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The Americans with Disabilities Act; its impact on small business.


Its Impact on Small Business

On July 26, 1990, President George Bush signed into law the Americans With Disabilities Act (ADA). The law mandates sweeping changes in the way American society accommodates its physically challenged. Because it will undoubtedly affect the way your clients do business, as a business adviser, you should become familiar with this law and its numerous ramifications.


There are approximately 43 million Americans with some form of recognized disability; however, only 26% of these individuals are employed on a full-time basis. More startling yet, only 13% of the nation's disabled women are engaged in full-time employment. By contrast, between 60% and 70% of this population indicates a desire for such work.

The problem historically has been one of employer attitude. The ADA is designed to foster changes in those attitudes without being unduly punitive toward employers. At the same time, the ADA's legislative history indicates that changing demographics militate in favor of the law.

By the year 2000, estimates indicate that demands for special professional services and management personnel will increase by 24% and 12% respectively. As society prepares to face these and other potential labor shortages, proponents of the ADA insist that preparing now to accommodate disabled workers makes good economic sense. Quite simply, then, the ADA seeks to integrate the country's disabled population into the mainstream of American life.

The Americans With Disabilities Act contains five sections, three of which are of significance to independent accountants and their clients. Title I regulates employment practices as they relate to disabled persons. Title II covers public services, notably public transportation. Title III sets standards for the accessibility of public accommodations to the physically challenged.

Who Is Protected?

Under the ADA, a disability is defined as: a physical or mental impairment that substantially limits one or more major life activities; a record of such impairment; or the perception of having such an impairment. The list is disjunctive. That is, any one of these three criteria will qualify as a disability.

The act further defines a physical or mental impairment as either:

1. Any physiological disorder or

condition, cosmetic

disfigurement or anatomical loss

affecting one or more of the

following body systems:

neurological, musculoskeletal,

special sense organs,

respiratory (including speech organs),

cardiovascular, reproductive,

digestive, genito-urinary,

hemic and lymphatic, skin

and endocrine, or, 2. Any mental or psychological

disorder, such as mental

retardation, organic brain

syndrome, emotional or mental

illness or specific learning


One of the more opaque terms of art in the ADA is the phrase "major life activities". Although the act itself is silent as to precise meaning of this term, the record of congressional hearings on the law indicates some examples of major life activities include caring for oneself, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning, working or participating in community activities.

Congress waffled somewhat on the delicate issue of substance abuse. While past or current alcohol abuse is considered a disability under the ADA, past substance abuse apparently is considered a disability, while current abuse is specifically excluded from protection under the act.

Title V of the ADA specifically excludes certain conditions from the definition of a disability. Among these are transvestism, transsexualism, pedophilia, exhibitionism, voyeurism, gender identity disorders not resulting from physical impairments, other sexual behavior disorders, compulsive gambling, kleptomania and pyromania. The law also indicates that homosexuality and bisexuality are not impairments.

A word about acquired immune deficiency syndrome (AIDS) -- some last minute wrangling by fundamentalists on Capitol Hill created an unusual legislative compromise. Under the act, the Secretary of Health and Human Services is directed to publish annually a list of contagious diseases transmittable through the handling of food. Employers will be given the limited option of transferring affected employees from food handling jobs to other positions within the organization. Since all medical evidence indicates that AIDS cannot be transmitted via this means and since HHS Secretary Louis Sullivan publicly opposed any exclusions for people with AIDS, the provision is effectively meaningless. People with AIDS are therefore protected under the law.

Employment Provisions

The basic rule under the employment title is that an employer may not discriminate against an individual with a disability at any point during the career of that individual, from recruitment to retirement, on the basis of that disability. Further, the employer is required to make "reasonable accommodations" for the disabled employee if, with such accommodations, that individual could perform the essential functions of the subject employment position. A reasonable accommodation must be made unless it would impose an "undue hardship" on the employer.

The ADA lists eight types of actions as discriminatory under the provisions of the employment title. Under the act, it will be unlawful for an employer to:

1. Limit, segregate or classify a

job applicant or employee in

a way that adversely affects

the opportunities or status of

the individual; 2. Participate in a contractual

relationship that has the

effect of subjecting employees

to discrimination; 3. Utilize standards, criteria or

methods of administration

that either have the effect of

discriminating on the basis

of disability or perpetuate the

discrimination of others who

are subject to common

administrative control; 4. Deny an employment

opportunity or benefit to an

otherwise qualified individual

because of that person's

relationship to or association with

an individual with a

disability; 5. Refuse to make reasonable

accommodations to the known

mental or physical limitations

of an otherwise qualified

individual unless the employer

can show that the

accommodation would impose an undue

hardship on the employer's

business; 6. Deny employment

opportunities to an otherwise

qualified individual because such

employment would require the

business to make a

reasonable accommodation; 7. Use qualification standards,

employment tests or other

selection criteria that preclude

the participation of qualified

disabled individuals unless the

standard, test or criteria is in

fact a job-related necessity;

and, 8. Retaliate and/or harass an

individual who files charges

or participates in proceedings

under the act.

The ADA defines a reasonable accommodation to include making existing facilities readily accessible to and usable by disabled individuals. The term also includes more flexible actions, such as job-restructuring, part-time or modified work schedules, reassignment to a vacant position, acquisition or modification of equipment or devices, appropriate adjustment or modifications of examinations, training materials or policies, the provision of qualified readers or interpreters and other similar accomodations.

This list is intended to be illustrative, not all-inclusive; whether a particular action is a reasonable accomodation depends upon whether it imposes an undue hardship on employers. Undue hardships are defined as actions requiring significant difficulty or expense when considered in light of the following factors:

1. The nature and cost of the

accomodation; 2. The overall financial resources

of the facility involved, the

number of employees at the

facility and the effect of the

accommodation on the

facility's resources and expenses; 3. The overall resources of the

employer, considering all its

facilities and activities

wherever located; and 4. The nature and location of

the facility.

Proponents of the act caution that employers should not panic with regard to the requirements of the reasonable accomodation standard. Although application of the standard will necessarily vary from circumstance to circumstance, the requirements are not intended to be onerous. For example, hiring an interpreter may be appropriate to accomodate a hearing-impaired salesperson who generates $5 million worth of business for a company each year; it likely is not reasonable to hire such an interpreter for a receptionist. In fact, disabled rights advocates point out that 81% of all reasonable accomodations can be achieved for less than $1,000.

The employment provisions of the ADA will apply to all employers with 25 or more employees two years after it is signed by the President. That threshold is lowered to 15 or more employees two years later.

With regard to employer provided insurance benefits, the ADA will not disrupt the current nature of insurance underwriting or the current regulatory structure for self-insured employers or the insurance industry regarding classification of risk. The act's legislative history indicates that, while a plan which limits certain kinds of coverage based on classification of risk would be allowed, the plan may not refuse to insure or continue to insure or limit the amount, extent or kind of coverage available to an individual solely because of a disability unless such actions are based on sound actuarial principles. The ADA should not affect employer-provided insurance.

Transportation Provisions

Generally speaking, the ADA covers public and private transportation systems, both fixed route and demand responsive services. The act has provisions applicable to virtually every mode of transportation. The mode most likely to be encountered by independent accountants is surface transportation -- buses, vans and the like.

The ADA applies to all such services which accomodate 16 or more passengers. It requires all new contracts for the purchase or lease of vehicles entered into more than 30 days after the law becomes effective to be for equipment "readily accessible" to disabled persons.

Alternatively, operators of fixed route systems may provide comparable services using para-transit vehicles. This is an exception to the general thrust of the ADA which forbids segregated facilities for the disabled. Such paratransit alternatives must be pursuant to a plan of service approved by the Secretary of Transportation. The act directs the secretary to issue regulations relating to such plans within one year of the ADA's effective date. The ADA allows the secretary to grant temporary waivers upon a showing of hardship.

Public Accomodation Provisions

The prohibitions against discrimination based on disability are broadly constructed to include most accomodations open to the public. Discrimination under this title of the act includes:

1. The imposition or

application of eligibility criteria that

screen out or tend to screen

out an individual or a class of

individuals with a disability

from equally enjoying any

goods, services, facilities,

privileges, advantages or

accommodations being offered

to the public, unless such

exclusion is necessary in

order to offer them; 2. Failure to make reasonable

modifications in policies,

practices or procedures when

such modifications are

necessary to offer goods, services,

et al.; 3. Failure to take necessary steps

to ensure that no individual

with a disability is excluded,

denied services, segregated or

otherwise treated differently

because of the absence of

auxilliary aids and services,

unless such steps would result

in an undue burden; 4. Failure to remove

architectural and communication

barriers in existing facilities

where such removal is readily

achievable; 5. Where removal of barriers is

not readily achievable, the

failure to make goods,

services, et al., available through

alternative methods, if such

alternative methods are

readily achievable; and, 6. Failure to make any

renovations, alterations or additions

to an existing structure

accessible to disabled


An exception to the last item is available with respect to the installation of elevators in facilities of less than three stories with less than 3,000 square feet per story. This exception is not available to shopping centers or the offices of health care providers.

Thus, a key requirement of the ADA for most small businesses becomes the removal of barriers or the provision of alternative methods of access. This in turn requires an understanding of the "readily achievable" standard.

The term "readily achievable" is defined as relating to actions that are "easily accomplishable and able to be carried out without much difficulty or expense". There are three factors to be considered in determining whether an alteration is readily achievable:

1. The overall size of a business;

the number of employees; the

number, type and location of

facilities and its overall

financial resources; 2. The nature of operation and

location maintained by a

covered business; and, 3. The nature and cost of the

action needed.

The kind of barrier removal envisioned includes the addition of grab bars, the simple ramping of a few steps, the lowering of telephones, the addition of raised lettering and braille markings on elevators, the addition of alarm lights and similar modest adjustments.

Compliance may require the removal of physical barriers, including those created by the arrangement or location of temporary or movable structures such as furniture, equipment and display racks. For example, a department store may need to adjust its layout of display racks and shelves in order to permit access to individuals who use wheelchairs, provided such actions can be carried out without much difficulty or expense.

