How Your ZIP Code Determines Your Employees Legal Rights

By Alan Rupe

Sep. 25, 2007

Most employers know that employment laws vary across the country. How much of a difference is often surprising to business owners and human resource professionals. Sometimes, what law applies to employees and how the law is interpreted by the courts is more a function of your ZIP code than anything else.

Take, for example, my home state of Kansas. While the state’s flat plains have plenty of blue sky overhead, the ceiling on discrimination claims is very low: Damages are limited to $2,000 for any lawsuit brought under the Kansas Act Against Discrimination. And for most lawsuits filed pursuant to the 1964 Civil Rights Act, damages are capped at $300,000. Across the border in Missouri, the potential for plaintiffs’ damage awards, according to Missouri state discrimination laws, is sky high—no caps. It’s obvious: Your company’s ZIP code may determine which discrimination laws apply to you, as well as how they apply.

There are11 circuit courts of appeal in the U.S. judicial system, each comprising a handful of states. The 8th Circuit, for example, takes in Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota and South Dakota. Next door, the 10th Circuit includes Colorado, Kansas, New Mexico, Oklahoma, Utah and Wyoming. But those neighboring appeals courts may have wide splits for many years on particular legal issues. For example, a ruling from the 8th Circuit on an individual’s rights under the Americans With Disabilities Act will differ from the 10th Circuit’s interpretation of the same set of facts. Your ZIP code, which circuit governs your company’s location, may be the determining factor in whether you, as an employer, have violated the ADA.

The federal ADA requires most employers to make a “reasonable accommodation” for “qualified” employees who can no longer perform the essential functions of a job. A “reasonable accommodation” is defined as “job restructuring, part time or modified work schedules, reassignment to a vacant position, acquisition or modification of equipment or devices, appropriate adjustment or modifications of examinations, training materials or policies, the provision of qualified readers or interpreters, and other similar accommodations for individuals with disabilities.”

Sounds pretty simple. But the 8th and 10th Circuits have issued widely differing rulings defining the simple phrase “reassignment to a vacant position.”

The 10th Circuit, in the case of Smith v. Midland Brake Inc. (180 F.3d 1154 [10th Cir. 1999]), ruled that a disabled employee must be automatically reassigned to an existing vacant position. Robert Smith was employed by Midland Brake when he developed a disability that prevented him from performing the essential functions of his job. Smith was ultimately fired by Midland. As you might expect, Smith sued Midland for discrimination under the ADA. Midland successfully proved to the trial court that it could not accommodate Smith’s disability. Smith appealed, and the 10thh Circuit took up the appeal.

The 10th Circuit focused on the definition of “reassignment to a vacant position.” The court relied on the EEOC’s Interpretive Guidance: “Does reassignment mean that the employee is permitted to compete for a vacant position? No. Reassignment means that the employee gets the vacant position if s/he is qualified for it. Otherwise, reassignment would be of little value and would not be implemented as Congress intended.”

And in doing so, the court determined that a reassignment of a qualified person with a disability was required if a vacant position was available and no other reasonable accommodation could be made. A disabled employee did not have to compete with other applicants for a vacant position, but the employee should be moved into the position by default. Although there were other factors in its decision, the 10th Circuit found the EEOC’s guidance in favor of an automatic reassignment to be particularly persuasive.

But next door at ZIP code 72716, in the case of Huber v. Wal Mart Stores Inc., decided in May 2007, the 8th Circuit came to an entirely different conclusion and ruled that a disabled employee is not automatically granted reassignment to a vacant position. Pam Huber, a dry-grocery order filler for Wal-Mart Stores, suffered a permanent disability to her arm and hand and could no longer perform the essential functions of her job. Huber requested reassignment to a vacant router position, but her request was denied and Wal-Mart instead hired another applicant for the job, following company policy that the most qualified applicant for a position be hired. Huber was later reassigned to a janitorial position, with a pay cut of nearly $7 an hour.

Again, as might be expected, Huber filed a lawsuit against her employer, and using the 10th Circuit’s ruling in Smith as precedent, argued that she should have been automatically reassigned to the store’s vacant router position. Wal-Mart used the 7th Circuit’s interpretation of “reassignment to a vacant position and cited EEOC v. Humiston Keeling Inc. (7th Cir. 2000), which stated that a reassignment is not required if a more qualified applicant has applied for the position. The 8th Circuit adopted the 7th Circuit’s ruling and held that a disabled employee is simply given the ability to apply for a vacant position, but is not guaranteed reassignment to a vacant position. To me (and probably most employers’ lawyers), the 8th Circuit decision makes the most sense to employers that want to employ the most qualified folks for open jobs.

One law, two circuits, two rulings, two different results for employers. Only action by Congress or the U.S. Supreme Court on this issue will remedy the ZIP code phenomenon of different results from the same law. Until that happens, employers, corporate counsel and HR professionals know that “location, location, location” are important guiding principles in what and how the country’s employment laws apply.

Schedule, engage, and pay your staff in one system with