ERISA

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On January 7, 2021, the EEOC proposed two rules, under the Americans with Disabilities Act (ADA) and the Genetic Information Nondiscrimination Act (GINA), designed to clarify what incentives employers may offer employees and their family members for joining employer-sponsored wellness programs.  In the 2017 case AARP v. EEOC, the then-existing regulations on employer-sponsored wellness programs were revoked.  Since then, employers have lacked guidance on how to structure wellness programs without violating the requirements of both the ADA and GINA that individuals’ disclosures of health information be voluntary.  The EEOC’s new rules seek to balance the competing interests.  However, given the Biden Administration’s recently issued freeze on proposed rules that have not yet been enacted, employers should not act on the EEOC’s proposed rules yet.

Legal framework

Under the ADA, employers cannot require employees to disclose medical information that might enable employers to discriminate against them.  Similarly, under GINA, the disclosure of the health information of a family member of an employee must also be voluntary.  In 2016, the EEOC finalized rules that outlined how employers could incentivize employees and their family members to participate in wellness programs that required the disclosure of health information without violating the ADA or GINA.  Under the 2016 rules, an employer could offer an incentive of up to 30 percent of the total cost of self-coverage without the wellness program running afoul of the ADA and GINA.  However, in AARP v. EEOC, the United States District Court for the District of Columbia held that the EEOC had failed to provide a reasoned explanation for its 30 percent incentive limit, and as a result, the EEOC removed the incentive sections from the ADA and GINA regulations.Continue Reading EEOC proposes new rules on permissible incentives for employer-sponsored wellness programs

Adding to a series of recent employment law cases decided by the United States Supreme Court, the Court issued three more opinions affecting employment law on June 19, 2008: two interpreting the Age Discrimination in Employment Act of 1967 (“ADEA”) and one concerning the Employee Retirement Income Security Act of 1974 (“ERISA”).

In Kentucky Retirement Systems v. EEOC, 554 U.S. ___ (2008), a 5-4 decision, the Supreme Court held that “differential treatment based on pension status, where pension status…itself turns, in part, on age” does not violate the ADEA. Specifically, Kentucky’s state retirement plan (the “Plan”) for employees in “hazardous positions” provided that an employee could obtain “normal” retirement benefits in two ways: (1) after 20 years of service; or (2) after 5 years of service provided the employee had attained the age of 55. If an employee became disabled prior to satisfying either avenue, however, the Plan would “impute” the number of years necessary to meet either the years of service or age requirement, whichever was less. The amount of benefits a retiree received depended upon the number of years of service (either actual or imputed).

The EEOC challenged the Plan on behalf of an employee who retired after becoming disabled at age 61. As the employee was already eligible for “normal” retirement benefits (having achieved 18 years of service and age 55), the Plan did not “impute” any additional years of service to him. The EEOC claimed that the Plan discriminated on the basis of age because had the employee become disabled before reaching age 55, he would have been credited with additional years of service and, therefore, received increased benefits. In rejecting the EEOC’s argument, the Supreme Court explained: “[w]here an employer adopts a pension plan that includes age as a factor, and that employer then treats employees differently based on pension status, a plaintiff, to state a disparate treatment claim under the ADEA, must adduce sufficient evidence to show that the differential treatment was ‘actually motivated’ by age, not pension status.” Because the EEOC had failed to produce such evidence, the Supreme Court found no violation of the ADEA.Continue Reading Supreme Court Issues Three Decisions Affecting the ADEA and ERISA