The Americans with Disabilities Act of 1990: Implications for Managers

Despite advances in equal job opportunity for a number of disenfranchised groups, one group that has continued to suffer both job and economic discrimination is the disabled:

• Disabled people in the workforce have unemployment rates almost double those of nondisabled people.
• Two-thirds of disabled Americans between sixteen and sixty-four are not working, and 66 percent of those not working say they would like to work.
• Disabled workers with thirteen or more years of education earn only 71 percent of the earnings of similarly educated nondisabled workers. Those with less than twelve years of education earn less than one-third the earnings of similarly educated nondisabled workers.1

On 26 July 1990, the Americans with Disabilities Act (ADA) became law. The Act extends the protections afforded under the Rehabilitation Act of 1973 and will eventually affect all firms with fifteen or more full-time employees. In order to help business owners and managers understand the law and respond to its requirements, we will (1) review the background and provisions of the ADA and (2) recommend courses of action for employers.

The Legislative Environment

A series of laws have addressed employment discrimination against various groups. Title VII of the 1964 Civil Rights Act prohibits employment discrimination based on race, religion, sex, color, and national origin. The 1967 Age Discrimination in Employment Act extends protection to individuals forty years of age and older. The 1973 Rehabilitation Act was the first national law to address employment protections for disabled individuals. The Act prohibits employment discrimination against otherwise qualified disabled workers by federal, state, and local governments, their agencies, and certain federal contractors.2 However, despite this Act and numerous related state and local regulations, almost fifteen million workers with disabilities in the private sector still lacked protections against employment discrimination. The ADA was enacted to fill this gap in coverage.

The ADA contains five titles or sections dealing with various business activities:

• Title I provides for equal employment opportunities;
• Title II requires equal availability and accessibility to all services provided by state and local governments, including transportation;
• Title III prohibits discrimination in public accommodations and services operated by a wide range of private businesses, including hotels, recreational facilities, and retail stores;
• Title IV concerns telecommunications;
• Title V contains miscellaneous provisions such as protection for individuals invoking their rights under the ADA.

We will limit our discussion to Title I, equal employment opportunity, but employers should be aware that other sections of the law — specifically, Title III — may prove the most costly and difficult to implement.

Definition of Disability

The ADA defines disability in virtually the same way as Section 504 of the Rehabilitation Act: “(A) a physical or mental impairment that substantially limits one or more of the major life activities of such individuals; (B) a record of such an impairment; or (C) being regarded as having such an impairment.”3 This definition is deliberately broad. Consequently, the law will affect most U.S. business firms.

The ADA avoids a “laundry list” of impairments that may be classified as disabilities. Some impairments may be disabling for some people but not for others, depending on, for instance, the stage of a disease, presence of other impairments, and so forth. Some impairments are specifically included or excluded. For example, HIV infection is considered a disability, whereas obesity or a concussion generally are not. The Equal Employment Opportunity Commission (EEOC) has listed a number of specific conditions excluded from ADA coverage, such as compulsive gambling, kleptomania, pyromania, transvestism, transsexualism, exhibitionism, voyeurism, and pedophilia.4

In the case of illegal drug use, the ADA amends the Rehabilitation Act by excluding individuals currently using drugs from protection.5 Decisions regarding other disabilities will need to be made on a case-by-case basis.

Compliance Dates

The ADA has a phased-in set of compliance dates. Employers with more than twenty-five full-time employees must meet the law’s provisions beginning 26 July 1992. After 26 July 1994, employers with fifteen or more full-time employees will have to comply. The lead time provided for compliance with the Act is unusually long. When the Civil Rights Act was enacted, firms had one year in which to comply, and when it was amended in 1978 with the passage of the Pregnancy Discrimination Act, firms were required to comply within six months. The long lead time indicates how difficult compliance is expected to be.

The Heart of the Law

Three interrelated concepts that affect employer actions under the ADA are “qualified individual,” “essential function,” and “reasonable accommodation.” Under the ADA it is illegal to discriminate against a disabled individual who is otherwise qualified to perform the essential functions of the job with or without reasonable accommodation.

According to the Act, essential functions of the job are the primary job duties that are intrinsic to the position. Reasonable accommodation involves a change in the job or work environment that permits the disabled person to perform the job’s essential functions.

An illustration provided by the EEOC clarifies the interrelationship of these terms. Assume that a law firm requires all incoming attorneys to have graduated from an accredited law school and to have passed the appropriate state bar examination. The firm would not need to provide any accommodation to an individual with a visual impairment who had not met these two criteria. However, a disabled person who has met these two criteria is “otherwise qualified” to perform the job’s essential functions. Under these circumstances, the law firm would be required to provide reasonable accommodation, such as a machine to magnify print, unless the employer can prove that such accommodation would impose an undue hardship.6

Reasonable Accommodation

“Reasonable accommodation” is at the heart of both the Rehabilitation Act of 1973 and the ADA. It may include modifying the job process, work environment, or even the circumstances under which the job is performed. The EEOC describes how the concept applies to a job that involves moving heavy sacks on a loading dock. The job’s essential function is to move the sacks, not lift them. To accommodate someone with a bad back who is otherwise qualified for the position, the firm could provide a handtruck.

