General Practice, Solo & Small Firm DivisionMagazine
VOLUME 19, NUMBER 2 MARCH 2002
Accommodating the Employment Disabled
By Douglas L. Leslie
The Americans with Disabilities Act (ADA) forbids an employer to discriminate against employees or applicants with disabilities by "not making reasonable accommodations" to the disabled person unless the employer "can demonstrate that the accommodation would impose an undue hardship on the operation of the business." A recurring issue under the ADA is what constitutes a "reasonable accommodation."
Disabled workers in competitive labor markets. Real labor markets contain substantial transaction costs, but it is useful to explore the concept of reasonable accommodations in the context of a perfectly competitive market. Suppose that workers in some groups are perceived by employers to be less valuable than average workers. I call these workers PLVs-perceived as less valuable. At the equilibrium wage, PLVs will not be hired, whether or not they are in fact less valuable.
In the idealized competitive market, PLVs will underbid the equilibrium wage. Over time, if the PLVs are in fact as valuable as other workers, the firms that hire them will prosper, and other firms will follow suit and compete for these workers. This process will eliminate discrimination if "discrimination" means the refusal to hire a worker because of a false perception that the worker is less valuable.
If, because of a legal rule such as the ADA, managers are not permitted to hire PLVs at less than the equilibrium wage, PLVs will not be able to underbid the equilibrium wage and will not be hired. Even a manager who does not believe these workers to be in fact less valuable will not hire them as long as the manager believes there is a risk that they are less valuable, given an ample supply of workers who do not carry the risk.
It becomes clear why a government that legislates that PLVs be paid the equilibrium wage must also legislate that firms hire them. To do otherwise would condemn PLVs to be unemployed.
Disabled persons fall into two categories: those who are incorrectly perceived as less valuable and those who are in fact less valuable. Disabled workers who require an accommodation to be fully productive are less valuable than those who do not; they are less valuable because of the cost of the accommodation. In a competitive labor market, the disabled person underbids the equilibrium wage in order to be hired. The amount of the underbid is dictated by the cost of the accommodation and any amount necessary to overcome the firm's perception that the disabled worker is less productive notwithstanding accommodation. If the latter perception is false, the market will eliminate this component of the underbid wage. The result is that the disabled person will absorb the costs of the disability.
Efficient accommodations. Legal rules forbid firms from refusing to hire disabled workers and from hiring them at less than the equilibrium wage. The rules require firms to make reasonable accommodations unless the accommodation entails an "undue hardship." A possible meaning of "reasonable accommodation" is that firms must make only accommodations that carry minimal costs. This suggests a transactions-costs analysis. Firms fail to notice trivial changes that make a disabled worker fully valuable. A judge uses the statute to correct the flawed market outcome, but the change must be nearly costless or it is hard to explain why managers failed to notice it.
Alternatively, reasonable accommodations might entail a cost-benefit analysis. If the costs to the firm of making the accommodation are compared with the benefits the firm derives from the now-productive disabled worker, the analysis will produce only de minimis accommodations at best. A cost-effective major accommodation is consistent only with a belief that at the equilibrium wage, accommodated disabled workers are more productive than other workers and that employers are ignorant of this fact. Moreover, if the accommodation is de minimis, legal compulsion is often unnecessary. Where a defendant is a large-scale firm, any accommodation is reasonable on a deep-pocket theory.
Those who believe the enactors of Title VII had more than de minimis accommodations in mind when they required reasonable accommodations must find an analytical framework for determining which accommodations are reasonable. One method is to compare the costs to the firm of an accommodation with the benefit realized by the disabled worker. When the benefits to the worker exceed the costs to the firm, they have the flavor of Kaldor-Hicks efficiency: changes that benefit some people more than they cost others, so that the gainers can fully compensate the losses and still come out ahead.
Often it is easy to quantify the costs of an accommodation to the firm. When the firm constructs a ramp to allow a worker to gain access to a part of the plant, the cost of accommodation is the cost of the ramp. However, costs to the firm are not as easy to quantify where the interests of other employees are concerned. If a disabled worker needs to work the day shift and this requires a more senior employee to lose her shift preference, the cost in theory can be measured by the amount of money necessary to persuade the senior employee to give up the day shift. Whether the senior employee's price can actually be measured is a different story, unless the firm in fact makes the offer. As accommodations become more complex, calculating the employer's costs is more difficult. Likewise, calculating the benefit to the worker is difficult, perhaps impossible.
Normative conclusions. It is little wonder that courts and commentators alike have no firm guidelines for what constitutes a reasonable accommodation under the ADA. If such a theory is grounded on a cost-benefit analysis, a calculation will be impossible when the accommodation of a single employee's disability is at stake-not because the cost of the accommodation to the employer is unknowable but because the gain to the disabled worker is.
Here are two candidates for justifiable accommodations:
o A court-ordered accommodation is justifiable if the cost to the employer is de minimis, the gain to the disabled employee is positive, and the employee cannot secure the accommodation on his own.
o A court-ordered required accommodation is justifiable when it benefits many disabled workers and collective action problems prevent the disabled workers from paying for the accommodation.
Outcomes in the courts. To gain a sense of how courts treat the accommodation issue under the ADA, I read 50 federal courts of appeals opinions and 50 federal district court opinions from 1999. Each case raised ADA issues in an employment context. There were few accommodation issues. The employers' success rate in defending accommodation claims was matched by the employers' overall success rate in defending ADA claims. Of the 100 cases, the employer won outright in 74. Meanwhile, the employee won outright in three cases, and 13 were sent to a fact finder.
The most common ADA issue was whether the plaintiff was disabled and otherwise qualified to do the job. The courts often treat these two conceptually distinct questions as the same issue. The disabled/otherwise-qualified issue was dispositive in 62 of the cases. In 30 other cases, the court was willing to assume the plaintiff was disabled and otherwise qualified; the issue was, therefore, whether the disability was the cause of the plaintiff's discharge.
My conclusion from the cases is that courts see the ordinary ADA employment case as a wrongful discharge case. Instead of alleging lack of good cause, as a discharged employee may under a collective bargaining agreement, the employee alleges that the discharge was due to a disability. The statistics from past cases suggest that the ADA plaintiff has a very poor chance of success.
Douglas L. Leslie is the Charles O. Gregory Professor of Law at the University of Virginia.
This article is an abridged and edited version of one that originally appeared on page 143 of The Labor Lawyer, Summer 2001 (17:1).