A federal judge on Tuesday sent the U.S. Equal Employment Opportunity Commission back to the drawing board on regulations for increasingly popular workplace wellness programs, ruling in part that the agency failed to justify its 30 percent cap on cost incentives for participating workers.

AARP challenged the rule in October, arguing it would allow employers to illegally access private health information and potentially use that data in a discriminatory manner. The AARP, which lobbies on behalf of nearly 38 million people age 50 and older, also alleged the 30 percent limit on health care cost incentives was too high of a penalty for nonparticipating…