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TEL :
Apr 03,91
14:12 No.005 P. 11
RECOMMENDATIONS FOR REGULATIONS TO IMPLEMENT
THE AMERICANS WITH DISABILITIES ACT
Submitted to the
Equal Employment Opportunity Commission
November 20, 1990
Mark A. Rothstein
Law Foundation Professor of Law and
Director, Health Law and Policy Institute
University of Houston
TEL:
Apr 03,91
14:13 No 005 P. 12
1.
Coverage of Genetic Conditions
New developments in molecular genetics, especially those resulting from the Human Genome
Project, will enable geneticists to detect individuals who will develop adult-onset diseases (e.g.
Huntington's disease), predispositions or increased risks of adult-onset disease (e.g. cardiovascular
disease), and unaffected heterozygote carriers of recessive disorders (e.g. cystic fibrosis). Employers
would have substantial economic incentives to refuse to hire, retain, or promote such individuals.
Even as to individuals who will never develop a genetic disorder, any genetic-based
discrimination should be unlawful. Therefore, the EEOC should interpret § 3(2) of the ADA as
protecting individuals from discrimination based on their genotype.
II.
Employment Entrance Examinations and Records
A.
Predictive value of examinations
The legislative history of the ADA makes clear that in entrance examinations pursuant to §
102(c) (3) the tests used must "actually and reliably predict the substantial, imminent degree of harm
required." (House Report at 73). Many employers currently use a variety of medical screening
procedures of a dubious scientific basis. There is no compendium of occupational medical
information on the predictive value of screening tests and even the most diligent employers have
difficulty in evaluating the often misleading claims of medical assessment companies and
manufacturers.
The EEOC should investigate the appropriateness of commonly used screening measures (e.g.
x-rays, strength testing, pulmonary function testing) and indicate which tests are of proven value
and under what circumstances. Itshould indicate what tests may and may not be used. Consultation
with the National Institute for Occupational Safety and Health is urged.
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2
B.
Test disclosures
Under current law and practice, applicants and employees are often not informed about what
medical tests are being performed (e.g. on a blood or urine sample), what the results are, or if there
is a medical basis for an adverse employment decision. Such practices have encouraged surreptitious
testing using illegal or irrelevant criteria, with employers virtually unaccountable.
The EEOC should require that any applicant or employee subject to a lawful medical
examination must be told in advance what tests will be run, have access to test results, and be
notified in writing if an adverse employment decision is based on medical information.
C.
Medical records
Employers conducting lawful, job-related medical assessments may need to obtain
information about the individual's medical condition. Current practice is for employers to require
that the individual sign a release authorizing the health care provider to release the records. Hospital
records and medical records of an individual's treating physician often contain much information
of a highly confidential, non-job related nature. It is infeasible for the health care provider to
"sanitize" the records before disclosure,
The EEOC should prohibit employers from requesting or requiring that applicants and
employees authorize a release of medical records that are likely to contain medical information of
a non-job related nature. An employer may only require that the individual authorize his or her
health care provider to respond to specific, job-related questions.
III.
Medical Exclusions
A.
"High probability of substantial harm"
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Apr 03,91
14:15 No. 005 P. 14
3
Employers are permitted to exclude individuals from employment if their medical condition
poses a "high probability of substantial harm." (House Report at 73). This is a very important, but
difficult issue. The most difficult issue is deciding when a currently capable individual may be
excluded on the basis of a future health risk.
The EEOC should publish guidelines on appropriate considerations in medical screening. The
following factors, discussed in detail in M. Rothstein, Medical Screening and the Employee Health
Cost Crisis (BNA Books 1989), should be considered in evaluating the appropriateness of "predictive"
medical screening: (1) job-relatedness of the medical criteria underlying the screening process: (2)
degree of correlation between the specific screening measures used and the job-related medical
criteria; (3) severity of the future injury or illness; (4) severity of the consequences of the injury or
illness; (5) absolute risk of future illness; (6) relative risk of future illness; (7) latency period; (8)
individualized determination of fitness; and (9) possibility of reasonable accommodation.
B.
Deference to the judgment of the individual's personal physician.
