Overruling its own precedent, the U.S. Court of Appeals for the Seventh Circuit (which covers Indiana, Illinois, and Wisconsin) recently held that the Americans with Disabilities Act (ADA) requires employers to reassign disabled employees to vacant positions for which they are qualified, provided that such accommodation ordinarily would be reasonable and would not present an undue hardship to the employer. EEOC v. United Airlines, Inc., No. 11-1774, Sept. 7, 2012.

In 2003, United Airlines established guidelines that addressed the reasonable accommodation of disabled employees. The guidelines provided that a transfer to an equivalent position may be a reasonable accommodation, but that the transfer process remained competitive. Consequently, disabled employees would not automatically be placed into a vacant position, but instead, they would be given preferential treatment. Under the guidelines, employees needing an accommodation could submit an unlimited number of transfer applications, they would be guaranteed interviews, and they would receive priority consideration over similarly qualified applicants. If two candidates were equally qualified, the disabled employee seeking the accommodation would be awarded the job.

The Equal Employment Opportunity Commission (EEOC) challenged the guidelines, and a district court granted United Airlines’ motion to dismiss. The district court relied upon the Seventh Circuit’s 2000 decision in EEOC v. Humiston-Keeling, which held that “the ADA does not require an employer to reassign a disabled employee to a job for which there is a better applicant, provided it’s the employer’s consistent and honest policy to hire the best applicant for the particular job in question.”

On appeal, the EEOC argued that “reassignment to a vacant position” is a possible ADA reasonable accommodation, and it required the transfer of a disabled employee to a vacant position who lost his or her position due to a disability. The Seventh Circuit agreed and concluded that Humiston-Keeling did not survive the U.S. Supreme Court’s decision in US Airways, Inc. v. Barnett. In remanding the case to the district court, the Seventh Circuit instructed the district court to conduct the two-step, case-specific analysis for determining whether reassignment is a reasonable accommodation as outlined in Barnett.

In Barnett, the Supreme Court addressed reassignment in the context of a seniority system. The plaintiff Barnett argued that, despite his employer’s seniority system, he was entitled to reassignment to a mailroom job over two more senior employees. The Supreme Court outlined a two-step process to determine whether a job reassignment is required despite a disability-neutral rule of the employer. The first step requires the employee to show that the type of accommodation seems reasonable on its face—that is, ordinarily or in the “run of cases.” The second step varies depending on the outcome of the first step. If the employee shows that the accommodation is reasonable in the run of cases, the burden shifts to the employer to show special case-specific circumstances that demonstrate undue hardship. Alternatively, if the employee fails to show that the accommodation is reasonable in the run of cases, the employee can still prevail by showing that the accommodation is reasonable under the special circumstances of the case.

The Barnett Court ultimately ruled in favor of US Airways because the accommodation at issue, violation of its seniority system, would create an undue hardship. The Supreme Court held that the presence of a seniority system will ordinarily render mandatory reassignment of a disabled employee unreasonable. Nonetheless, the Supreme Court noted that it was “not creating a per se exception” for seniority systems because an employee “remains free to show that special circumstances warrant a finding that, despite the presence of a seniority system…the requested ‘accommodation’ is ‘reasonable’ on the particular facts.”

Although noting the Barnett Court’s conclusion that a transfer in violation of a seniority system “would not be reasonable in the run of cases,” the Seventh Circuit held it was error to equate a “best-qualified selection policy” with a seniority system. The court stated that “while employers may prefer to hire the best qualified applicant, the violation of a best qualified selection policy does not involve the property-rights and administrative concerns (and resulting burdens) presented by the violation of a seniority policy.”

Accordingly, the Seventh Circuit expressly overruled Humiston-Keeling and held that the case is no longer good law. It also noted that its decision was consistent with the Tenth Circuit’s en banc decision in Smith v. Midland Brake, Inc., and the D.C. Circuit’s en banc decision in Aka v. Washington Hospital Center, in which the courts concluded that the ADA requires employers to appoint disabled employees to vacant positions, absent undue hardship or violation of a collective bargaining agreement.

In light of United Airlines, whether reassignment to a vacant position is a required reasonable accommodation in the face of a disability-neutral policy in the Seventh Circuit will require application of the two-step, case-specific approach outlined in Barnett. An employer may be required to give preference to disabled employees over more qualified non-disabled employees in filling vacant positions. Of course, the disabled employee must be qualified for the vacant position in the first instance. Finally, while the presence of a seniority system may ordinarily render a transfer unreasonable, there may be case-specific situations in which an employee could demonstrate that reassignment is, in fact, a reasonable accommodation under the ADA despite the presence of a seniority system.