Ex-Worker’s High Court ADA Suit Raises Future Benefits Questions

A case newly slated for US Supreme Court review stands to toughen employers’ benefits obligations to former employees with disabilities if the justices rule a former Florida firefighter is allowed to bring her suit under federal anti-bias law.

The justices said this week that they would take up a case that could resolve a split among six federal appellate courts over whether ex-employees have the right to sue under the Americans With Disabilities Act over discriminatory post-employment policies.

Karyn Stanley took early disability retirement from her Sanford, Fla., firefighting job due to Parkinson’s disease. She has alleged a city policy change that only allowed her two years of free health insurance after leaving her job, instead of longer-term coverage, was biased against disabled workers in violation of the ADA.

The Supreme Court will examine the US Court of Appeals for the Eleventh Circuit’s decision that Stanley lacked standing to sue because the ADA only applies to workers who currently hold or seek a job. The high court in the process could provide employers clarity on a longstanding question of the ADA’s applicability in these cases, but could also increase their benefits compliance burdens.

A decision could dissuade employers from offering post-employment benefits to workers with disabilities, said Lynn Luther, a management-side employment attorney with Eastman & Smith.

If former workers are granted the right to sue, employers could be hit with expensive bias litigation over those benefits and find it more difficult to change the terms of their programs without risking the appearance of discriminatory treatment.

Few employers offer post-employment health-care benefits, but those that do now might then be less inclined to continue, Luther said.

“The ability to modify those programs to control costs is essential in this labor market in particular because a lot of those companies now want to shift those resources toward securing new talent and investing in their current employees,” Luther said.

Employers could lose some of the flexibility they’ve had in adjusting retirement programs to the insurance market if the court rules for the former firefighter, said Jennifer Shinall, a professor of law at Vanderbilt University who focuses on disability discrimination.

“If I’m an employer, I’m going to be very nervous to make those sorts of promises to begin with if I can’t respond to the market,” Shinall said. “The cost projections you might have had ten years ago on a plan like this may not reflect reality now.”

ADA Definitions

The ADA’s statutory language specifies it applies to workers with disabilities who can perform the essential functions of the job the person “holds or desires.” Stanley has argued that former employees like herself are “qualified individuals” under the ADA as the law’s “capacious” treatment of bias isn’t tied to timing of claims if discrimination has clearly occurred.

Luther said that given the current high court justices’ propensity for strict interpretation, they are likely to uphold the Eleventh Circuit’s decision, as the law’s text “clearly excludes former employees” from what she called a “very specific definition.”

However, a strict interpretation may not be the most logical reading, said Ruth Colker, chair of constitutional law at the Ohio State University.

“It’s a very irrational reading of a statute to say that the day after you retire you lose all claims to disability discrimination from your former employer, when they still have the ability to discriminate against you on the basis of disability by changing the terms of your retirement plan,” said Colker.

Advocates for workers are hoping the court takes the same approach next term with Stanley v. City of Sanford as it did in a 1997 case, Robinson v. Shell Oil Co. There the Supreme Court ruled that former employees were eligible to sue under Title VII of the 1964 Civil Rights Act, which prohibits discrimination based on race, sex, and other protected characteristics, and bans retaliation against workers who raise bias concerns.

Stanley has argued that the ADA incorporates procedural provisions from Title VII and so its rules around standing should be understood in the same way.

But Shinall said past cases involving former employees’ Title VII claims concerned retaliation, not protected status-based discrimination. The court may be less likely to take an expansive view of statutes in cases that involve solely discrimination instead of retaliation, she said.

Advocates for employees said a decision for the city could put the health care of disabled workers in jeopardy.

“Not only firefighters, but tens of thousands of workers nationwide who become disabled through their job and are promised benefits are relying on those benefits in order to survive,” said Peter Leff, general counsel to the International Association of Fire Fighters, which filed an amicus brief in the case. “We think the Supreme Court recognized an injustice here and hopefully they will correct it in the next term.”

Neither attorneys for Stanley nor for the city of Sanford responded to a request for comment from Bloomberg Law.

Gupta Wessler LLP, Sigman & Sigman P.A., and Martha A. Chapman P.A. are representing Stanley. Dean, Ringers, Morgan & Lawton P.A. is representing the city.

The case is Stanley v. City of Sanford, U.S., No. 23-997.