The legislative history indicates that an adverse, medically-based employment decision may
be "challenged" by an applicant or employee on the basis of a conflicting medical opinion by the
individual's own physician. In the event of a conflict of medical opinion, deference is to be given
to the opinion of the individual's physician. (House Report at 73). This represents a major change
from current law, in which employers have sole discretion in the first instance and, if it is challenged
under a state disability law, it is given deference by the court.
The EEOC should explain the nature of this change, indicate the rationale of Congress, and
refer to the body of case law under the Social Security Act and state workers' compensation law
that parallels the ADA.
TEL:
Apr 03,91
14:15 No 005 P. 15
4
C.
Paternalistic exclusions
The legislative history also indicates Congressional opposition to "paternalistic exclusions" of
individuals with disabilities by employers. (House Report at 73). If individual autonomy is to be
preferred over employer paternalism, then the individuals need to be apprised of all material facts
so they can make an informed decision. In the workplace setting, this requires informing applicants
and employees about the possible risks to their health from workplace exposures and activities.
The EEOC should require employers to inform applicants and employees about all conditions
in the workplace that may cause impairments or may aggravate existing impairments. The EEOC
should coordinate this rulemaking with the Occupational Safety and Health Administration.
D.
Health benefits costs
The most likely future basis of employment discrimination against individuals with
disabilities is the desire of employers to avoid employing people who may be a drain on health care
benefits. This trend already has begun, as evidenced by the growing numbers of employers who
refuse to hire individuals who smoke cigarettes, even if only off work. Although § 501(c) permits
health insurance risk underwriting, the ADA prohibits discrimination in employment opportunities
based on actual or perceived health care costs, including the health care costs of dependents pursuant
to § 102 (b)(4).
The EEOC should indicate that discrimination on the basis of health insurance costs violates
the ADA.
IV.
Disclosure of Employer-Generated Medical Information
A.
Adoption of ACOM Principle 7.
TEL:
Apr 03,91
14:15 No 005 P. 16
5
Section 102 (c)(3)(B)(i) prohibits the disclosure of specific medical findings to nonmedical
personnel. This provision is consistent with Principle 7 of the Code of Ethics of the American
College of Occupational Medicine (ACOM), which provides:
7. Physicians should treat as confidential whatever is learned about individuals
served, releasing information only when required by law or by overriding public
health considerations, or to other physicians at the request of the individual according
to traditional medical ethical practice; and should recognize that employers are
entitled to counsel about the medical fitness of individuals in relations to work. but
are not entitled to diagnosis or details of a specific nature.
The EEOC should require that physicians rendering medical services to companies must
comply with ACOM Principle 7.
B.
Separate medical files
Section 102 (c)(3)(B) requires that medical records be kept in separate, confidential files. For
small companies or remote locations of larger companies there are often no medical departments.
Medical examinations of applicants and employees are usually performed by physicians in private
practice under contract to the company. It is infeasible to have these physicians store the records,
when they may examine large numbers of applicants and employees only once,
The EEOC should interpret § 102 (c)(3)(B) to permit the storage of medical records by
facilities without medical departments in either of the following ways: (1) storage at any other
medical facility of the company; or (2) storage in some other department of the facility where they
are separate from personnel records, are confidential, and accessible to nonmedical personnel only
upon the consent of the individual or legal process.
V.
Medical Claims
A significant, but largely unrecognized threat to the confidentiality of employee medical
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6
information exists in the method of paying employee health insurance claims. Perhaps most
pronounced at large, self-insured companies, these breaches of confidentiality are very common.
When a health care provider submits a bill for payment it will customarily contain an explanation
of the nature of the services rendered, either by description or code number. These bills are
processed by the benefits office, not the medical department, and access to the information may be
widespread.
The EEOC should initiate rulemaking proceedings to determine the most effective way of
protecting the privacy of health insurance claims information. One possible option is for each
employee to have a separate medical claims number and have claims submitted by number only.
VI. Waivers
The ADA does not indicate whether applicants and employees may waive their rights. If
waivers were permitted (e.g. giving employers access to an individual's non-job related medical
records), the widespread requirement of waivers -- such as currently exists -- would completely
frustrate the purpose of the ADA.
