On September 7, 2012, the United States Court of Appeals for the Seventh Circuit issued a decision holding that the Americans with Disabilities Act (“ADA”) may require the reassignment of disabled employees to vacant positions for which they are qualified, even if there is a more qualified candidate for the position. This decision reverses the Seventh Circuit’s own prior holding, in EEOC v. Humiston-Keeling, that allowed employers to consider transfer requests of disabled employees on a competitive, rather than mandatory, basis. The Seventh Circuit Court of Appeals covers the states of Illinois, Indiana, and Wisconsin.

Friday’s decision in EEOC v. United Airlines, Inc. involved the “Reasonable Accommodation Guidelines” adopted by United Airlines in 2003 to address accommodations for employees with disabilities who were no longer able to perform their current job functions. United’s guidelines specified that while transfer to a vacant position might be possible as a reasonable accommodation, the “transfer process is competitive,” and disabled employees seeking a transfer would “not be automatically placed into vacant positions but instead [would] be given preferential treatment” over other applicants who were equally qualified for the job.

The U.S. Equal Employment Opportunity Commission (“EEOC”) sued United Airlines, alleging that United’s accommodation policy violated the ADA. The EEOC argued that the ADA requires employers to pass over even a more qualified candidate in order to provide a vacant position to an employee with disabilities as a reasonable accommodation. The district court dismissed the case, based on Humiston-Keeling’s holding that the ADA does not require an employer to reassign disabled employees when there is a more qualified applicant for the position.

However, the Seventh Circuit determined that Humiston-Keeling, a case that was relied on by employers for twelve years, is no longer valid in light of an inconsistent 2002 United States Supreme Court decision, U.S. Airways, Inc. v. Barnett. Noting that Barnett “flatly contradicted much of the language of Humiston-Keeling,” the Seventh Circuit held that “the ADA does indeed mandate that an employer appoint employees with disabilities to vacant positions for which they are qualified, provided that such accommodations would be ordinarily reasonable and would not present an undue hardship to that employer.”

The Seventh Circuit remanded EEOC v. United Airlines, Inc. back to the district court, so that the Barnett standard may be applied. Under Barnett, the employee will be required to show that the requested accommodation is reasonable on its face. After such a showing by the employee, United (the employer) must demonstrate “fact-specific considerations particular to United’s employment system that would create an undue hardship and render mandatory reassignment unreasonable.”

This decision aligns the Seventh Circuit with the automatic reassignment stance of the D.C. and Tenth Circuits (covering the states of Kansas, Oklahoma, Colorado, New Mexico, Utah, Wyoming, and the District of Columbia). In light of this significant reversal, employers in the Seventh, Tenth, and D.C. Circuits should consider whether their ADA accommodation practices are in compliance with the new mandatory reassignment standard adopted in EEOC v. United Airlines, Inc.