The Supreme Court of the United States recently granted certiorari in Stanley v. City of Sanford, Florida—a case about whether the Americans with Disabilities Act (ADA) permits former employees to sue for alleged discrimination in providing post-employment fringe benefits.  The case has practical significance for employers.  If the Court finds that the ADA does apply to former employees, then those former employees could use the ADA as an avenue to challenge an employer’s changes to post-employment fringe benefits.  As a result, employers offering post-employment benefits may be subjected to increased litigation over benefit changes.

Background

The plaintiff, Karyn Stanley, worked as a firefighter for the City of Sanford for about fifteen years until she was diagnosed with Parkinson’s disease.  She worked for two more years, but the disease ultimately forced her to take disability retirement.  Under the policy in effect when she first joined the Fire Department, employees retiring for qualifying disability reasons received free health insurance until they were 65 years old.  Stanley did not know, however, that the benefit changed during her employment.  And, following that change, employees who retired with a qualifying disability were only eligible for a health insurance subsidy for two years following retirement.  Given that she was unaware of this change during her employment, Stanley filed no legal action while an active employee.  It was years later, when Stanley had already retired, that she learned of the benefit change and that she would lose her health insurance after two years.

Stanley, post-retirement, filed a lawsuit against the City of Sanford alleging that the City violated the ADA and discriminated against her as a disabled retiree when it decided to trim the health insurance subsidy.  The district court granted the City’s motion to dismiss.  On appeal, the Eleventh Circuit affirmed.  The Court explained that Stanley was not a qualified individual with a disability because the ADA’s text requires such an individual to “hold” or “desire” to hold a job with the employer. So, according to the Court, “to be a victim of unlawful disability discrimination, the plaintiff must desire or already have a job with the defendant at the time the defendant commits the discriminatory act.”  Thus, because Stanley had retired, she could not bring such a suit under the plain language of the statute.

In reaching this conclusion, however, the Eleventh Circuit recognized there is a circuit split on whether the ADA applies to former employees.  On the one hand, the Sixth, Seventh, Ninth, and Eleventh Circuits say the ADA does not cover former employees, while the Second and Third Circuits say that it does. The primary reason for the circuit split is that the Second and Third Circuits believe the ADA’s text is ambiguous and have chosen to construe that ambiguity in favor of the employees.

SCOTUS Grants an Appeal

In June 2024, the Supreme Court granted certiorari.  The question presented by Stanley is rather straightforward:  whether, under the ADA, a former employee—who was qualified to perform her job and who earned post-employment benefits while employed—loses her right to sue over discrimination with respect to those benefits because she no longer holds her job.  The Supreme Court is now poised to answer that question and resolve the circuit split over whether a former employee loses her right to sue over post-employment benefits that she accrued during her employment.

In grappling with this question, the Court may rely on its rationale from an earlier decision, Robinson v. Shell Oil Co., 519 U.S. 337 (1997).  In Robinson, a former employee sued his previous employer for allegedly providing a negative employment reference because he filed an EEOC charge.  The employer argued that the language of Title VII—which defines an employee as “an individual employed by an employer”—does not cover former employees.  The Supreme Court held that, while the statute was ambiguous, it does cover former employees given the broader context and primary purpose of Title VII.   

What This Means for Employers

If the Court rules for Stanley, then former employees will be provided with another avenue—the ADA—to challenge changes to post-employment benefits plans.  This will, undoubtedly, lead to additional litigation expenses, and potential liability, for employers who face such challenges.  For example, in Stanley, a reversal would likely result in remand to the district court, where the case would proceed with costly discovery before the court, or jury, ultimately determines whether the benefit changes were discriminatory towards disabled employees.

Additionally, if the Court rules for Stanley, it may cause employers to think twice about making benefit changes or, alternatively, may deter them from offering such benefits based on the fear that they may ultimately be sued for routine adjustments.     

Employers will want to keep an eye on this case when it proceeds to oral argument in the Fall 2024 and eventually to a decision in 2025.

This content was originally published on HR Daily Advisor and is re-posted with their permission. Further duplication is prohibited.