The EEOC should declare that rights under the ADA may not be waived.
LEGI-SLATE Report for the Federal Register
Fri, March 1, 1991 9:50am (EST)
Text of the Federal Register for
LEGI-SLATE ID No. 384079
L-S ID No.: 384079 (3360 lines)
PAGE:
56 FR 8578 NO. 40 02/28/91
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
29 CFR Part 1630
Equal Employment Opportunity for Individuals With Disabilities
AGENCY: Equal Employment Opportunity Commission.
ACTION: Notice of proposed rulemaking.
SUMMARY: On July 26, 1990, the Americans with Disabilities Act (ADA) was
signed into law. Section 106 of the ADA requires that the Equal Employment
Opportunity Commission (EEOC) issue substantive regulations implementing
title I (Employment) within one year of the date of enactment of the Act.
Pursuant to this mandate the Commission is publishing a proposed new part
1630 to its regulations to implement title I and sections 3(2), 3(3), 501,
503, 508, 510 and 511 of the ADA as those sections pertain to employment.
These regulations prohibit discrimination against qualified individuals with
disabilities in all aspects of employment.
DATES: To be assured of consideration, comments must be in writing and must
be received on or before April 29, 1991. The Commission will consider any
comments received on or before the closing date and thereafter adopt final
regulations. Comments that are received after the closing date will be
considered to the extent practicable.
ADDRESSES: Written comments should be submitted to Frances M. Hart, Executive
Officer, Executive Secretariat, Equal Employment Opportunity Commission, 1801
"L" Street NW., Washington, DC 20507.
As a convenience to commenters, the Executive Secretariat will accept
public comments transmitted by facsimile ("FAX") machine. The telephone
number of the FAX receiver is (202) 663-4114. (This is not a toll-free
number) Only public comments of six or fewer pages will be accepted via FAX
transmittal. This limitation is necessary in order to assure access to the
equipment. Comments sent by FAX in excess of six pages will not be accepted.
Receipt of FAX transmittals will not be acknowledged, except that the sender
may request confirmation of receipt by calling the Executive Secretariat
Staff at (202) 663-4078. (This is not a oll-free number)
Comments received will be available for public inspection in the EEOC
Library, room 6502, by appointment only, from 9 a.m. to 5 p.m., Monday
through Friday except legal holidays, from March 14, 1991, until the
Commission publishes the rule in final form. Persons who need assistance to
review the comments will be provided with appropriate aids such as readers or
print magnifiers. To schedule an appointment call (202) 663-4630 (voice),
(202) 663-4630 (TDD).
Copies of this notice of proposed rulemaking are available in the following
alternate formats: large print, braille, electronic file on computer disk,
and audio-tape. Copies may be obtained from the Office of Equal Employment
Opportunity by calling (202) 663-4395 (voice) or (202) 663-4399 (TDD).
FOR FURTHER INFORMATION CONTACT:
Elizabeth M. Thornton, Deputy Legal
Counsel, (202) 663-4638 (voice), (202) 663-7026 (TDD).
SUPPLEMENTARY INFORMATION: The Commission actively solicited and considered
public comment in the development of proposed part 1630. On August 1, 1990,
the Commission published an advance notice of proposed rulemaking (ANPRM), 55
FR 31192, informing the public that the Commission had begun the process of
developing substantive regulations pursuant to title I of the ADA and
inviting comment from interested groups and individuals. The comment period
ended on August 31, 1990. In response to the ANPRM, the Commission received
138 comments from various disability rights organizations, employer groups,
and individuals. Comments were also solicited at 62 ADA input meetings
conducted by Commission field offices throughout the country. More than 2400
representatives from disability rights organizations and employer groups
participated in these meetings.
The format of the regulations reflects congressional intent, as expressed
in the legislative history, that the regulations implementing the employment
provisions of the ADA be modeled on the regulations implementing section 504
of the Rehabilitation Act of 1973, as amended, 34 CFR part 104. Accordingly,
in developing these regulations, the Commission has been guided by the
section 504 regulations and the case law interpreting those regulations.
