Today, in Stanley v. City of Sanford, the United States Supreme Court decided that retired employees are no longer considered “qualified” for their former jobs for purposes of a discrimination claim under the Americans with Disabilities Act (ADA). The Supreme Court’s decision, which resolved a circuit split, helps protect employers against ADA discrimination claims by retirees and provides employers more flexibility to change post-employment benefits promised to employees.
What happened in Stanley?
Ms. Stanley was a firefighter for the City of Sanford, Florida. One of her employment benefits was a health insurance subsidy that covered most of the cost of participating in the City’s health-insurance plan and applied to both current employees and to qualifying retirees—those retiring with twenty-five years of service or those retiring for disability reasons—until they reached age sixty-five. During her employment, however, and before Ms. Stanley became disabled, the City changed this benefit so that those retiring for disability reasons would receive the subsidy only until the disabled retiree received Medicare benefits or until two years had elapsed from the date of retirement, whichever came first. The health insurance subsidy benefit remained the same for those retiring for the “normal” reason of twenty-five years of service.
In 2018, after approximately twenty years of service, and at the age of forty-seven, Ms. Stanley retired from her job for disability reasons (Parkinson’s disease). Pursuant to the changed benefit, her health-insurance subsidy ceased two years later. She sued the city in 2020, claiming it discriminated against employees who retired for disability reasons by giving them a smaller health insurance subsidy than employees who retired for the “normal” reason of twenty-five years of service.
The district court dismissed Ms. Stanley’s case, finding that it was bound by precedent holding that a disabled former employee has no standing to sue over post-employment benefits under the ADA because she is no longer a qualified individual. The United States Court of Appeals for the Eleventh Circuit affirmed, aligning with the United States Courts of Appeals for the Sixth, Seventh, and Ninth Circuits, to hold that Ms. Stanley, as a retiree, was not a “qualified individual” at the time her subsidy payments ceased. Two other circuit courts, the United States Courts of Appeals for the Second and the Third Circuits, have held the opposite: that a former employee does not lose the ability to sue their employer for discrimination even if they no longer hold or seek to hold their former position.
The Supreme Court granted certiorari to determine whether a former employee loses her right to sue under the ADA with respect to post-employment benefits solely because she no longer holds her job.
The Supreme Court’s Ruling
In a 7-2 decision with four separate opinions, the Supreme Court affirmed the Eleventh Circuit, determining that the plain reading of the ADA controlled: a “qualified individual” is a person who, at the time of the alleged discrimination, can perform the essential functions of the job the person “holds or desires.” The Court focused on Congress’ use of present tense verbs to agree with the Eleventh Circuit’s holding that the “holds or desires” language is a temporal qualifier demonstrating when an individual must be qualified—i.e., the plaintiff must desire or already have a job with the defendant at the time the defendant commits the discriminatory act.
In an additional part of the opinion, however—authored by Justice Gorsuch and joined by only three Justices—Justice Gorsuch provided guidance as to how Ms. Stanley could have (or could still) state a claim. Justice Gorsuch explained that between 2016, when she was diagnosed with Parkinson’s, and her retirement in 2018, “Ms. Stanley was both ‘an individual with a disability’ and a ‘qualified individual’ who ‘could still perform the essential functions of her job.’” Justice Gorsuch noted Ms. Stanley could assert an ADA claim for that limited window, but that because the case was on appeal from a motion to dismiss, and because the timing and nature of her Parkinson’s diagnosis were not alleged in her complaint (those facts were available from a later-developed record in the case), those facts could not help Ms. Stanley in the present posture of the case.
Looking Forward
- While for many employers, the Stanley decision simply maintains the status quo, employers subject to lawsuits within the Second and Third Circuits will likely have a higher chance of success against ADA discrimination claims brought by retirees.
- Employers offering post-employment benefits often find themselves needing to change those benefits when the economy tanks, business needs change, or for other budgetary reasons: Stanley generally gives employers that flexibility without the fear of an influx of retiree discrimination claims.
- Stanley does not mean employers should throw caution to the wind when it comes to changing post-employment benefits. As Justice Gorsuch noted, a different formulation of Ms. Stanley’s claim, focusing on the time period she was still employed, could succeed. Further, had Ms. Stanley’s right to a post-employment health insurance subsidy been “vested,” the result could have been very different. Or, depending on state law, employees may have other types of claims for changes in post-employment benefits, such as breach of contract. Accordingly, employers should continue to exercise caution and always assess legal risks before making changes to post-employment benefits promised to employees.