Impact of Facially Neutral "No Rehire" Policy Not Relevant in Claim for Disparate Treatment Under the ADA Based on Recovering Addict Status

In Raytheon v. Hernandez, ___ U.S. ____,. 124 S.Ct. 513 (2003), the United States Supreme Court, per Justice Thomas, considered whether an employer must give preferential rehire rights to a disabled employee who was terminated for workplace misconduct. Respondent Hernandez was a 25 year employee of the company. On one occasion, he reported to work and appeared to be under the influence of either drugs or alcohol. The Company had a policy requiring Hernandez to submit to a drug test. He did so and the test was positive for cocaine. Hernandez later admitted that he had been using alcohol and taking cocaine the night before. Because Hernandez’s conduct violated Company policy, he resigned rather than be terminated. The stated reason for his separation from employment was “discharge for personal conduct (quit in lieu of discharge”).

Two years later, Hernandez applied to the Company for a job. On his application, he revealed his prior employment with the Company. His application also included references from his pastor and an Alcoholics Anonymous counselor. The latter indicated that Hernandez regularly attended meetings and was in recovery. An employee of the company reviewed Hernandez’s application and, because of his prior employment, his personnel file. She then rejected Hernandez’s application because she claimed the Company had an unwritten policy against rehiring employees who had been terminated for misconduct. She claimed she had no knowledge of Hernandez’s former drug addiction.

Hernandez filed a charge with the EEOC alleging discrimination in violation of the ADA. In response to the charge, the Company took the position that Hernandez was not protected by the ADA and, in any event, he was properly rejected because of his demonstrated drug use during his previous employment. The Company’s response to the charge in combination with the references submitted with his application, led the EEOC to conclude that Hernandez might have been rejected because of his past alcohol and drug use and issued a reasonable cause determination and a right to sue letter.

Throughout the litigation, Hernandez took the position that his application was rejected because of his record of drug addiction and because the Company regarded him as disabled. In opposition to the Company’s motion for summary judgment, Hernandez argued for the first time that the Company’s facially neutral “no rehire” policy had a disparate impact on disabled employees. The District Court granted summary judgment in favor of the Company on the disparate treatment claim and refused to consider Hernandez’s disparate impact claim because it had not been pled or advanced during discovery.

The Court of Appeals for the Ninth Circuit agreed with the District Court’s disposition of the disparate impact claim. The Court analyzed the disparate treatment claim under the McDonnell Douglas framework (McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973)) and found that, with respect to Hernandez’s prima facie case of discrimination, there were genuine issues of material fact precluding summary judgment regarding whether Hernandez was qualified for the position and whether the reason for the Company’s refusal to rehire him was because of his prior drug addiction. Next, the Court considered whether the employer had a legitimate, nondiscriminatory reason for refusing to rehire Hernandez that would entitle it to summary judgment in any event.. The Company offered as its nondiscriminatory reason its policy against rehiring employees who had been previously terminated for misconduct. The Court agreed that the policy was neutral on its face but nevertheless concluded that the policy was unlawful “as applied to former drug addicts whose only work-related offense was testing positive because of their addiction.” In doing so, the Court essentially held that a neutral no-rehire policy could never be a legitimate, nondiscriminatory reason for refusing to rehire an employee who was terminated for illegal drug use because the policy has a disparate impact on recovering addicts.

The Supreme Court reversed, and criticized the Ninth Circuit for essentially utilizing a disparate impact analysis in a disparate treatment case. Initially, the Court recognized that both disparate treatment and disparate impact claims are cognizable under the ADA. Disparate treatment occurs when the employer treats some employees less favorably than others because of a protected characteristic. Disparate impact occurs when facially neutral employer policies fall more harshly on one group than another and cannot be justified by business necessity. In disparate impact cases, the facially neutral policy may be deemed illegal irrespective of the employer’s subjective discriminatory intent, a requirement in disparate treatment cases.

Here, both the District Court and the Ninth Circuit agreed that Hernandez had failed to preserve a disparate impact claim. Thus, the only claim before the Court was the disparate treatment claim. According to the Supreme Court, the company’s no rehire policy was, if the true reason, a sufficiently legitimate, nondiscriminatory reason not to hire Hernandez. Under the McDonnell Douglas burden shifting scheme, Hernandez would then have the burden back to show that this reason was only a pretext and that the true reason was his disability or perceived disability (former drug addiction). Thus, the relevant inquiry was whether Hernandez had met that burden. The Supreme Court noted that the Ninth Circuit’s opinion by repeatedly mixing disparate impact analysis into this disparate treatment claim came to the erroneous result that the company’s no rehire policy was not a legitimate, nondiscriminatory reason. It therefore vacated the decision of the Court of Appeals and remanded the case for further consideration.

The Court’s decision provides a clear explanation of the evidentiary differences between disparate treatment and disparate impact claims. Courts must be careful not mix the evidentiary burdens attendant to these distinct claims, and employers should be keen to these distinctions when responding to discrimination claims.