It is the intent of Congress that these regulations be comprehensive and
easily understood. Proposed part 1630, therefore, defines terms not
previously defined in the regulations implementing section 504 of the
Rehabilitation Act, such as "substantially limits," "essential functions,"
and "reasonable accommodation. Of necessity, many of the determinations that
may be required by this proposed part must be made on a case by case basis.
Where possible the regulations establish parameters to serve as guidelines in
such inquiries.
The Commission is also issuing interpretive guidance concurrently with the
issuance of part 1630 in order to ensure that qualified individuals with
disabilities understand their rights under these regulations and to
facilitate and encourage compliance by covered entities. Therefore, proposed
part 1630 is accompanied by a proposed appendix. This proposed appendix
represents the Commission's interpretation of the issues discussed and the
Commission will be guided by it when resolving charges of employment
discrimination. The proposed Appendix addresses the major provisions of the
regulations and explains the major concepts of disability rights.
One especially complex area for which the Commission has attempted to
provide additional definitions and parameters involves the question of how to
determine whether an employer regards a particular individual as having an
impairment that substantially limits the major life activity of working. This
question arises only when the individual is being regarded as substantially
limited in working as opposed to substantially limited in any of his or her
other major life activities. Also, it does not apply when an individual has
an actual disability, or has a record of being an individual with a
disability. The Commission has proposed, in the appendix to part 1630, that
an employer be considered to regard an individual as substantially limited in
the major life activity of working if the employer's qualification standard
excluding individuals with a particular impairment, would, if assumed to be
generally applied by employers facing comparable hiring decisions, exclude
the individual from a class of jobs or from a broad range of jobs in various
classes. The Commission invites specific comment on this proposal.
More detailed guidance on specific issues will be forthcoming in the
Commission's Compliance Manual. Several Compliance Manual sections and policy
guidances on ADA issues are currently under development and are expected to
be issued prior to the effective date of the Act. Among the issues to be
addressed in depth are the theories of discrimination; definitions of
disability and of qualified individual with a disability; reasonable
accommodation and undue hardship, including such matters as the scope of
reassignment and supported employment; and pre-employment inquiries.
To assist us in developing this guidance, the Commission requests comment
from disability rights organizations, employers, unions, State agencies
concerned with employment or worker's compensation practices, and interested
individuals on the following specific questions concerning the application of
Title I of the ADA.
Insurance
1. What are the current risk assessment or classification practices with
respect to health and life insurance coverage in the area of employment?
2. Must risk assessment or classification be based on actuarial statistics?
3. What is the relationship between "risk" and "cost?"
4. Must an employer or insurance company consider the effect on individuals
with disabilities before making cost saving changes in its insurance
coverage?
Worker's Compensation
1. Is submission of medical information to worker's compensation offices a
permissible use of information obtained as a result of a medical examination
or inquiry?
2. Is an inquiry into the history of an individual's worker's compensation
claims a prohibited pre-employment inquiry? Is such an inquiry ever
permissible as an inquiry that is job-related and consistent with business
necessity?
3. What has been the experience of federal contractors subject to section
503 of the Rehabilitation Act with respect to State worker's compensation
requirements?
Collective Bargaining Agreements
1. Can the effect of a particular accommodation on the provisions of a
collective bargaining agreement ever be considered an undue hardship? For
example, may an employer decline to restructure a job or refuse to grant
light duty because to do so would violate seniority or other provisions of
the collective bargaining agreement?
2. What is the relationship between collective bargaining agreements and
the accommodation of reassignment to a vacant position?
3. Should a position be considered "vacant" when the employer has other
obligations, such as consent decrees or arbitration agreements, with respect
to filling the position?
4. If a necessary reasonable accommodation is challenged as a violation of
a collective bargaining agreement, would the employer or union violate the
confidentiality requirements of the ADA by explaining that the accommodation
was made to comply with the ADA?
Executive Order 12291 and Regulatory Flexibility Act
The Commission has determined that this proposed rule will not exceed the
threshold level of $100 million and thus is not a major rule for the purposes
of Executive Order 12291. In making this determination the Commission
prepared a Preliminary Regulatory Impact Analysis. The text of the Analysis
appears below.
