(Reuters) - A federal agency on Monday released final rules explaining how employers can offer workers financial incentives to participate in wellness programs without violating federal laws protecting the confidentiality of medical information.

The move from the Equal Employment Opportunity Commission was meant to clear up confusion over the way two federal laws protecting employees' medical privacy apply to the popular programs, which are designed to control medical spending by reducing obesity, smoking and other risk factors.

The rules, which were first proposed in November, mark a compromise with U.S. businesses that opposed the EEOC's previous stance that providing incentives to join voluntary wellness programs rendered them involuntary, and thus illegal.

About 98 percent of U.S. companies with 200 or more workers, and 73 percent of smaller firms, offered wellness programs in 2014, according to the Kaiser Family Foundation. Wellness programs are generally managed by outside companies in what has become an $8 billion-a-year industry, research firm IBISWorld reported last year.

The 2010 Affordable Care Act allowed U.S. employers to increase the rewards they offer to employees who participate in wellness programs. But in a series of 2013 lawsuits against companies, including Honeywell International Inc, the EEOC said a request for medical information related to any program offering incentives violated the Americans with Disabilities Act or the Genetic Information Nondiscrimination Act.

On Monday, the EEOC brought its rules into line with other federal agencies, including the Internal Revenue Service and the U.S. Department of Health and Human Services, saying companies could offer employees and their spouses incentives worth up to 30 percent of their out-of-pocket health insurance costs without violating the laws.

Incentives can include discounts on health insurance premiums, cash, prizes or paid time off from work. Some health and workers' rights groups say the rules, which take effect next year, penalize employees who decline to join wellness programs and hand over private medical information.

The EEOC's 2013 lawsuits riled the business community and prompted some companies to threaten to pull their support for the ACA as it came under attack from Republicans.

A federal judge in Minnesota in 2014 dismissed the case against Honeywell, in part because the EEOC had not issued guidance to employers on how to structure wellness programs lawfully.

(Reporting by Daniel Wiessner in Albany, New York; Editing by Alexia Garamfalvi and Dan Grebler)