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Applying conduct rules to an employee with a disability: The case of the potato chip “thief”

April 29th, 2014  |  Kathy Kapusta

Almost every organization has rules that govern workplace behavior. Typically, consistency in the application and enforcement of work rules is an employer’s best protection against allegations of discrimination. But what happens when an employee with a disability violates a conduct standard? Can you hold that individual to the same standard that you apply to all other employees?

In an April 2014 decision, a federal district court in California found that a diabetic employee who was fired for violating Walgreens’ neutral, uniformly applied “anti-grazing” policy when she took a $1.37 bag of potato chips without paying for it — while allegedly in the midst of a hypoglycemic attack — can take her disability discrimination and failure to accommodate claims to a jury. In that case, the court observed that under Ninth Circuit law, misconduct resulting from a disability has to be considered as part of the disability.

The “theft.” Although Walgreens allowed the employee to carry candy with her in case of low blood sugar, on one occasion, she allegedly suffered a hypoglycemic attack while returning items in a shopping cart to the shelves. Because she did not have any candy with her, she opened a bag of chips from the cart and ate some of them. When she started feeling better, she purportedly attempted to pay for the chips at the cosmetic counter, where employees paid for their items, but no one was there. She then put the chips under the counter by her register, where they were later discovered by an assistant manager. She was subsequently terminated for violating the company’s policy against employee theft.

Reasonable accommodation. Walgreens, which estimated that it lost more than $350 million per year as a result of employee theft, argued that it strictly enforced its policy prohibiting employees from eating food merchandise without first paying for it. It also asserted that it was unreasonable to require an employer to accommodate employee theft. In support of its position, the company relied on Raytheon Co. v Hernandez, in which the Supreme Court addressed whether the ADA conferred preferential rehire rights on disabled employees lawfully terminated for violating workplace conduct rules. Though the Supreme Court, in that case, held that an employer’s application of its neutral no-rehire policy was, by definition, “a legitimate, nondiscriminatory” reason under the ADA, the court here observed that the decision did not directly address whether an employer under the ADA is required to make a reasonable accommodation with respect to an employee whose disability caused her to violate her employer’s workplace rule.

Consistent with business necessity. Walgreens also cited to the EEOC’s own guidance, specifically Question 35 in “EEOC Enforcement Guidance on Reasonable Accommodation and Undue Hardship 915.002,” in which the agency stated that “an employer never has to excuse a violation of a uniformly applied conduct rule that is job-related and consistent with business necessity. However, in the court’s opinion, Walgreens failed to address what was “consistent with business necessity” in the context of an employee suffering a hypoglycemic attack. Nor did it establish that she was “stealing” where she testified that she attempted to pay for the product but was unable to do so because no one was at the register.

The company’s attempt to rely on additional EEOC guidance — “Applying Performance And Conduct Standards To Employees With Disabilities,” in which the agency advised that if an employee’s disability caused a violation of a conduct rule, the employer could discipline the individual if the rule was job-related and consistent with business necessity — was similarly unsuccessful. Here, the court noted that what “Walgreens fails to point out is that in that same guidance, the EEOC explains that ‘[t]he only requirement imposed by the ADA is that a conduct rule be job-related and consistent with business necessity when it is applied to an employee whose disability caused her to violate the rule.”

Critically, the court pointed out, the EEOC explained that whether an employer’s application of a conduct rule to an employee with a disability is job-related and consistent with business necessity may rest on several factors, including the manifestation or symptom of a disability affecting an employee’s conduct, the frequency of occurrences, the nature of the job, the specific conduct at issue, and the working environment. Thus, the agency qualified the concept of “business necessity” as it is applied to a particular employee. Accordingly, the court found that the guidance did not establish that accommodating the employee’s conduct here was unreasonable as a matter of law. Whether it was a business necessity to treat the employee the same as other employees who had been fired under the anti-grazing policy when she claimed that taking the chips was necessitated by her medical condition was a question of fact for the jury, the court concluded.

Disability discrimination. As to the EEOC’s disability discrimination claim, Walgreens contended that there was no connection between the employee’s disability and her termination for theft. Rejecting this argument, the court pointed out that it was “simply a reiteration of Walgreen’s position” that the employee should be considered without respect to her disability, which was contrary to Ninth Circuit precedent.

Also rejected by the court was the company’s argument that it proffered a legitimate, nondiscriminatory reason for the employee’s termination — violation of its neutral, uniformly applied anti-grazing policy. Here, the court pointed out that in the Ninth Circuit, reliance on disability-caused misconduct is by its very nature not a legitimate nondiscriminatory reason under the ADA. In this case, the alleged misconduct that formed the basis of her termination was the taking of the chips without first paying for them, an act the employee claimed was caused by her disability. Walgreens thus failed to allege any misconduct that was unrelated to her disability, the court stated.