DECEMBER , 2003 LEGAL UPDATE

 

GUIDANCE OR NO GUIDANCE?

Raytheon Co. v. Hernandez

U.S. Supreme Court No. 02-749 (December 2, 2003)

 

            On December 2^nd, the U.S. Supreme Court issued a decision that court observers hoped would discuss the application of a no-rehire policy to individuals with disabilities.  Those same observers are disappointed that the decision provided no definitive guidance on the topic.  However, some guidance can be gleaned from the Court's approach to the analysis of disability claims and may prove helpful for prudent employers hoping to avoid claims in the first place.

 

            Case Background

 

            Joel Hernandez worked for Hughes Missile Systems (subsequently purchased by Raytheon Co.) for 25 years.  In July of 1991, Hernandez's appearance and behavior at work suggested that he might be under the influence of drugs or alcohol.  Hernandez took a drug test that came back positive for cocaine.  Hernandez then admitted he had been up late the night before drinking beer and using cocaine.  Because his conduct violated the company's workplace conduct rules, Hernandez was offered the opportunity to resign rather than be terminated.  According to the company's "Employee Separation Summary," the reason for termination was:  discharge for personal conduct (quit in lieu of discharge).

 

            More than 2 years later, Hernandez applied for rehire.  He stated on his application that he had previously been employed by the company.  He also attached two reference letters to the application:  the first was from his pastor stating that Hernandez was an active church member while the second was from an Alcoholics Anonymous (AA) counselor stating that Hernandez regularly attended AA meetings and was in recovery.

 

            An employee in the company's labor relations committee, Joanne Bockmiller, reviewed Hernandez's application, noted his prior employment with the company, and reviewed his Employee Separation Summary.  Bockmiller rejected Hernandez's application based on the company's (unwritten) policy against rehiring employees who were terminated for misconduct.  Hernandez then filed a charge against the company alleging that the company rejected his application because of his record of drug addiction and/or because he was regarded as being a drug addict in violation of the Americans with Disabilities Act (ADA).  The Equal Employment Opportunity Commission (EEOC) concluded that there was probable cause to believe discrimination had occurred and issued a right to sue letter.  Hernandez pursued his legal claim in court.

 

            During deposition testimony given in anticipation of trial, Bockmiller indicated that she rejected Hernandez's application because he was discharged for violating workplace conduct rules, that she did not know Hernandez was a former addict when she made that decision, and that she did not see anything that would constitute a "record of" addiction.  George Medina, the Manager of Diversity Development, initially responded to Hernandez's EEOC claim.  He stated that the ADA exempts from protection those individuals who are currently engaging in illegal use of drugs.  Denial of rehire was not based on any legitimate disability but instead because of his demonstrated drug use while previously employed and because of "complete lack of evidence" indicating successful drug rehabilitation.

 

            The Question Before the Court

 

            The Court concluded that it was to determine whether the ADA confers preferential rehire rights to former employees with a disability who were lawfully terminated for violating workplace conduct rules.  Unfortunately, at this stage, the Court's answer was "maybe."  However, the manner in which the Court analyzed the situation and reached that conclusion may be informative.

 

            Both Disparate Treatment and Disparate Impact Apply

            Keep Them Separate and Consider the Implications of Both

 

            The Supreme Court was not able to answer this question because the lower court commingled the disparate treatment and disparate impact claims in its analysis.  Consequently, the Court instead took the opportunity to provide a primer on the two types of claims and illustrate the two claims might result in different outcomes.

 

            As you know, disparate treatment claims are based upon claims that an employer treated some people less favorably based upon their race, color, religion, sex or other protected characteristic.  Liability in a disparate treatment case depends on whether the protected trait actually motivated the employer's decision.

 

            Disparate impact claims, on the other hand, involve employment practices or policies that are "facially neutral" in their treatment of different groups but, in fact, have a more harsh impact on one protected group and cannot be justified by business necessity.  A facially neutral policy or practice may be deemed discriminatory without evidence of the employer's intent to discriminate.

 

            In this case, Hernandez neglected to pursue the disparate impact claim in a timely manner and was, therefore, precluded from pursuing what might ultimately have been the more successful claim.  The company's no rehire policy following prior misconduct is facially neutral, however, the application of that policy has an adverse impact on one group of individuals protected by the ADA – those who have formerly had a drug addiction.

 

            The Court seemed to be more willing to consider the no rehire policy similarly to its prior analysis of application of seniority policies in the disparate treatment analysis.  As you likely recall, the Court has previously been willing to conclude that an employer need not overlook a seniority policy (that is, the more senior employee will have preference for a promotion) to provide preferences to an individual with a disability so long as the employer consistently applied the policy and did not selectively enforce the policy to the detriment of employees with disabilities (which might establish that the protected characteristic actually motivated an employer's decision).

 

            Unfortunately, here the Court did not have enough information to determine whether the company consistently applied this admittedly unwritten no-rehire policy and, therefore, returned the case to the lower courts to resolve the question.  However, the Court clearly concluded that both disparate treatment and disparate impact claims will be recognized under the ADA.  Thus, prudent employers will conduct both types of analysis whenever a disability-related situation arises.

 

            Policy Reflects a Legitimate Non-discriminatory Reason

            But That May Not Be Enough

 

            To evaluate Hernandez's disparate treatment claim, the Court applied the discrimination analysis we are all familiar with:  first, the employee sets out his or her entitlement to protection under the statute; second, the company proffers a legitimate non-discriminatory reason for its action; and third, the employee must provide evidence that the non-discriminatory reason is really a pretext for discrimination.  Here the Court was willing to conclude that the company had stated a legitimate non-discriminatory reason for its decision not to rehire Hernandez.  However, the question remained whether Hernandez could then establish that the company's stated reason was pretext for a decision based upon his disability.

 

            Company's Approach May Increase Skepticism

 

            When a company's motivation is being evaluated in a disparate treatment claim, the company's actions will be closely examined and credibility is important.  Apparent inattention to the documentation provided with an application does not make the company appear more credible.  Here, Bockmiller seemed unaware of documents Hernandez at least claimed were attached to his application.  Medina acknowledged he knew of Hernandez's prior drug use but disavowed any knowledge of rehabilitation, in the face of a letter from an AA counselor.  It's too bad we may never know how the courts resolved these credibility issues or whether the court was willing to respond positively to the company's application of the no-rehire policy in this context.