Asked & Answered: Appeals court overturns ADA verdict in favor of employees

 A federal appeals court recently reversed a jury’s award of $870,000, including $400,000 in punitive damages, to several former employees of Dura Automotive Systems, Inc. in Auburn Hills who claimed Dura violated the Americans with Disabilities Act by discharging them for testing positive for their lawful use of prescription drugs. 

Dura argued the use of prescription drugs that had specific warnings about operating machinery was unsafe in its manufacturing environment. The trial judge decided as a matter of law that Dura’s testing for prescription drugs constituted either a medical examination or a disability-related inquiry under the ADA. The jury found that Dura failed to prove the testing was job-related and consistent with business necessity, as Dura was required to do under the ADA. 
The appeals court held that the jury, not the trial judge, should decide if Dura’s policy constituted either a medical examination or a disability-related inquiry based on the language of the ADA and guidance provided by the Equal Employment Opportunity Commission. Dura argued that its testing policy was not intended to force the disclosure of potential disabilities but rather to determine if an individual’s lawful prescription drug use was unsafe in Dura’s manufacturing facility. 
The plaintiffs have filed a motion for all 13 of the appeals court judges to reconsider the decision. 
Jo Mathis of The Legal News talked about the issue with Honigman labor and employment attorney Tara Mahoney, a Washtenaw County resident who works in Honigman’s Detroit office.
Mathis: This case highlights the importance of careful creation and implementation of drug testing policies in the workplace, especially when it comes to lawful prescription drug use. Where do you suggest employers start?
Mahoney: Employers should start with their current policy. There are some questions to ask: Does it cover lawful prescription drug use? Should it? Are there positions in the company where lawful prescription drug use would present a safety risk? Aside from the Dura case, many employers are also grappling with how to handle medical marijuana use by employees. That issue can also be addressed in drug use/testing policies. Once these types of questions are answered, employers then should revise their policies accordingly. Of course, if an employer does not have a drug testing policy, now may be the right time implement such a policy. Employers should also have legal counsel review the drug use/testing policy before it is implemented.
Mathis: What is legally required of employers regarding drug testing?
Mahoney: All drug testing policies have to comply with federal, state and local laws and any contractual legal obligations of the employer. Setting aside situations where an employer has to follow government regulations (e.g., Department of Transportation regulations with regard to truck drivers) or has contractual legal obligations (e.g., is a party to a collective bargaining agreement), in Michigan an employer generally needs to include in its policy, at a minimum: who can be tested and under what circumstances, why someone can be tested, what substances will be tested for, how the test will be performed, how the results of the test will be handled and what the consequences are for failing or refusing to take a test. It is important to carefully tailor the policy to fit the business needs of the employer while complying with the applicable laws.
Mathis: The trial judge awarded the plaintiffs over $400,000 in punitive damages and said it was reasonable for the jury to conclude that Dura acted with “reckless indifference” even though it may not have known that its drug-testing protocol violated the ADA.
Mahoney: That is what the trial court said. The Appeals Court, however, reversed the trial court’s denial of a new trial on the issue of punitive damages. Because the trial court determined as a matter of law that the testing was a medical examination or disability inquiry, the jury did not have the opportunity to decide whether Dura was trying to comply with the law. The Appeals Court stated that is the relevant inquiry with regard to punitive damages. Thus, by allowing the jury to decide whether the testing was a medical examination or disability inquiry, the jury will also be able to consider Dura’s intention with regard to compliance.
Mathis: Dura insists it believed that the employers’ prescription drugs were unsafe in a manufacturing environment. Wasn’t that enough to terminate employment in an at-will state?
Mahoney: It depends. An employer cannot terminate an employee’s employment if it violates the law, including the ADA. So if an employer performs a test that does not comply with the ADA, it cannot discriminate against the employee (e.g., fire the employee) based on the non-compliant test. 
Mathis: The appeals court reversed the punitive damages award because the jury did not have the opportunity to consider whether Dura intended to comply with the ADA. Can you speak on the importance of intent in this instance?
Mahoney: In its discussion about whether the testing constituted a medical examination or disability inquiry, the Appeals Court focused on one specific element: whether Dura’s testing was designed to reveal an impairment of the employee’s health. The Appeals Court found this factor most relevant because the uncovering of [health] defects at an employer’s direction is the precise harm that [the ADA] is designed to prevent. The Appeals Court also stated that it was a fair reading of the facts that Dura did not use the testing to reveal impairments or health conditions. 
Mathis: Anything else you want to say about this issue?
Mahoney: My partner, Cam Evans, and I are hosting a webinar on this topic on November 6, 2014 from noon to 1 pm. More information about the webinar, including registration, can be found at: