When it comes to blog entries, sometimes, I have a pipeline of cases to discuss. Sometimes, I have to search for a case to discuss. Sometimes, a news item comes up bearing discussing. As of now, cases in my pipeline include: standing under title III of the ADA; a tour de force on why Internet only places are places of public accommodations; and a case from the 11th circuit exploring the issues of what is an actual disability and when a person is regarded as having a disability. I’ve had all of those cases in the pipeline for a bit, but I’m having trouble figuring out which one to blog on first.
Also, news keeps coming up. For example, recently Delta changed its service dogs and emotional support dog policy, and I am still digging into that (we might even have our first guest blogger for that one). That Delta change in policy has been a real hot topic of discussion on the animal law section of the Texas Bar Association listserv. In particular, the concern there is whether Delta change in policy goes beyond the requirements of the Air Carrier Access Act. In the news today, on the front page of the Wall Street Journal, there is an article entitled, “CSX to make CEO’s health its business.” Since I have been on a job-related and business necessity tear of late, I thought this article would win out for today’s blog entry. The article is divided into two categories: the WSJ article and thoughts. The blog entry is so short that you will probably want to read the whole thing. Nevertheless, it is possible to focus on either category or both.
The article reports that CSX Corporation Board will adopt a policy requiring the railroad’s chief executive to submit to an annual physical exam that will be reviewed by the board. That annual physical exam will be conducted by a board selected physician. The rule comes about due to the issue CSX had with the last CEO. That CEO had a history of health issues and required the use of a portable oxygen tank to treat an unspecified medical condition. He declined the board’s request to review his medical records or submit to a physical as part of being named CEO. His hiring included an $84 million payment to cover compensation he left behind when he quit his job at another railroad to leave CSX. Hiring that CEO probably added $10 billion to the company’s market value. After taking medical leave of absence, that CEO died.
This isn’t the first time a company has had to deal with CEO health issues. For example, Apple never disclosed the specific reason for two extended medical leaves by co-founder Steve Jobs who died in 2011 after battling pancreatic cancer. United Continental holdings CEO was hospitalized and the company did not initially disclose that he had suffered a heart attack. He took a medical leave, had a transplant, and returned to work the following year. In 2015, the Goldman Sachs Group CEO informed his board of his lymphoma diagnosis shortly after receiving the news from his doctor. He continued to work through treatment and returned to work full-time the following year.
The article does note that requiring executives to share their physicals with the board could violate employment laws and at least required waving a right to privacy. I agree on the right to privacy needing to be waived, state laws and HIPPA for example. The article also notes that securities laws don’t explicitly require companies to disclose executive health problems, though companies must share material information that might affect investor decisions to buy or sell stock.
- The article doesn’t say if the physical is part of the CEO contract. Rather, it just says that it is a policy adopted by the board. I would be a lot more comfortable if the physical was part of the CEO contract for the reasons discussed in this blog entry. That particular blog entry discusses how in a collective bargaining context it isn’t always necessary to have some kind of cause before doing a post-employment medical exam as a result of the bargained for terms. It certainly helps if the job has a safety angle to it, which the CEO job does not.
- CSX has a current CEO, but I could foresee problems if they required a physical exam prior to making a conditional job offer. See this blog entry.
- With regards to a postemployment medical exam, an employer has the right to insist on one if it is job-related and consistent with business necessity (not sure why that wasn’t done with respect to its last CEO). Is that the case here? With respect to business necessity, is the exam vital to the business? The article points out that the health of a CEO can dramatically affect a company’s valuation. So, I have to vote yes. However, the harder question is whether the physical exam is no broader and no more intrusive than necessary.
- With respect to job-related, from this blog entry, we learned that the Sixth Circuit has said that job-related involves the employer showing any of the following: the employee requested an accommodation; the employee’s ability to perform the essential functions of the job was impaired; or the employee posed a direct threat to himself or others.
- With respect to the CEO of a major corporation, the business necessity piece seem to be fairly obvious. Just what is evaluated in the exam much less so. However, especially if you are in the Sixth Circuit, getting by job relatedness may not be so simple where the CEO is doing his or her job and nobody is aware of any problems. Remember, direct threat, which we discussed here and in numerous other blog entries, is a legal standard and a high one at that. The burden is also on the employer to establish direct threat.
- Is it just the CEO that is going to have this requirement? What about other high level employees?
- While an employee certainly has the right to waive its privacy, an employer cannot insist on waving the employee’s ADA rights.
- If the physical does reveal problems, then the company is going to have to assess whether those problems that come up during the physical exam are job-related, consistent with business necessity, and whether there are any reasonable accommodations that can be put in place.
- Bottom line: I would be a lot more comfortable if such a requirement was put in the contract with the CEO itself. I’m not sure a board policy will cut it in light of what we have discussed in this blog over time.
I really do have to move off this job-related and business necessity focus don’t I:-). Next week:-)