Employers must re-assign a qualified employee with a disability under the Americans With Disabilities Act (“ADA”) to a vacant job for which the employee is qualified, even if there are other better qualified applicants for that vacant job, according to a decision issued last week by the federal appeals court in Chicago.

In EEOC v. United Airlines Inc., the Seventh Circuit Court of Appeals overruled prior precedent of allowing "best-qualified" selection policies in the context of transferring disabled employees to vacant positions, and instead imposed the equivalent of a "mandatory preference" rule.

The ADA generally requires an employer to reasonably accommodate a qualified applicant's or employee's physical or mental disability unless the employer demonstrates that the accommodation would pose an undue hardship on its operations. The ADA includes "reassignment to a vacant position" as a possible accommodation. Previously, the Seventh Circuit found that an employer satisfied its duty to reasonably accommodate an employee whose disability prevented him or her from performing the essential functions of his or her regular job by allowing that disabled employee to apply for the vacancy, but did not require the employer to award the position unless the disabled employee was the most qualified candidate. In other words, previously, the employer's final decision could be "disability-neutral."

In the new case, United Airlines went even further. Rather than just extending the opportunity to apply for vacant positions to disabled employees no longer able to perform their current jobs, the airline created a "competitive transfer" process giving them preferential treatment: unlimited application opportunities, guaranteed interviews, and priority consideration when candidates were "equally qualified."

"Not enough," said the Seventh Circuit Court of Appeals. The basis for the decision was U.S. Airways v. Barnett, in which the U.S. Supreme Court ruled that reasonable accommodation under the ADA sometimes requires that employers give preference to disabled employees. In other words, "disability-neutral" rules sometimes fall short of what the ADA requires. With this decision, the Seventh Circuit now joins two others (the Tenth and and District of Columbia Circuits) in holding that qualified disabled employees must be given a "mandatory preference" for vacant positions over better qualified applicants.

This decision means that all employers should review their transfer or reasonable accommodation policies. If a disabled employee can no longer perform the essential functions of their regular job even with a reasonable accommodation, but could perform the essential functions of another vacant job with or without a reasonable accommodation, then the employer must give the vacant job to the disabled employee, even if better qualified, non-disabled people have applied for the vacant job.

Employers should also strike any "disability neutral" provisions and discontinue practices giving better qualified transfer applicants preference over minimally qualified disabled employees. And because the EEOC remains keenly interested in this area, employers should consult with counsel when administering their policies and making transfer selections involving disabled applicants.