The automobile industry’s recent difficulties have shined a spotlight on the escalating costs of retiree benefits. Companies faced with runaway costs of paying for such benefits often face legal challenges from retired employees when such benefits are reduced or when eligibility is defined adverse to the retiree’s interests. A new Sixth Circuit Court of Appeals case restricts a retiree’s ability to use the Americans with Disabilities Act (ADA) to challenge certain employer actions.
In McKnight v. General Motors Corp., the plaintiffs were retired GM workers whose retirement benefits were offset by GM due to their receipt of Social Security disability benefits. They sued under Title I of the ADA, alleging that the pension plan discriminated against disabled retirees.
The Sixth Circuit concluded that retired employees do not have standing under Title I to sue their former employer for disability discrimination involving retiree benefits. The Sixth Circuit joined the majority of federal appellate courts in concluding that disabled retired workers do not meet the ADA’s definition of “qualified individuals with a disability.” By definition, a former employee unable to perform the job due to a disability does not meet this definition.
The Second and Third Circuits take the opposite view, concluding that disabled retirees may sue when retiree benefits discriminate on the basis of a disability. The plaintiffs may also have grounds under ERISA for claiming that the alleged discrepancies are illegal. The U.S. Supreme Court may be called upon to resolve this split in authority. The new ADA Amendments Act does not directly address these standing issues.