Wellness Program Incentives: ADA, GINA, and California Limits

An employer wellness program that includes health questions or screenings has to be voluntary. Under the ADA rule at 29 CFR section 1630.14(d), “A covered entity may conduct voluntary medical examinations and activities, including voluntary medical histories, which are part of an employee health program.” The paragraph that used to cap incentives is now marked “[Reserved],” so there’s no safe-harbor percentage to rely on. Large rewards or penalties tied to health data are where these programs get challenged.

What makes a program “voluntary” under the ADA?

Four conditions. Under section 1630.14(d)(2), a program is voluntary if the employer doesn’t require participation, doesn’t deny health plan coverage for not participating, doesn’t retaliate or coerce, and gives a notice describing the medical information collected and how it’ll be protected.

The program must also be “reasonably designed to promote health or prevent disease.” The regulation says a program isn’t reasonably designed “if it exists mainly to shift costs from the covered entity to targeted employees based on their health or simply to give an employer information to estimate future health care costs.”

What happened to the incentive limit?

It was removed. The ADA rule’s incentive paragraph, section 1630.14(d)(3), now reads “[Reserved],” and the parallel GINA provision for employee incentives is reserved too. Neither section has been substantively amended since January 1, 2019.

That leaves employers without a numeric safe harbor. A program with a modest reward is easier to defend as voluntary than one where non-participants pay much more for coverage. Separate HIPAA and ACA wellness rules still govern programs that are part of a group health plan.

What does GINA add?

Limits on genetic information, including family medical history. Under 29 CFR section 1635.8(b)(2), employers can collect genetic information through a wellness program only if participation is voluntary, with prior written authorization, and the employer receives it only “in aggregate terms that do not disclose the identity of specific individuals.”

Incentives are restricted. The GINA rule says a covered entity “may not offer an inducement (financial or in-kind), whether in the form of a reward or penalty, for individuals to provide genetic information.” A health risk assessment that asks about family history must make clear the reward is available “whether or not the participant answers questions regarding genetic information.”

How does California law apply?

Through FEHA’s medical examination rule. Government Code section 12940(f)(2) lets employers “conduct voluntary medical examinations, including voluntary medical histories, which are part of an employee health program available to employees at that worksite.” Outside that exception, exams of current employees must be “job related and consistent with business necessity.”

So a California program has to be truly voluntary under both laws. FEHA claims carry uncapped damages and attorney fees, which makes California the higher-risk forum for a wellness program that pressures employees.

Wellness program rules at a glance

The firm’s page on disability discrimination defense for California employers describes its work on ADA and FEHA claims.

When an employee challenges a wellness program

1. Preserve the program documents, vendor contract, participation notices, authorization forms, and incentive terms for each plan year.
2. Calendar the deadline on the EEOC or CRD charge, demand, or lawsuit, and check EPLI and fiduciary coverage notice requirements.
3. Identify HR and benefits staff who ran the program, and make sure no one treats the complaining employee differently.
4. Pull records showing what health data the employer itself received and whether it was aggregate only.
5. Talk to a lawyer before changing incentives mid-year or contacting the vendor about individual data.

Wellness program questions from employers

Can we charge non-participants more for health insurance?

That’s the riskiest design. Without a numeric safe harbor, a large surcharge can support an argument that participation isn’t voluntary. The health plan rules also apply. Any surcharge should be reviewed under both ADA and benefits law.

Is a step-count challenge covered?

Activity-only programs that don’t ask health questions or require exams generally don’t trigger the ADA medical inquiry rules. They still need reasonable alternatives for employees whose disabilities affect participation.

Can managers see who participated?

Participation lists can raise issues. Section 1630.14(d)(4) requires medical information to be kept confidential and reported to the employer only in aggregate terms. Limit who sees individual data.

Do we need to accommodate employees who can’t meet health targets?

Yes. The GINA rule notes that wellness programs must make reasonable accommodations “to the extent required by the ADA.” An alternative way to earn the reward is the usual approach.

If an employee challenges your wellness program

If your company has received a charge or lawsuit claiming its wellness program was involuntary or misused health data, the program design and the data flow records usually decide the defense. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving medical inquiries and employee health programs. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.

Sources

The federal regulations are 29 CFR section 1630.14 and 29 CFR section 1635.8. The California statute is Government Code section 12940.

This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.