Seventh Circuit Dismissal Signals Likely End to EEOC’s Challenges to Employer-Sponsored Wellness Programs

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Several years ago, the Equal Employment Opportunity Commission (EEOC) raised employers’ eyebrows when it filed several lawsuits challenging the validity of employer-sponsored wellness programs. The EEOC contended that such programs violate the ADA and GINA due to terms that rewarded or punished employees and dependents based on their degree of participation in the wellness initiatives. Federal courts were largely unsympathetic to these challenges, noting provisions in other federal laws specifically endorsing the use of wellness programs as a way to improve employee health and help control plan expenses.

Last month, the Seventh Circuit Court of Appeals dismissed the EEOC’s last remaining complaint against an employer’s wellness program. In EEOC v. Flambeau, Inc., the court affirmed dismissal of the suit, concluding that the relief sought by the agency was either unavailable, or that the case was now moot. Since the challenge to the plan was filed, the EEOC issued new regulations providing employers with a “safe harbor” under the ADA for wellness programs that limit incentives or penalties to 30 percent of the cost of individual employee coverage under the medical plan.

The defendant in this case, along with most employers, changed the terms of its wellness plan to meet the new safe harbor requirement. The Seventh Circuit noted that no employee had actually been financially harmed as a result of the prior wellness program’s terms, and therefore the change in the program eliminated any live controversy between the parties.

Given that the large majority of U.S. employers follow the safe harbor, the EEOC may not have available targets for new wellness plan challenges. The Trump administration may have little interest in pursuing claims against employers on this basis, meaning that for all intents and purposes, the Seventh Circuit’s decision may prove to be the end of this EEOC litigation.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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