Source: https://www.littler.com/publication-press/publication/half-loaf-court-rejects-ada-safe-harbor-approves-pre-regulations
Timestamp: 2020-01-19 07:53:23
Document Index: 724065967

Matched Legal Cases: ['§ 1630', '§ 12112', '§ 12112', '§ 12201', '§ 12201', '§ 12201', '§ 514', '§ 1144', '§ 1630', '§ 1630']

Half a Loaf: Court Rejects ADA "Safe Harbor" But Approves Pre-Regulations Wellness Program as "Voluntary" | Littler Mendelson P.C.
The district court rejected the rationale of those earlier decisions, concluding that a broad reading of the “safe harbor” provision conflicts with the ADA’s remedial purpose. The court found that the wellness program in question simply did not fall under the “safe harbor” because it was not used by the employer to underwrite, classify, or administer risk.7 In fact, the court held that the wellness program was not a part of the employer’s group health plan because the employer adopted the program “separately from the terms of [the] health benefit plan and did not amend its health benefits summary plan to include the wellness initiative.”8
1 As indicated in an earlier ASAP, the EEOC filed this action on August 20, 2014. See Russell Chapman, EEOC Directly Challenges Wellness Program for the First Time, Littler ASAP (Aug. 29, 2014).
2 As noted in our May 20, 2016 Insight summarizing the EEOC’s final regulations on wellness programs, those rules failed to take into account the “safe harbor” provision at issue in Orion. See Ilyse W. Schuman, Judith Wethall, and Russell Chapman, EEOC Issues Final Rules on Wellness Programs, Littler Insight (May 20, 2016). The EEOC has since issued a regulation explicitly addressing the “safe harbor” provision.
3 That new regulation appears at 29 C.F.R. § 1630.14(d)(6). The Orion decision is apparently the first to substantively address the EEOC’s final wellness regulations, and their application to the ADA’s “safe harbor” provision, discussed infra.
4 See 42 U.S.C. § 12112(d)(4).
5 Id. § 12112(d)(4)(B).
6 See, 42 U.S.C. § 12201(c); Seff v. Broward County, 691 F.3d 1211 (11th Cir. 2012); EEOC v. Flambeau, Inc., 131 F. Supp. 3d 849 (W.D. Wis. 2015). Flambeau is currently on appeal to the U.S. Court of Appeals for the Seventh Circuit, EEOC v. Flambeau Inc., (7th Cir., No. 16-1402).
7 EEOC v. Orion Energy Sys., Inc., No. 14-cv-1019, at 15–17 (E.D. Wis. Sept. 19, 2016) (discussing the scope and application of the “safe harbor” provision); see also 42 U.S.C. § 12201(c) (setting out the exception). In its discussion, it appears that the court may have applied the wrong provision of § 12201(c). Paragraph (3) of that section, which apparently applies to ERISA-governed self-insured welfare benefit plans, does not include the “underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law” proviso included in paragraphs (1) and (2), because such plans are “not subject to State laws that regulate insurance.” It appears undisputed that the defendant’s health plan was a self-insured group health plan that would not have been subject to State laws regulating insurance under ERISA’s “deemer” clause. ERISA § 514(b)(2)(B), 29 U.S.C. § 1144(b)(2)(B).
8 Orion Energy Sys., Inc., No. 14-cv-1019, at 15.
9 Id. at 9–13.
10 No other court has yet had the opportunity to evaluate 29 C.F.R. § 1630.14(d)(6).
11 As mentioned by the court, Congress did not define “voluntary” for these purposes. And although another new EEOC regulation includes guidance on the issue of voluntariness, 29 C.F.R. § 1630.14(d)(2), the EEOC did not argue that the regulation applied retroactively. Id. (stating, for example, that an examination is voluntary so long as the employer does not require participation or deny coverage for non-participation, and financial incentives are within limits set out in the regulation).
12 Orion Energy Sys., Inc., No. 14-cv-1019, at 18.
13 Note that the court’s analysis regarding “voluntariness” of the wellness program relates only to plan years beginning before January 1, 2017, the effective date of the EEOC’s final wellness regulations as to the voluntariness issue. Id.
14 Orion Energy Sys., Inc., No. 14-cv-1019, at 19-21.
EEOC Directly Challenges Wellness Program for the First TimeEEOC Issues Final Rules on Wellness Programs