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Supreme Court Dodges Question Whether Rehire Policy Barring Former Drug User Violates Disability Law

By Francis P. Alvarez and Kathryn J. Russo
  • December 3, 2003

The U. S. Supreme Court has held an employer's invocation of a neutral "no-rehire" policy banning the reemployment of all workers who were terminated or forced to resign always dispels a preliminary showing of disability discrimination based on a rejected applicant's claim of "disparate treatment." To prevail on the claim under the Americans With Disabilities Act, the applicant must then show the employer used the policy as a "pretext" for intentionally discriminating against him.

However, in the 7-0 decision, the Court declined to rule on the primary question presented to it, "whether the ADA confers preferential rehire rights on disabled employees lawfully terminated for violating workplace conduct rules." The Court said it did not need to resolve that question in this case because the plaintiff, Joel Hernandez, had not timely pursued his "disparate impact" claim that the policy as applied to him was discriminatory. Raytheon Co. v. Hernandez, (.PDF file/191 KB/13 pgs.) Docket No. 02-749 (12/02/03).

The Facts in the Case

After 25 years of employment with his employer (then known as Hughes Missile Systems), Hernandez tested positive for cocaine on a workplace drug test.  He resigned, in lieu of discharge, for "personal conduct." More than two years later, he re-applied for a position with his former employer. On his application, he mentioned his former employment, and attached a letter from an Alcoholics Anonymous counselor stating that he attended AA meetings regularly and was in recovery. 

In reviewing the application, an individual in the employer's Labor Relations Department pulled Hernandez's personnel file and read his employee separation summary. Based on an unwritten policy against rehiring employees terminated for workplace misconduct, she rejected his application.   

The Court Rulings

Claiming discrimination in violation of the ADA, Hernandez filed a charge with the Equal Employment Opportunity Commission.  In its defense, the employer submitted a letter which stated, among other things, that Hernandez's application "was rejected based on his demonstrated drug use while previously employed and the complete lack of evidence indicating successful drug rehabilitation."  In the subsequent lawsuit, however,  the individual who had rejected Hernandez's application testified that she did not know he was a former drug addict and saw nothing in his file that would constitute a "record of" addiction.

In his lawsuit, Hernandez initially had claimed discrimination based on the company's "disparate treatment" of him, meaning it had rejected his application because he had a  "record of" drug addiction or because he was "regarded as" being a drug addict, both of which may violate the ADA.  However, after the employer requested summary judgment in the case, Hernandez argued a different theory for the first time. He argued that even if the company did apply a neutral no-rehire policy, it still violated the ADA: such a policy has a "disparate impact," meaning it has a discriminatory impact on former drug abusers who had been rehabilitated and who are protected as disabled under the ADA.    

The federal trial court ultimately granted the employer's motion for summary judgment on the disparate treatment claim. However, the court refused to consider the subsequent disparate impact claim because Hernandez had failed to raise it within the time limits for doing so.  When Hernandez appealed to the U. S. Court of Appeals for the Ninth Circuit, that court agreed that the disparate impact claim had been filed untimely.  However, the Ninth Circuit also reversed the summary judgment in favor of the employer and said Hernandez could proceed with his disparate treatment claim. The court found that the company may have violated the ADA by applying the neutral no-rehire policy to former drug addicts whose only work-related offense was testing positive. 

In ruling that the appeals court erred in its reasoning and must consider the case again, the U. S. Supreme Court emphasized that there is a difference between disparate impact claims and disparate treatment claims, and they must be analyzed and judged according to different legal standards. Under the ADA, a disparate impact claim may properly be  raised in a timely manner.  However, a disparate treatment claim, such as the only one raised in a timely manner by Hernandez, must be evaluated according to its own legal  framework, and not one used for evaluating disparate impact claims. 

Here, the Ninth Circuit had erred by using a disparate impact analysis when it rejected Raytheon's reason for refusing to re-hire Hernandez, the Court said. Instead, by applying the correct disparate treatment framework, the Court said it was obligated to conclude that Raytheon's neutral no-rehire policy was, by definition, a legitimate, nondiscriminatory reason for refusing to rehire Hernandez. While Hernandez might be able to show that the no-rehire policy was used as a "pretext" to unlawfully discriminate against him, the Court concluded that issue will need to be resolved by the lower court.

Clarity and Uncertainty after the Supreme Court's Decision

The Supreme Court's opinion in the Hernandez decision has clarified several important  points.  First, the potentially broader "disparate impact" claim may be brought under the ADA, but such a claim must be analyzed distinctly and differently from the more individualized "disparate treatment" claim.  Second, the ruling reinforces the importance of proof when a decision-maker lacks the knowledge that an applicant may be protected by the ADA because of his or her disability status.  If it can be proven a decision-maker truly lacks such knowledge, there can be no viable claim of disparate treatment.    

Despite this clarity, the Court did not remove the uncertainty surrounding no-rehire policies.  While adopting or enforcing a broad no-rehire policy may reduce an employer's exposure to disparate treatment claims, a blanket rule with no exceptions may make employers more vulnerable to disparate impact claims when the policy is applied to a person with a disability. 

Ultimately, the Hernandez decision may prove most significant for what it does not say.  Disparate impact claims under the ADA are now plainly viable, and the Court has left open the possibility that individuals with disabilities are entitled to preferential treatment under neutral personnel policies, such as no-rehire policies.  Taken together, this may mean that recovered drug addicts, alcoholics, and other individuals with disabilities may claim that employers must "forgive and forget" violations of otherwise lawful policies if the disabilities were later mitigated or eliminated. 

What Employers Should Do Now

In light of this decision, there are several preventive measures employers should consider.  First, identify and review substance abuse and other policies that automatically do any of the following: 

  1. Bar re-employment after a positive drug or alcohol test result;
  2. Restrict the duties to be performed by employees who test positive for illegal drug use or alcohol, or;
  3. Bar re-employment following a discharge for workplace misconduct, excessive absenteeism or tardiness, and poor performance. 

Second, employers may limit their exposure to "disparate impact" claims by establishing guidelines to ensure that any ban or restriction on employment can be shown to be "job related and consistent with business necessity" rather than the result of an automatic application of a blanket policy. Additional guidelines may be developed for processing employment applications of former employees and previously rejected applicants. 

Given the complexity and uncertainty surrounding workplace disability issues, employers should continue training their managers and supervisors about the risks in hiring, managing, disciplining and terminating individuals with physical or mental conditions that might be actual or perceived "disabilities" under the ADA, state or local law. 

©2003 Jackson Lewis P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

Reproduction of this material in whole or in part is prohibited without the express prior written consent of Jackson Lewis P.C., a law firm that built its reputation on providing workplace law representation to management. Founded in 1958, the firm has grown to more than 900 attorneys in major cities nationwide serving clients across a wide range of practices and industries including government relations, healthcare and sports law. More information about Jackson Lewis can be found at www.jacksonlewis.com.

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