The Americans with Disabilities Act of 1990 (ADA) requires that individuals with disabilities be treated fairly and equally with regard to employment opportunities, government services, access to public accommodations, commercial facilities, telecommunications and in other areas. The ADA employment provisions became effective for most employers on July 26, 1992, and the Act also prohibits disability discrimination by employment agencies, labor organizations or joint labor-management committees. Congress charged the Equal Employment Opportunities Commission (EEOC) with the responsibility of administering these requirements, but neither Congress nor the EEOC gave full thought to the delicate interplay between this federal statute and state workers' compensation laws.
The attempt to regulate fairness for those with disabilities places unexpected burdens on employers. In cases where an employer made a lump-sum settlement of future workers' compensation benefits, the employee's new-found wealth may lead the employer to believe that any return-to-work request can be denied. But the ADA requires an employer to provide "reasonable accommodation" to a "Qualified Individual with a Disability" (QID) which can result in returning an employee to work who incurred a work-related injury, even though he or she previously received an award of workers' compensation benefits. Although this is a costly prospect, employers can remedy the situation by adopting a strategy that gets the employee to waive his or her right to a lawsuit while honoring the employee's rights concerning workers' compensation and the ADA.
Although the ADA is not explicit on what constitutes "reasonable accommodation," the requirement effectively saddles employers with a greater burden with respect to current employees than to job applicants, because current workers have already established their qualifications. Therefore, when raising ADA challenges to employment decisions, current employees will generally be able to establish that they are "qualified" individuals. Job applicants, on the other hand, will have greater difficulty establishing their "qualified" status. In cases where qualified individuals incur on-the-job injuries, the employer must also contend with numerous workers' compensation issues.
In the typical job-related injury case, the employee will file with the state industrial commission or workers' compensation board for workers' compensation benefits. Such benefits are generally awarded for a fixed amount over a fixed period (in Virginia, for example, the maximum weekly amount in 1993 was $434 per week for a maximum of 500 weeks). The employer and/or the workers' compensation insurance carrier will attempt to negotiate a lump-sum settlement of future workers' compensation benefits, in order to reduce long-term financial exposure and administrative costs.
As a rule, employees will agree to such settlements, particularly if the lump-sum is attractive. Once the state workers' compensation commission approves the settlement, the lump-sum is distributed to the employee. But this does not mean that the employment relationship is ended, because the workers' compensation program is administered by the employer's risk management office, and the hiring/separation function resides with the company's personnel department. In other words, it is possible for the risk management office to make a lump-sum settlement of workers' compensation claims and for the personnel office to list the individual as an "employee" who is still "on the books."
Prior to the enactment of the ADA, this situation was not a problem; the employer could simply terminate the employee for inability to perform the essential functions of the job. Now, however, the employee, as a QID, can assert his or her right under the ADA to a reasonable accommodation, irrespective of any workers' compensation settlement. The qualified employee's right to reasonable accommodation under the ADA means that he or she may request that the essential functions of the job be modified to allow him or her to perform the job. These modifications could include measures such as lowering shelves, shifting the weight or size of packages to be lifted, switching duties with a co-worker or giving the employee a more desirable position, even though transferring the employee in such a way could require the employer to ignore collectively bargained seniority lists. If the employee can establish that he or she is still qualified for the job, then he or she is entitled to a reasonable accommodation that could include a return to the job where the injury was incurred. An employer who refuses to consider the employee's request will be vulnerable to a lawsuit under the ADA. For example, in one case in Michigan, a foreman at a company requested a return to work following a back injury, but the employer refused to allow him to show that he could do the job with a lifting restriction. The employee later filed suit.
The ADA and the EEOC recognize "undue burden" as a valid defense to providing reasonable accommodations to QIDs. However, there is no precise definition as to what constitutes an undue burden. Therefore, employers run a serious risk if they rely on this undue burden defense without having substantial facts to support their position. Ultimately, employers who make lump-sum settlements of workers' compensation claims without resolving the employer-employee relationship have created a worse problem than the one they were trying to solve.
"MOST QUALIFIED" EMPLOYEES
Some employers have procedures that allow for removal of the employee at or near the time of the workers' compensation settlement. When the employee is officially "off the books," the employer will advertise the position in an effort to fill it with a qualified individual. Once again, prior to the ADA, this arrangement posed no problems for employers. But in some cases, an employee who is a QID will apply for his or her old job. These former employees invariably have no difficulty demonstrating that they are QIDs, thereby very likely making the "most qualified" list of applicants by virtue of their prior experience on the very job being advertised.
From the perspective of the personnel department, a "most qualified" job applicant who is also a disabled individual will require special attention. Because of heightened sensitivity to the ADA and the aggressive enforcement efforts of the EEOC, most personnel departments will bend over backward to ensure that such employees are given every opportunity to be hired. In cases where the QID is also the same individual who formerly held the job, he or she will know virtually everything there is to know about that position, or certainly more than any other applicant. This individual will also know precisely what modifications are needed in order to enable him or her to perform the essential functions of the job.
Assuming that this individual makes the "most qualified" list, the employer may find it very difficult to extend a job offer to any other applicant. (The employer could discuss with the person the matter of reasonable accommodation to the job, in a good faith effort to determine whether he or she can perform the job. But, if the QID is not offered the position -- whether this occurs after or in lieu of a discussion about reasonable accommodation -- the employer may be sued for refusing to hire this person, in violation of the ADA.)
In any case, the injured employee's rights under the ADA entitle him or her to request a reasonable accommodation in returning to the old job. Under the ADA, the employer may be required to honor this request. However, the disadvantage to the employer is that injured employees who have returned to work could create a higher exposure for other types of injuries to themselves and to others at the workplace. There is also the issue of morale: A situation where an employee who receives a large settlement for a work-related injury and returns to work shortly thereafter may send the wrong message to the work force.
