutshell, is what the AARP lawsuit says:

Thirty percent of the cost of employee-only coverage is a lot of money for most people. And it could jump to 60 percent, if the employee and the spouse both refuse to participate. So, if the employee and spouse participate in the wellness program only because they can't afford the penalty -- which is likely -- then their participation is not really "voluntary."

I think this is a legitimate argument, and it's consistent with concerns that I've raised before about wellness incentives. (The courts don't seem to agree with the AARP or me on this point, but that's another story.)

The AARP lawsuit makes some other arguments:

• The EEOC's decision to allow inducements for spouses to provide "genetic information" is not based on a reasonable interpretation of the GINA provisions, since spouses are covered "family members" under the GINA.

• The EEOC's decision to treat spouses differently from other covered "family members" under the GINA is not based on a reasonable interpretation of the GINA. The GINA statute gives spouses the same protections that it gives to other covered family members.

• The EEOC took the position in 2000 (in the ADA context) and in more recent litigation that rewards or penalties based on participation are never allowed because they always entail some level of employee coercion. The 2016 wellness rules contradict these prior positions of the EEOC. The EEOC has the right to change its mind, but if it does so, it is required by law to provide a thorough explanation for the change. According to the AARP, it didn't.

• Before issuing a new regulation, the EEOC is required to ask for comments and to "engage" the substance of the comments -- even if the EEOC ends up deciding not to adopt the suggestions. Although the EEOC did provide an opportunity for comment and acknowledged the comments received, the AARP says that the EEOC failed to address and rebut the comments expressing concern about allowing incentives.

• There is nothing in the HIPAA/ACA provisions on wellness inducements that "preempts" or overrides the medical privacy protections under the ADA or the GINA. (In other words, the EEOC was not required to change its position on inducements because of the HIPAA/ACA.)

This lawsuit will be interesting to follow. Although the EEOC regs are already in effect, the "inducement" provisions apply only to health insurance plan years that begin on or after January 1, 2017. I look forward to seeing what the EEOC says in response.

And I have a question. Will employer groups be filing "friend of the court" briefs in support of the EEOC?   :-)