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

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.


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Jonathan Crotty

Jonathan Crotty

Jonathan Crotty has been a successful counselor and problem solver for large and small employers in the Carolinas and beyond for over 20 years. He heads Parker Poe’s Employment and Benefits practice group and represents employers in all aspects of the employment relationship, from hiring to discharge. Mr. Crotty provides guidance to employers as they navigate the complex array of laws and regulations applicable to the employment relationship, including employment discrimination laws, OSHA compliance, FMLA, and wage and hour matters. If employers face legal or administrative claims resulting from their employees and employment practices, he defends and resolves those disputes in line with the client’s goals and expectations.

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