Supreme Court Bars Retiree’s ADA Discrimination Claim over Benefits

A retiree was barred by the Supreme Court from suing over retirement health benefits for alleged discrimination under Title I of the Americans with Disabilities Act (ADA).  

In the court’s June 20 ruling in Stanley v. City of Sanford, Justice Neil Gorsuch wrote that “judicial innovations” extending anti-discrimination protections to retirees “might ‘create perverse incentives’ by encouraging employers to reduce retirement health care benefits for people with disabilities.”

This possibility “underscores why Congress’ decision to limit the scope of Title I’s anti-discrimination provision is not necessarily at war with the ADA’s broader aims,” Gorsuch wrote. Title I prohibits employment discrimination against qualified people with disabilities.

“Nor, of course, do the law’s present limitations preclude future legislation from going further. If Congress wishes to extend Title I to reach retirees like [the plaintiff], it can,” the court said. “But the decision whether to do so lies with that body, not this one.”

“This decision will reduce litigation risk under the ADA when employers make changes to their retiree health benefit offerings,” said Caroline Pieper, an attorney with Seyfarth in Chicago. “The court held that the ADA only protects active employees and job applicants, not retirees.”

Part III of Opinion

In Part III of the opinion, which was agreed to by four of the nine justices, Gorsuch wrote that an ADA anti-discrimination claim nonetheless “may be available to others who happen to be retired at the time they sue, if they can plead and prove they were both disabled and qualified when their employer adopted a discriminatory retirement-benefits policy.”

Justice Clarence Thomas, joined by Justice Amy Coney Barrett, concurred in the opinion, but not this portion of the opinion, which Thomas said wasn’t the issue before the court.

However, in a concurrence, Justice Sonia Sotomayor joined Part III of the opinion. She said that at least five justices — four in the plurality and Justice Ketanji Brown Jackson in dissent — agree that retirees can plead disability discrimination if they are subject to a discriminatory compensation decision or other practices while a qualified individual.  

Dissenting Opinion

“As I understand today’s holding, the court has decided that if a worker who has earned retirement benefits leaves the workforce (as expected) and is then discriminated against with respect to the provision of those earned benefits because she is disabled, Title I offers no protection,” Jackson wrote in her dissent.

She continued, “Under the majority’s logic, if an employer cuts off an employee’s entitlement to retiree health benefits (because of their disability) one day before they retire, the employee can sue. But if the employer waits until one day after that employee’s retirement (assuming the employee no longer desires the job they held), Title I offers them no protection.”

Background

The case was brought by Karyn Stanley, a retired firefighter for the city of Sanford, Fla. 

Stanley started working as a firefighter for Sanford in 1999. At first, she planned to serve for 25 years. Part of the reason had to do with health insurance. At the time the city hired her, it offered health insurance until age 65 for two categories of retirees: those who retired with 25 years of service, and those who retired earlier because of a disability.

In 2003, the city changed its policy. Going forward, it said it would continue to pay for health insurance up to age 65 for retirees with 25 years of service. But for those who retired earlier due to disability, the city announced, it would now provide health insurance for just 24 months, unless the retiree started receiving Medicare benefits sooner.  

After Sanford revised its policy, Stanley developed Parkinson’s disease in 2016. In 2018, that disability forced her to retire earlier than she had planned.  

Under the city’s revised policy, that meant she was entitled to, at most, 24 months of health insurance. 

Stanley sued, claiming that the city had violated the ADA and a number of other state and federal laws. Providing different health insurance benefits to those who retire with 25 years of service and those who retire earlier due to disability, she contended, amounted to impermissible discrimination based on disability.

Court’s Holding

The present-tense verbs of the ADA’s anti-discrimination provisions “tend to suggest that the statute does not reach retirees who neither hold nor desire a job at the time of an alleged act of discrimination,” the Supreme Court said.  

Reinforcing this assessment is the statute’s definition of reasonable accommodation, the court added. It said that reasonable accommodations make sense with current employees or applicants, “[b]ut it is hard to see how they might apply to retirees who do not hold or seek a job.”

Toolkit: Handling ADA Accommodation Requests

The ADA further provides examples of what constitutes discrimination against a qualified individual based on disability. While this language clearly applies to job seekers, it “makes no sense in the context of retirees who do not seek employment,” the court wrote. In sum, the ADA’s anti-discrimination provisions “focus on current and prospective employees — not retirees.”

It distinguished retaliation claims from discrimination claims, but said the fact that “Congress used different language in these two provisions strongly suggests that it meant for them to work differently.”

“This decision will have little to no effect on employers who do not offer post-employment benefits,” said Ryan Bates, an attorney with Hunton Andrews Kurth in Washington, D.C.