The Commission certifies that this proposed rule will not have a
significant economic impact on a substantial number of small business
entities. Therefore, a regulatory flexibility analysis under the Regulatory
Flexibility Act is not required.
Preliminary Regulatory Impact Analysis
Executive Summary
The following analysis estimates three economic effects likely to result
from the regulation implementing Title I of the Americans with Disabilities
Act. Reasonable accommodation expenses are estimated at approximately $16
million, productivity gains are estimated at more than $164 million and
decreased support payments and increased tax revenue is estimated at about
$222 million. Lost benefits of not promulgating the rule could exceed $400
million.
It appears that the rule is unlikely to have a significant economic impact
on smaller entities. Because small entities employ fewer workers, the chance
that an individual small business will be required to take reasonable
accommodation is quite low. Further, the availability of tax credits, the
two-year exemption period and the lack of reporting requirements all reduce
the economic effect of the rule on these firms.
Introduction
The Equal Employment Opportunity Commission (EEOC) has drafted regulations
to implement title I of the Americans with Disabilities Act (ADA), requiring
equal employment opportunity for qualified individuals with disabilities, and
sections 3(2), 3(3), 501, 503, 508, 510, and 511 of the ADA as those sections
pertain to the employment of qualified individuals with disabilities. The
Commission is required by the ADA to issue regulations to enforce Title I
within one year of the date of enactment. The regulation raises no issues for
discretionary rulemaking. Title I of the ADA is an unusual statute in that it
contains a level of detail more commonly found in regulations, leaving very
little room for regulatory discretion, and thus limits regulatory costs to
those preset by the Congress in its choice of statutory requirements. The
regulation merely explains and provides guidance on the statutory
requirements by relying primarily on existing case law, which is another
limitation on Commission discretion in constructing the regulation.
NOTE /1/ Case law is a result of experiences encountered in implementing the
Rehabilitation Act of 1973.
The purpose of this preliminary regulatory impact analysis is to determine
the costs and benefits of the proposed rule as required by Executive Order
12291, 46 FR 131391 (1981) This preliminary analysis suffers from a number
of constraints. The ADA establishes very stringent time frames for developing
implementing regulations. The limited time available necessitates the use of
very rough estimates that can readily be drawn from existing literature.
Additionally, a lack of regulatory alternatives available to the Commission
and a scarcity of data relevant to the regulation at hand prevent this
analysis from being an ideal application of cost benefit analysis. Even more
limiting is the lack of a clear definition of costs associated with the rule
as benefits, costs or simply transfers. Nevertheless, this analysis will
address the five areas proscribed as necessary elements of a regulatory
impact analysis by the Office of Management and Budget./2/ These areas are:
(1) Statement of potential need for the proposal, (2) an examination of
alternative approaches, (3) an analysis of benefits and costs, (4) rationale
for choosing the proposed regulatory action, and (5) a statement of statutory
authority. Also included in the final section of this preliminary regulatory
impact analysis is a regulatory flexibility analysis.
NOTE /2/ "Appendix V, Regulatory Impact Analysis Guidance", Regulatory
Program of the United States Government, April 1, 1990-March 31, 1991, The
Executive Office of the President, Office of Management and Budget, pp. 653-
666.
Background
On July 26, 1990, the ADA was signed into law. The Commission invited
public comment on the development of regulations through the publication of
an advanced notice of proposed rulemaking on August 1, 1990. As directed by
the legislative history, the regulations are modeled on those implementing
section 504 of the Rehabilitation Act of 1973, as amended, 34 CFR part 104.
Substantively, the regulations parallel the act. Succinctly stated, the act
and the regulations prohibit employers from discriminating in employment
decisions against qualified individuals with disabilities. This includes the
requirement that employers make reasonable accommodation to known physical or
mental limitations of an otherwise qualified applicant or employee with a
disability, unless the employer can demonstrate that the accommodation would
impose an undue hardship on the operation of its business. There are certain
economic effects expected as a result of title I : (1) Reasonable
accommodation expenses, (2) reduction of social welfare payments and an
increase in tax revenues, and (3) increased labor productivity. As will be
discussed, these costs can be viewed as being positive (benefits), negative
(costs) or neutral (transfers). Government administrative costs in
implementing Title I could also be considered an economic effect.
