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Published: 2008-03-26

New Supreme Court Rulings Affecting Employers



At the end of its recently completed term, the United States Supreme Court decided several significant cases involving important issues for employers regarding the scope of federal disability discrimination law and the circumstances under which employees can recover punitive damages under another federal anti-discrimination law. This Employment Law Alert surveys some of the highlights of these developments.

SUPREME COURT LIMITS SCOPE OF AMERICANS WITH DISABILITIES ACT

On June 22, 1999, the Supreme Court issued three ground-breaking decisions under the Americans with Disabilities Act ("ADA"): Sutton v. United Airlines, Inc.; Murphy v. United Parcel Service, Inc.; and Albertsons, Inc. v. Kirkingburg. These decisions have important ramifications for employers because they significantly limit the scope of the ADA.

Limiting the Scope of Protected "Disabilities" by Considering Corrective Measures

For several years, courts have struggled to determine whether an employee is "disabled" under the ADA when the employee has a physical or mental impairment that has been corrected or controlled through medication or some other manner. Many lower courts as well as the Equal Employment Opportunity Commission have taken the position that courts should consider the employee's impairment only in its uncorrected state in deciding whether the employee is "disabled." Other courts have taken into account effects that corrective measures have in lessening the impairment.

In Sutton and Murphy, the Supreme Court held that courts should consider the effects of corrective measures and decided that an employee with an impairment -- even one that is severe in its uncorrected state -- generally is not "disabled" under the ADA if the impairment does not "substantially limit" a "major life activity" (such as seeing or walking) in its corrected or controlled state. The Court also stressed that courts should not make broad generalizations about the types of impairments that are "disabling" under the ADA but rather must determine on an individualized case-by-case basis whether a particular impairment creates a "substantial" limitation for a particular employee or applicant.

Sutton and Murphy provide additional protections for employers from ADA suits by employees with corrected or controlled impairments. In Sutton and Murphy, for example, the Court found that two airline pilots with severe near-sightedness and a truck mechanic with serious high blood pressure were not "disabled" under the ADA because they had controlled their conditions with corrective lenses and medication, respectively, to the point where their impairments were no longer substantially limiting in any significant manner. Similarly, the Court decided in Kirkingburg that a fired truck driver with uncorrectable near blindness in one eye was not necessarily "disabled" because his own bodily systems had compensated for his monocular vision so as to make it less disabling.

Nevertheless, employers should continue to use caution before making employment-related decisions based on an employee's or applicant's physical or mental impairments, even when those impairments are correctable or corrected. First, not all impairments are correctable or controllable, and an employer may not be in a position to know whether a given impairment can be mitigated. Second, an impairment that can be controlled or corrected to some extent can still constitute a "disability" under the ADA if it "substantially limits" a "major life activity" even with corrective measures. Third, courts also can take into account ways in which a corrective measure has aggravated a condition and thus made it more disabling (as some medications do, for example). Fourth, employers likely must continue to provide reasonable accommodations to disabled employees who need accommodations in order to take corrective measures (for example, giving a diabetic employee frequent meal breaks to permit the employee to control his or her blood sugar levels). Fifth, employees who are not "disabled" under this new interpretation may still be able to assert other claims against employers under the ADA, including under provisions that prohibit discrimination against employees "regarded as" being disabled (discussed below) or employees with a history of having a disability, and provisions that prohibit retaliation against individuals who attempt to assert rights under the ADA.

Limiting Claims by Employees Who Cannot Perform Certain Particularized Jobs

The Court also held that an employee generally is not "disabled" under the ADA merely because he or she cannot perform certain specific positions or jobs due to an impairment. Rather, to demonstrate that he or she is "substantially limited" in the "major life activity" of "working," an employee must show, "at a minimum, that [he is] unable to work in a broad class of jobs" and "must be precluded from more than one type of job, a specialized job, or a particular job of choice." To illustrate, the Court held that the pilots in Sutton were not substantially limited in the major life activity of working because they had not claimed that their severe near-sightedness precluded them from holding any kind of pilot job other than "global airline pilot" positions.

These decisions, therefore, provide employers with additional protection against ADA claims by employees who may be unable to perform certain specific tasks or jobs but generally can work in a wide range of other positions. Again, however, employers should take care when considering these issues because courts will determine whether a given impairment "substantially limits" an employee's ability to work in many jobs on an individualized case-by-case basis.