Similar accommodations can be easily and readily made at minimum effort and cost. For someone in a wheelchair, a firm might place blocks under a desk to raise its height or adjust equipment to allow the employee to reach and manipulate the controls.

Process changes could include modified or part-time work schedules for employees who are physically unable to work complete or regular shifts. Such an arrangement can prove mutually beneficial to the company and employee at little or no cost to the firm.

Neither the Act nor the EEOC definitively states what employers must do to fulfill the reasonable accommodation requirements. The widely varied needs of the disabled make precise conclusions difficult to draw. The EEOC has promised more detailed guidance in its “Compliance Manual on ADA,” which is currently under development. Until its release, the specific contours of the Act will no doubt be developed on a case-by-case basis. Managers will need to evaluate each job, identify the firm’s unique requirements, and consider specific accommodations in order to make appropriate decisions concerning the level and degree of accommodation.

Previous Case Law

Until the EEOC completes its compliance manual, managers seeking specifics will need to look elsewhere, such as at the body of case law that has developed surrounding the Rehabilitation Act. The EEOC provides a few examples of that case law in its proposed and final rules.

For example, in one case the court agreed with a small firm that it had too few employees to be able to accommodate a disabled person by reassigning tasks, and in another case, the court agreed that a firm’s peak production periods made accommodations difficult.7 The type and cost of accommodations have also been addressed by the courts. The accommodation must enable the disabled employee to perform the job’s essential functions, but it does not have to be the “best” accommodation. In the example of moving sacks on the loading dock, the employer does not need to provide state-of-the-art equipment; a dolly is sufficient.8 Issues of reasonableness and cost will continue to be addressed by the courts.

Cost Estimates

The EEOC has estimated costs for reasonable accommodation based on studies conducted in the early 1980s concerning costs to federal contractors under the Rehabilitation Act. One study found:

• 51.3 percent of all accommodations entailed no cost;
• 18.5 percent of accommodations cost between $1 and $99; and
• 11.9 percent of accommodations cost between $100 and $499.

Thus, 80 percent of all accommodations in this study cost less than $500, and the average cost per accommodation was only $304. The EEOC has used this average along with two other averages to estimate an overall mean cost per accommodation of $261.

Costs are likely to be lower for smaller firms than for larger firms. Firms with fifteen to twenty-five employees will have two years to watch larger firms comply with the law and thus time to learn the easiest and least expensive means for compliance. The EEOC also estimates that larger firms will be thirty times more likely to need to make an accommodation than their smaller counterparts, given the number of disabled people seeking employment.

Unfortunately, these are only estimates. The EEOC’s analysis of costs involved with accommodations under the Rehabilitation Act is nearly a decade old, and no effort has been made to factor in inflation or other increased costs. Medical costs, for example, have increased at a rate far in excess of the inflation rate over the past ten years, and such costs could affect expenses associated with some accommodations.

Many indirect costs have also not been included, such as making existing facilities — break areas, lunch rooms, training areas, and so on — accessible to disabled employees. Indirect costs involving job restructuring would include those associated with undertaking a thorough job analysis to determine essential functions. The sum of such indirect costs may actually exceed direct costs of a reasonable accommodation.

In addition, the statistical probability of accommodations may be of little comfort; what was once considered unlikely may become extremely expensive.

Recommendations for Managers

The ADA requires all employers to reevaluate their employment practices and procedures. We offer the following suggestions:

1. Employers should watch for additional information issuing from the EEOC. The EEOC plans to release several sections of its compliance manual before 26 July 1992.9 In the interim, questions concerning the ADA can be addressed directly to the EEOC at its national or regional offices.
2. Managers should stay apprised of changes in local and state legislation affecting the disabled. It is likely that the ADA will serve as a model for future legislation at all government levels. State and local laws frequently are as strict as or stricter than their federal counterparts and generally cover organizations of all sizes, not just those with more than twenty-five employees. Even the smallest businesses must remain alert to changes in local and state employment laws.
3. Small businesses should note the special provisions for them (see Table 1). This law is unusually sensitive to smaller firms. Both Congress and the EEOC have attempted to accommodate the needs of smaller businesses by setting later compliance dates, allowing tax credits, and eliminating reporting requirements (the lack of reporting requirements applies to larger businesses as well).
4. Managers should be aware that compliance with the ADA will involve hidden and as yet unknown indirect costs. Costly activities will include job analysis and job redesign.
5. Firms should prepare by undertaking job analyses to determine the essential and marginal functions of jobs. A thorough analysis takes time and resources that may not be available when a position is suddenly open and needs immediate filling.
6. Take note of Title III. We have limited ourselves to discussion of Title I, but Title III, which governs access to all public accommodations and services, may be more costly to employers in the long run. Neither the Act nor the proposed rules addresses the possible costs of complying with Title III.

In the 1990s, we will see a period of increasing equal job opportunity for those with disabilities. The enactment of Title VII of the Civil Rights Act in 1964 was the beginning of the expansion of equal job opportunity for disenfranchised Americans. The ADA continues that journey.