In a recent decision under the Americans with Disabilities Act (ADA), the US Court of Appeals for the Seventh Circuit reversed a prior holding and held that the ADA mandates transfer of disabled workers to vacant positions for which they are qualified, absent undue hardship to the employer. EEOC v. United Airlines Inc., No. 11-1774, 2012 WL 3871503 (7th Cir. Sept. 7, 2012).
In 2003, United Airlines promulgated “Reasonable Accommodation Guidelines” (the Guidelines) that addressed accommodating employees who, because of recognized ADA disabilities, are no longer able—even with a reasonable accommodation—to perform the essential functions of their current jobs. The Guidelines noted that “transfer . . . [to] an equivalent or lower-level vacant position” may be a reasonable accommodation. However, the Guidelines specified that the transfer process is “competitive.” As such, United’s policy was that employees needing accommodation will not automatically be placed into a vacant position within the company, but instead will be given preferential treatment in the hiring process. As such, an employee seeking transfer was permitted to submit an unlimited number of transfer applications, be guaranteed an interview, and receive priority over a similarly qualified candidate. Therefore, under these guidelines, as long as the employee seeking the job was equally as qualified as an outside applicant, the employee would get the job. At the same time, however, a disabled employee would not be given preference over a better-qualified outside applicant.
The Lower Court and First Appeal
The Equal Employment Opportunity Commission (EEOC) filed suit against United, alleging that the Guidelines violated the ADA insofar as they required disabled employees to compete for vacant positions rather than mandating reassignment whenever possible. In the lower court, United prevailed on its motion to dismiss. That court relied on the Seventh Circuit’s ruling in EEOC v. Humiston-Keeling, 227 F.3d 1024 (7th Cir. 2000), which held that, although the ADA contemplates reassignment as a reasonable accommodation, the Act does not require an employer to reassign a disabled worker to a vacant job for which a better candidate exists, provided it was the employer's “consistent and honest policy” to select the best-qualified applicant. The district court therefore held that, as a matter of law, the EEOC had failed to state a claim because United’s policies complied with Humiston-Keeling.
In its initial review, the Seventh Circuit upheld the district court’s decision, agreeing that its prior decision in Humiston-Keeling controlled—and that, as a matter of law, the Guidelines therefore complied with the ADA. See EEOC v. United Airlines, Inc., 673 F.3d 543 (7th Cir. 2012).
The Seventh Circuit Panel Reverses Itself
The EEOC petitioned for rehearing en banc, arguing that Humiston-Keeling’s reasoning had not survived the Supreme Court’s intervening decision in U.S. Airways, Inc. v. Barnett, 535 U.S. 391 (2002). In Barnett, the Court outlined a two-step, case-specific approach to analyzing the reasonableness of an accommodation under the ADA:
The first step requires the employee to show that the accommodation is a type that is reasonable in the run of cases. The second step varies depending on the outcome of the first step. If the accommodation is shown to be a type of accommodation that is reasonable in the run of cases, the burden shifts to the employer to show that granting the accommodation would impose an undue hardship under the particular circumstances of the case. On the other hand, if the accommodation is not shown to be a type of accommodation that is reasonable in the run of cases, the employee can still prevail by showing that special circumstances warrant a finding that the accommodation is reasonable under the particular circumstances of the case.
Barnett therefore called Humiston-Keeling into question, the EEOC argued, because it rejected Humiston-Keeling’s “anti-preference” interpretation of the ADA, specifically suggesting “that preferences will sometimes prove necessary to achieve the Act’s basic equal opportunity goal.” In other words, the ADA will sometimes mandate that a disabled employee be reassigned to a vacant position over a better-qualified applicant for the same position so long as such a move does not impose an undue hardship on the employer.
Instead of granting the EEOC’s petition for rehearing en banc, the same Seventh Circuit panel that initially decided the EEOC’s appeal invoked Circuit Rule 40(e), which allows a three-judge panel to overrule a prior panel decision so long as its decision overruling the panel is circulated “among the active members of [the] court and a majority of them do not vote to rehear en banc the issue of whether the position should be adopted.” Because “every member of the court in active service approved overruling Humiston-Keeling,” and because no active Seventh Circuit judge voted to rehear the case en banc, the panel overruled Humiston-Keeling as inconsistent with Barnett.
Although the panel at that point could have proceeded to the merits, i.e., whether United’s Guidelines violate the ADA to the extent that they do not require mandatory reassignment, the Seventh Circuit chose to remand the matter to the district court to consider the issue afresh—and unhindered by Humiston-Keeling. As Judge Cudahy explained for the court,
On remand, the district court must conduct the Barnett analysis. In this case, the district court must first consider (under Barnett step one) if mandatory reassignment is ordinarily, in the run of cases, a reasonable accommodation. Assuming that the district court finds that mandatory reassignment is ordinarily reasonable, the district must then determine (under Barnett step two) if there are fact-specific considerations particular to United’s employment system that would create an undue hardship and render mandatory reassignment unreasonable.
In a footnote, the court suggested that mandatory reassignment will be a reasonable accommodation in most cases, and that, even if it is not here, “the EEOC can still prevail if it shows that special factors make mandatory reassignment reasonable in this case.”
Although the Eighth Circuit appears to still follow an analogous rule to Humiston-Keeling, see Huber v. Wal-Mart, 486 F.3d 480 (8th Cir. 2007), the Seventh Circuit joined the Tenth and DC Circuits in holding that the ADA will sometimes require mandatory reassignment of disabled employees to vacant positions and that it is a question of fact that cannot be decided on a motion to dismiss. This will likely make these types of cases more difficult and more expensive for employers to defend.