The United States Supreme Court recently confirmed that a plaintiff seeking to establish a claim for employment discrimination under Title I of the Americans with Disabilities Act (“ADA”) must prove that they held or desired a job and could perform its essential functions with or without reasonable accommodation at the time of an employer’s alleged act of disability-based discrimination. Thus, the Court concluded that a retiree who neither held nor desired a job could not state a claim for disability discrimination based on health benefits provided to retirees. This case emphasizes the importance of the threshold determination of whether a plaintiff is a “qualified individual” under the ADA; but the Court acknowledged there might be multiple other avenues to challenge retirement benefits that differentiate between retirees on the basis of disability. Thus, employers should continue to exercise caution in developing retirement benefit plans.

FACTS

Plaintiff, Karyn Stanley, was a firefighter who worked for the City of Sanford and retired early in 2018 due to a disability. The City provided health insurance to retirees: employees who retired after 25 years of service received health insurance to age 65; but those who retired earlier than 25 years of service due to a disability only received health insurance for 24 months. Because Stanley did not complete 25 years of service, she only received health insurance for 24 months after her retirement.

Stanley sued the City claiming that the policy discriminated against her due to her disability under the ADA. Both lower courts dismissed her claim under the ADA.

THE COURT’S HOLDING

The Supreme Court affirmed the lower courts. The Court explained that Title I of the ADA prohibits employers from discriminating against qualified individuals on the basis of disability, and defines “qualified individual” as a person who, with or without reasonable accommodation, can perform the essential functions of the employment position that the person holds or desires. The Court’s central holding was that a retiree who does not hold or seek a job is not a qualified individual, and cannot state a claim under Title I of the ADA

Based on this, the Supreme Court affirmed the lower court’s ruling that Stanley had failed to state a claim under the ADA because she failed to plead that she held or desired the job or could perform the essential functions of the job with or without reasonable accommodations at the time of the alleged discrimination.

Importantly, the Supreme Court highlighted other potential avenues for retirees to seek relief, including state law, the Rehabilitation Act, and an equal protection claim under Rev. Stat.§1979, 42 U. S. C. §1983). Several of the justices also suggested that a person might have a claim under Title I of the ADA if they could prove they were disabled and a qualified individual at the time their employer adopted a discriminatory retirement benefits policy, thus leaving open the possibility that some retirees (and even Stanley herself) might still be able to state a claim for disability discrimination based on a retirement benefit plan that provided varying benefits to employees with and without disabilities.

EMPLOYER TAKEAWAY

This decision is a reminder that employees, applicants, and retirees who are not able to perform the essential functions of a job they hold or desire are not qualified individuals under the ADA and therefore cannot plead a claim for discrimination under Title I the ADA. Nevertheless, employers should exercise caution in crafting retirement benefit plans (particularly those that may differentiate between retirees with and without disabilities), as the Court left open numerous possible avenues for plaintiffs to plead and prove claims based on such plans.

Additionally, while this decision arose under federal law, and it is possible for California courts to rule differently regarding rights for retired employees under the state’s Fair Employment and Housing Act (“FEHA”), the Supreme Court’s decision is in line with California courts, which have held that an employee must be able to perform the essential duties of an employment position to state a claim for disability discrimination under the FEHA.

In sum, due to the remaining uncertainty, employers should consult counsel to ensure compliance with all relevant laws related to rights and benefits for current and former employees.

Of course, feel free to contact us regarding how this case might affect your business policies.

• Saba Zafar (szafar@wilsonturnerkosmo.com)
• Katie M. McCray (kmccray@wilsonturnerkosmo.com)

Wilson Turner Kosmo’s Special Alerts are intended to update our valued clients on significant employment law developments as they occur. This should not be considered legal advice.