The Employer's Legal Resource:  Temp Agency Placement to Direct Employee and Essential Functions Under ADA: Physical Exams are Okay, but Work History Still Matters

07.01.17

A recent Tenth Circuit decision, Iselin v. Bama Companies, Inc., provides guidance when employers use temp agency workers assigned to their location and later seek to hire those workers directly as employees of their own. Arnold Iselin was an employee of a temp agency and, in early 2015, he was assigned to work for The Bama Companies as a production worker. After six months, Bama offered to make Iselin its regular employee (no longer through the temp agency), provided he passed a Physical Demand Assessment (PDA). Despite the fact that Iselin completed all of the required tasks, he did not pass the PDA and Bama advised him that his employment was terminated.

Iselin filed suit against Bama under the Americans with Disabilities Act (ADA). Both the temp agency and Bama knew Iselin was an individual with a disability (apparently due to an unspecified back injury, torn rotator cuff, or both) when they hired him. Additionally, Iselin had previously received "occasional reasonable accommodation" for his disability; Bama had reassigned him to a different work location at least once during his tenure because he complained that the work was too hard on his back.

In the lawsuit, Iselin claimed he was qualified to perform the essential functions of a production worker because he did perform all of those duties for six months, during his assignment with Bama as a temp agency employee. Bama argued that Iselin's failure to pass the PDA rendered him unable to perform the essential functions of the position and sought dismissal of his claims. The Tenth Circuit rejected Bama's argument, concluding his failure to pass the PDA "does not necessarily mean that Iselin could not perform essential job functions." The court explained "there may be other reasons" why Iselin did not pass the PDA that are unrelated to essential job functions, but it was not appropriate to resolve such factual questions at the dismissal stage.

The Tenth Circuit also criticized the lower court for ignoring Iselin's temporary work experience at Bama, which supports the claim he could perform the essential functions of the position and is a relevant factor to be considered in making that determination. Bama argued the two positions were different because Iselin initially performed the job for a temporary time period, for a different employer (the temp agency), and for a lesser wage (he was offered a raise if he passed the PDA). The court disagreed, stating that "these distinguishing features say very little, if anything about the essential functions of the general production worker job as Iselin initially performed them or as he would have performed them going forward."

The Tenth Circuit did side with Bama about one thing: requiring Iselin to undergo the PDA when it sought to hire him as a regular, direct employee was not unlawful. Under the ADA, medical exams are permitted only in limited circumstances. For job applicants, such exams may be required after an offer of employment but before commencement of duties if all entering employees are subjected to the exam regardless of disability. For current employees, medical exams may be required if they are job related and consistent with business necessity. But Iselin's lawsuit lacked the necessary factual allegations under either characterization of his relationship with Bama and was inconsistent about how he described that relationship. Though he waffled between identifying himself as an applicant or employee, Iselin made no allegations about either; he did not mention whether all entering employees were required to undergo the PDA, nor did he dispute whether the PDA was job related and consistent with business necessity.

Employers should be aware of the ADA's restrictions in this kind of situation. Physical assessments and other medical inquiries may be permitted when workers make the transition from temporary assignment to direct employee if they meet the above criteria, but prior work experience in the position must still be taken into account and the exams themselves should be reflective of the actual duties performed.

By Rebecca D. Bullard, RBullard@dsda.com

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Rebecca D. Bullard

Rebecca D. Bullard

Rebecca represents clients primarily in labor and employment litigation and counsels clients regarding everyday employment matters. 

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