9th Circuit: Employers Must Foot the Bill for Post-Offer Follow-up Medical Exams

The Ninth Circuit recently sided with the Equal Employment Opportunity Commission (“EEOC”), holding that employers can’t require applicants to pay for follow-up post-offer medical exams.  Specifically, in EEOC v. BNSF Railway Company, No. 16-35457 (9th Cir. Aug. 29, 2018), the court affirmed that BNSF Railway Company (“BNSF”) violated the Americans with Disabilities Act (“ADA”) by conditioning the plaintiff’s job offer on his getting an MRI at his own expense.

BNSF had offered the plaintiff, Russell Holt, a job as a senior patrol officer, contingent on Holt passing a post-offer medical evaluation process.  Holt underwent BNSF’s strength test and physical examination and submitted a medical questionnaire.  Upon learning from the questionnaire that Holt injured his back several years ago, BNSF asked Holt to provide medical records relating to his back.  Among other records, Holt provided an old MRI showing that he had a two-level disc extrusion.  Based on that MRI, BNSF had Holt undergo a follow-up medical exam with a doctor.  The examining doctor found no issues that would prevent Holt from performing the job.  Nevertheless, BNSF told Holt that he would need to, among other things, get a current MRI.  After learning that his insurance would not cover the MRI, Holt told BNSF he couldn’t afford it.  The company told Holt that it could not hire him without an MRI and ultimately rescinded the offer when Holt failed to get one.  Holt brought an EEOC charge, and the EEOC sued BNSF for ADA violations.

There are two key takeaways:

Takeaway 1: Requiring a follow-up post-offer medical exam may show that an employer “regards” the applicant as having a disability.

BNSF argued that Holt didn’t have a disability within the meaning of the ADA because the company didn’t “perceive” him as having an impairment—rather, it was “unsure” about the state of Holt’s back and sought more information.  The court rejected this argument, finding that, in requiring an MRI because of Holt’s prior back injury, BNSF “assumed” that Holt had a disqualifying back condition and, in rejecting Holt for not getting a recent MRI, the company treated Holt as it would an applicant whose medical exam turned up a disability.  Based on this, the court concluded that BNSF perceived Holt as having a disability.

Takeaway 2: If a follow-up medical exam is needed, you can’t make the applicant pay for it.

BNSF also argued that the company’s actions were legal because the ADA authorizes employers to condition job offers on passing a medical exam, and EEOC guidance permits follow-up exams related to previously received medical information.  The court recognized that the ADA does permit follow-up exams for people with disabilities, but it noted that the statute is silent as to who pays for the additional testing.

Looking to the ADA’s antidiscrimination provisions and policy purposes, the court reasoned that making applicants pay for follow-up medical exams is at odds with the ADA in that it would place an additional financial burden on disabled applicants because of their disabilities and would have the effect of precluding many disabled applicants.  The court also reasoned that the ADA elsewhere puts the financial burden on employers, including the requirement that employers pay for reasonable accommodations.  Consequently, the court held that, although the ADA permits follow-up testing to disproportionately affect disabled applicants, it “does not, by extension, authorize an employer to further burden a prospective employee with the cost of the testing.”  The court noted that, absent its holding, employers might use the cost of follow-up medical testing to screen out disabled applicants.  For these reasons, the Court found that BNSF’s practice discriminated against Holt because of his perceived disability.

The Ninth Circuit’s recent decision is a good reminder to employers to carefully examine their hiring practices with respect to post-offer medical exams and, when in doubt, consult with counsel.