One to Watch in 2025: Stanley re Post-Employment Benefits and the ADA

By Gregory Feit

On January 13, 2025, oral argument in the U.S. Supreme Court is scheduled to be held in Stanley v. City of Sanford, Florida.  The question presented is principally one of statutory interpretation, focusing on whether, pursuant to the Americans with Disabilities Act (ADA), a former employee – who earned post-employment benefits under an allegedly discriminatory policy while she was employed – forfeits the right to challenge the policy solely because she no longer holds the job.

Legal and Factual Background

Under Title I of the ADA, employers shall not “discriminate against a qualified individual on the basis of disability in regard to job application procedures, the hiring, advancement, or discharge of employees, employee compensation, job training, and other terms, conditions, and privileges of employment.”  The statutory term “qualified individual” means “an individual who, with or without reasonable accommodation, can perform the essential functions of the employment position that such individual holds or desires.”

Also arguably relevant to the case is the Lilly Ledbetter Fair Pay Act of 2009 (Fair Pay Act), which amended enforcement provisions applicable to Title I of the ADA by adding the following:  “For purposes of [the enforcement provisions], an unlawful employment practice occurs, with respect to discrimination in compensation . . . [1] when a discriminatory compensation decision or other practice is adopted, [2] when an individual becomes subject to a discriminatory compensation decision or other practice, or [3] when an individual is affected by application of a discriminatory compensation decision or other practice . . . .”

The plaintiff in Stanley was a firefighter for a city that provided a health-insurance subsidy in the form of paying a portion of its employees’ premiums for a certain period after retirement.  Plaintiff alleges that, in 2003, during her employment but unbeknownst to her at the time, the city changed its benefits plan, such that employees who retire on account of disability were entitled to the post-employment benefits only until the earlier of receiving Medicare benefits or two years after retirement.  Prior to this change, such retirees were entitled to receive the benefits until they turned 65; after the change, non-disabled retirees continued to qualify for the benefits until the age of 65.  Plaintiff was diagnosed with Parkinson’s disease and placed on disability retirement, when she learned that she would lose her insurance after only two years.

Plaintiff sued the city in federal court, alleging that the 2003 plan amendment facially discriminated on the basis of disability.  Both the district court and the 11^th Circuit on appeal concluded, however, that plaintiff had no ADA discrimination claim as a matter of law, essentially holding that she could not challenge the policy because, as a now former employee, she was no longer a “qualified individual” under the statute, and because she had not yet been disabled at the time of the allegedly discriminatory change to the plan.

Key Arguments Under Consideration

Arguments advanced in favor of the plaintiff/former employee include the following:

• The Fair Pay Act says that a plaintiff may sue when a benefits policy is adopted, when she becomes subject to it, or when she is affected by it. Thus, the ADA prohibits discrimination in a benefits policy adopted when a plaintiff was still employed and able to perform her job (e., was a “qualified individual”).
• To be a “qualified individual,” it is not necessary that one hold or desire a job with the defendant at the time of the wrongful act; instead, retirees can also count.
• In any event, plaintiff adequately alleged that she held a job and was capable of performing its essential functions when the city adopted the challenged policy; and she filed her charge when she was later subject to or affected by the policy.
• The “qualified individual” definition requires that a plaintiff be able to perform a job’s functions only to the extent that she holds or desires the job.
• Title I does not require the plaintiff to have a disability at the time of the discriminatory act. Prior Title I language barred discrimination against a qualified individual “with a disability because of the disability.”  But that quoted language was amended in 2008 to instead read “on the basis of disability.”
• These readings avoid the absurd result of leaving retirees unprotected against disability discrimination in the distribution of benefits earned during their careers.

Arguments advanced in favor of the defendant/former employer include the following:

• The Fair Pay Act did not alter Title I’s requirement that a plaintiff be a “qualified individual” with a disability at the time of the alleged discrimination. Plaintiff here only alleged discrimination occurring post-employment, when she could no longer perform the essential functions of her job.
• Title I’s plain use of the present tense – “can perform the essential functions of the employment position that such individual holds or desires” – unequivocally bars discrimination only against an individual who “can perform” the job she presently “holds or desires.” Construing the text otherwise would require rewriting Title I.
• No policy preferences for covering retirees can override the statute’s unambiguous language. Anyway, policy reasons cut the other way.  Employers are not legally required to offer retiree disability benefits, and allowing former employees to complain about post-employment discrimination that does not involve retaliation, or compelling employers to maintain disability benefits in lockstep with other benefits, would incentivize employers to eliminate or reduce post-employment disability benefits.

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The federal appeals courts are divided as to whether a former employee can sue under Title I of the ADA for discrimination in the provision of benefits earned during employment.  The Sixth, Seventh, and Ninth Circuits agree with the general approach taken by the Eleventh Circuit in Stanley, whereas the Second and Third Circuits take the opposite approach.  The Supreme Court’s decision in Stanley will provide necessary clarification.

A Supreme Court affirmance would provide a degree of flexibility to employers seeking to adjust post-employment benefits for disability retirees.  Employers should be aware, however, that such former employees could still in theory sue for alleged ADA retaliation, which does not turn on “qualified individual” status.  A Supreme Court reversal, on the other hand, would establish disability retirees’ right to contest, via another statutory mechanism, modifications to post-employment benefits plans.