To remedy this situation prospectively, the employer must follow a three-step approach that respects the employee's workers' compensation and ADA rights. In other words, the employer must consider the entire employment relationship. This strategy requires close coordination between the company's legal, risk management, personnel and labor relations departments (where applicable) to ensure that each office is able to accomplish its mandate without compromising the employee's rights or the mandate of any other department.
Setp One. The following measures should be taken to protect the employee's rights and the employer's posture vis-a-vis the law. First, the risk management department must make a preliminary determination as to whether the injury is compensable and the level of benefits to which the employee may be awarded by the workers' compensation commission. Assuming the workers' compensation commission determines that the injury is compensable, the risk management department may begin paying those benefits to the employee.
Once the workers' compensation commission reaches a determination on eligibility and makes an award, risk management will evaluate the employee's medical progress and relay to the personnel department whether it appears that the employee will be able to return to work. Personnel will then use information from all relevant sources such as accounting and risk management to conduct an ADA analysis to determine whether the injured employee is a QID (presumably, this will be so), and whether the injured employee is able to perform the duties of available jobs for which he or she is qualified under the ADA's reasonable accommodation standard.
Personnel will then inform the employee, the employee's division manager and the labor relations department of the results of its analysis. If a job is available, the personnel department will offer that job to the employee; if no job is available, the personnel department will notify labor relations, the employee's division manager and the employee of this fact. Under traditional labor law, the employee must accept any valid job offer and return-to-work program, or the employee's division manager will request that labor relations initiate termination procedures for failure to accept a valid job offer or because there are no jobs available for which the employee is qualified. If no jobs are available and the employee will be removed, the risk management department may engage in settlement negotiations to provide the employee with a lump-sum payment for future workers' compensation benefits.
Step Two. At this juncture, risk management can also offer a lump-sum payment in return for the employee's execution of a waiver -- also known as a release -- of his or her rights to sue the employer under the ADA. The employee is not required to sign the waiver, but neither is the employer required to make a lump-sum settlement to the employee. On the other hand, the employee can negotiate for some "consideration" (i.e., money) for his or her waiver of ADA rights; the employer should be amendable to this approach, since it strengthens the argument that the waiver is voluntary and valid -- that is, that the employee signed in return for good consideration.
Case law supports an employer's right to negotiate for an employee's knowing, voluntary waiver of his or her right to sue under Title VII of the Civil Rights Act of 1964 (Dorosiewicz vs. Kayser-Roth Hosiery, 1987) and under the Age Discrimination in Employment Act (ADEA) (Coventry vs. U.S. Steel Corp., 1988). In addition, the Older Workers Benefit Protection Act (OWBPA) allows employees to waive ADEA rights in the context of early retirement programs. Title I of the ADA indicates support for the use of a waiver. Specifically, Section 513 of the act, "Alternative Means of Dispute Resolution," includes references to voluntary negotiations, conciliation, facilitation, mediation and other methods to resolve ADA disputes outside of the courtroom.
The underlying philosophy in allowing waivers is that the rights to be waived are prospective and of speculative value, as opposed to rights that are vested when earned, such as the Fair Labor Standards Act. Prospective rights to recover in a lawsuit may not be successful for a variety of reasons (for example, statute of limitations, jurisdiction and contributory negligence). When dealing with such rights, the courts have generally honored valid ("knowing and voluntary") waivers to bar future lawsuits, especially where the law either does not preclude such waivers or affirmatively encourages their use. And since the ADA was patterned after Title VII and the ADEA -- where waivers are well recognized -- and since Congress has indicated support for voluntary settlement of ADA disputes, it is reasonable to conclude that employers and employees can negotiate for a waiver of an employee's right to sue under the ADA.
Step Three. Recently, there have been three court rulings involving an employer's effort to obtain a waiver from a former employee in return for a settlement. In each case, the former employee attempted to introduce into evidence the settlement offer as proof of the employer's intent to discriminate. Each employer argued that the offer was not evidence of an intent to discriminate, but was merely an effort to resolve a dispute.
In two cases, the courts refused to allow the offer of settlement to be introduced into evidence to show an intent to discriminate, because the offer arose in the context of post-termination negotiations. That is, the employer made the offer after the employee was terminated. In the third case, the offer was presented to the employee at the time of termination. The court allowed this waiver to be introduced as evidence of the employer's intent to discriminate, since the offer was part of a "termination agreement" and not part of a post-termination effort to settle a claim or a lawsuit. (See, Cassino vs. Reichold Chemicals, Mundy vs. Household Finance Corp. and Pierce vs. Tripler & Co.)
These cases illustrate why employers should resolve workers' compensation and ADA issues before making any employment decision, since an offer of settlement made at the time of termination may be deemed to be part of the termination agreement, rather than as part of a post-termination offer to settle a dispute.
In summary, under the workers' compensation program, the employer can bargain for the employee to execute the waiver by offering a lump-sum payment for future benefits; no waiver means a lengthy payout of much smaller amounts. With the risk management department's withholding of a lump-sum payment, the employer can conduct an ADA analysis before the employee obtains an unjust enrichment. The withholding of a lump-sum payment, coupled with the waiver instrument, puts the employer in a strong position regarding an employee who wants to exercise his or her workers' compensation and ADA rights to best advantage. Finally, negotiating for an ADA waiver after the termination will provide the employer with a defense to a charge of discrimination for either terminating the employee or refusing to consider rehiring him or her when the vacancy is posted. Employers should consult with their legal counsel for waivers geared to their businesses.…