Limiting Claims by Employees Who Allegedly Are "Regarded As" Disabled

In addition to protecting employees with actual disabilities, the ADA protects employees who suffer discrimination because their employer "regards" them as being disabled even if they are not, in fact, "disabled" under the ADA. The Court held in Sutton that an employer does not necessarily "regard" an employee as disabled, and thereby face ADA liability, merely because it makes employment decisions based on real or imagined physical characteristics or medical conditions that do not substantially limit a major life activity, or that are not impairments at all. Instead, the Court held that an employer generally "regards" an employee as disabled under the ADA when the employer mistakenly believes that a non-disabled employee has an impairment that would substantially limit a major life activity, or mistakenly believes that a person's actual impairment substantially limits a major life activity when, in reality, it does not. Thus, "an employer is free to decide that physical characteristics or medical conditions that do not rise to the level of an impairment -- such as one's height, build, or singing voice -- are preferable to others, just as it is free to decide that some limiting, but not substantially limiting, impairments make individuals less than ideally suited for a job." Despite these additional protections, however, employers are well-advised to take great care before establishing physical or mental job fitness criteria or otherwise making decisions based on physical or mental characteristics given the significant practical difficulty of determining whether and to what extent an employee has an impairment that "substantially limits" a "major life activity."

SUPREME COURT REFINES TITLE VII PUNITIVE DAMAGES STANDARD

In another important decision issued on June 22, 1999, Kolstad v. American Dental Association, the Supreme Court expansively interpreted the circumstances under which employees can recover punitive damages against employers under Title VII of the Civil Rights Act of 1964 (which generally prohibits employment discrimination based upon an employee's race, color, gender, national origin or religion), while at the same time giving employers a powerful and straightforward potential defense against punitive damages liability. The Court held that an employee generally can recover punitive damages against an employer found liable for intentional discrimination if the employer was aware when it took the challenged employment action (such as a termination or refusal to promote) that its action may violate federal law, even if the employer's discriminatory conduct is not "egregious" in nature. The Court noted that intentional discrimination might not give rise to punitive damages in cases where the employer was entirely unaware that federal law prohibited its action or reasonably believed that its intentional discrimination was lawful. Because many employers will be unlikely to qualify for one of these exceptions, however, Kolstad highlights the need for employers to take care when considering adverse employment actions against employees who may be protected by Title VII.

Significantly, the Court also held that punitive damages may not be awarded -- even against employers whose management or supervisory employees have intentionally and unlawfully discriminated -- where the employer can demonstrate that it has made "good faith efforts" to prevent discrimination in the workplace and to comply with Title VII, notwithstanding its agents' unlawful conduct. Although the Court did not comprehensively define such "good faith efforts," examples likely include enactment and enforcement of anti-discrimination policies (including, but not limited to, sexual harassment policies) that include reasonable procedures for handling complaints, diversity and workplace sensitivity training sessions, and general education of managerial and non-managerial employees alike as to the requirements of Title VII and other employment discrimination laws. In addition to the preventative and other benefits of such measures, therefore, employers are well-advised to consider taking steps such as these as a potential means of controlling their exposure to punitive damages claims in employment discrimination cases. The Court's pronouncements in Kolstad regarding the value to employers of enacting comprehensive anti-discrimination programs and policies in the punitive damages context build upon the Court's landmark decisions last year in Burlington Industries, Inc. v. Ellerth and Faragher v. City of Boca Raton. In these cases, the Court ruled that policies against sexual harassment and other preventative measures can under certain circumstances protect an employer from liability for sexual harassment undertaken by one of its supervisors. Furthermore, the Equal Employment Opportunity Commission has taken the position in a recent Enforcement Guidance that the protections afforded by these cases should be extended to all other forms of workplace harassment, whether or not based on gender (discussed further in a related Sidley & Austin Employment Law Alert). Prevention of discrimination also remains critically important because employees can still recover back pay, other compensatory damages, injunctive relief, attorneys' and expert witnesses' fees, court costs and possibly other relief under Title VII even when punitive damages are unavailable. Courts will likely apply the Supreme Court's rationale in Kolstad to punitive damages claims under the ADA, which has a punitive damages provision that parallels Title VII.