Statement of Potential Need for the Proposal
Beyond the legislative requirements for the regulations, Office of
Management and Budget (OMB) guidance requires regulatory impact analyses to
establish the potential need for a proposal by demonstrating that "(a) market
failure exists that is (b) not adequately resolved by measures other than
Federal regulation."/3/ The labor market failures at issue here include those
addressed by other equal employment opportunity requirements. These failures
have been explained in three different ways in the seminal works of Becker,
Thurow and Arrow. These works originally addressed race discrimination but
they are applicable to discrimination against disabled workers./4/ Becker
treats discrimination as a commodity in which employers, co-workers and
consumers all have to determine their discrimination coefficient, that is,
their taste for discrimination or how much discrimination will affect their
utility. /5/ Here the market failure is the substitution of a human capital
factor (that is, a qualification for or contributor to labor productivity)
with factors unrelated to productivity, such as race, sex, or disability.
Becker indicates that individuals and firms are willing to accept the reduced
productivity arising from using such factors because they prefer not to be
associated (due to uncomfortableness or displeasure) with blacks, women or
disabled workers in the work place. Becker's general theorem on market
discrimination assumes that all employees in a given market are either
perfect substitutes or perfect complements. Discrimination by employers
converts minority or female wage rates into a net wage rate with the added
costs of discrimination. The discrimination cost adds to the actual wage rate
by adding costs from employees, customers, unions and others who prefer not
to associate with certain classes of individuals. This cost of discrimination
makes the black, female, or disabled worker more expensive to the firm and
therefore stimulates the employer to discriminate in wages or to fail to hire
these individuals. The effect on the labor market is that it artificially
constricts the labor pool and allows a non-human capital factor to be
considered in labor decisions, thus reducing gross productivity.
NOTE 13/ "Appendix V, Regulatory Impact Analysis Guidance", Regulatory
Program of the United States Government, April 1, 1990-March 31, 1991, The
Executive Office of the President, Office of Management and Budget, p. 653.
NOTE /4/ The term "disabled worker" is used to refer to applicants and
employees covered by the act. It is not intended to be a legal term but is
simply a term of convenience for this analysis.
NOTE /5/ Becker, Gary S. The Economics of Discrimination, The University of
Chicago Press, 1957
Thurow relies strongly on the marginal productivity theory in labor
economics./6/ The author explains that in studying discrimination, the
important source of income is individual labor. Labor income is determined
by
labor's marginal productivity, its contribution to the firm's production.
Firms are expected to set labor costs equal to labor's marginal productivity.
As productivity increases, income should increase. In explaining employment
discrimination, Thurow rejects Becker's notion of tastes for discrimination.
Instead he sees the discriminator as a profit maximizer. Given a situation
where firms pay black, female, ethnic or disabled workers less for comparable
work, Becker would suggest that a portion of these workers' marginal
productivity must go to buy off discrimination tastes. Thurow would argue
that it occurs because the firm knows it can use that portion of a black,
female, ethnic or disabled worker's marginal productivity as profit. Thurow's
theory has limited applicability to hiring discrimination because if firms
were able to capture wage disparities as profits, they would place a greater
demand on these workers. This seems to be a particular weakness with respect
to disabled workers because of the high rate of disabled unemployment.
Nevertheless, Thurow provides a theoretical basis for observed wage
disparities between equally qualified disabled and non-disabled workers.
Thurow's theory also points out another market failure having to do with
human capital. Although Thurow's theory could not create an artificially
constricted labor market, as Becker's theory does, it would reduce returns on
human capital investments for certain workers. /7/ As a result, disabled
workers (and others that are discriminated against in the manner described by
Thurow) would be less willing and less able to make human capital
investments. This will result in a less qualified work force than would be
expected in a perfectly competitive market. This again can have serious
national productivity effects.
NOTE /6/ Thurow, Lester C. Poverty and Discrimination, The Brookings