A public accomodation would not be required under the act to provide physical access if there is a flight of stairs which would require extensive ramping or an elevator. The readily achievable standard only requires physical access that can be achieved without extensive restructuring or burdensome expense. In these instances, the ADA requires alternative methods of making goods, services, privileges, advantages or accomodations available. This may include such simple actions as serving customers at the front door.

Thus, the only retrofitting required by the ADA is that needed to satisfy the readily achievable standard. The law's supporters have sought to reassure the small business community that the act's requirements in this regard are modest. However, where barrier removal is not readily achievable, alternative methods of accomodation, such as the one described above, almost always are.

New structures whose first occupancy is to occur 30 months or more after the act's effective date will be required to be designed in accordance with minimum accessibility specifications set forth by the Federal Architectural and Transportation Barriers Compliance Board. The board's workings are discussed in detail below.

Remedies Under the Law

Generally speaking, the ADA was not designed to be a windfall for plaintiffs' lawyers. The drafters of the legislation sought to strike a balance in crafting its remedies for non-compliance. Nothwithstanding the fact that many small business attorneys have termed it the "most significant piece of legislation affecting small businesses since the Occupational Safety and Health Act", the remedies are specific and tailored to the act's goals. This may change, but more on that in a moment.

The exclusive initial remedy for violations of the employment title is a grievance procedure before the Equal Employment Opportunity Commission. After an EEOC investigation, the agency may require mediation if it believes the complaint is legitimate. Only if the mediation process fails may an employee seek redress in federal court.

Remedies for violations of the employment provisions are limited to reinstatement, back pay, promotions, specific performance (i.e., a mandate that reasonable accomodations be made) or similar equitable remedies to make the plaintiff "whole". In addition, attorneys' fees may be awarded to prevailing plaintiffs. However, both compensatory and punitive damages are not available under the act.

The remedies available for violations of the public accomodations and public services (including transportation) titles are limited to injunctive relief. Such an injunction would again mandate specific performance as under the employment title. Again, an award of attorneys' fees may be made, if appropriate.

As of this writing, there is a specter on the horizon which threatens to severely upset the remedial balance referred to above. Congress appears poised to pass civil rights legislation which would allow both jury trials and punitive damages. The proposals are in response to six recent U.S. Supreme Court cases which restricted plaintiffs' rights under the Civil Rights Act of 1964. While the Supreme Court decisions arguably require some legislative correction, the provisions described above appear excessive.

The ADA's remedial procedures incorporate by reference Title VII of the 1964 act. Hence, any changes to the 1964 act would likewise be applicable to the ADA. If the current proposal becomes law, punitive damages will be available to those suing under the ADA.

Practical Considerations

Notwithstanding the potential civil rights changes just discussed, the ADA is not intended to punish employers and businesses. It is designed to integrate an important minority into the larger culture. Therefore, employers should not feel unduly intimidated by the act's requirements. As in most similar circumstances, common sense should prevail. The most difficult barriers faced by the disabled are psychological, not structural.

For example, if a disabled individual applies for a job, it is perfectly acceptable, if not appropriate, to ask job-related questions with respect to the disability. Employers cannot make reasonable accomodations if they are not familiar with the limitations imposed by a particular disability.

At the same time, an interviewer should not fixate on the disability. Particularly, the interviewer should not try to imagine him or herself in the applicant's position. This is impossible, and attempting to do so is counterproductive.

Further, employers should not attempt to "slot" disabled employees. There is no such thing as a job that is "just right" for a disabled individual. Certain candidates are just right for certain jobs, and disabilities are seldom relevant.

Finally, never hire an individual just because of a disability. Ultimately both the employer and the employee suffer when things do not work out. Always hire the best applicant, period.

An important protective measure employers can take is to prepare good job descriptions for all the positions in the organization. Since coverage under the employment title of the ADA requires that the individual be otherwise qualified to perform a job's essential functions, a defendant employer would be hard pressed to argue that any function not included in a job description is somehow "essential". Prepare and regularly update good job descriptions.

Where to Go for Help

Happily, there are many avenues of assistance available to those who wish to understand their roles in integrating the disabled into American society. A good place to start is with the government agencies in your area. Check the government listings of your local telephone directory for help. State vocational rehabilitation service agencies can also be helpful.

There are also numerous national organizations which can be of help. The Job Accommodation Network (JAN), operated by the President's Committee on the Employment of People With Disabilities, can assist with understanding how to make reasonable accommodations in the workplace. To reach JAN, contact the President's Committee on the Employment of People With Disabilities, 1111 20th Street, N.W., Washington, D.C. 20036, phone 1-800-526-7234.

The Equal Employment Opportunity Commission (EEOC) is responsible for drafting regulations and administering enforcement under the employment title of the act. Equal Employment Opportunity Commission, 1800 L Street, N.W., Washington, D.C. 20507, phone 1-800-872-3362.

The Architectural and Transportation Barriers Compliance Board (ATBCB) issues minimum guidelines and requirements for accessible design in public accommodations and transportation. The ATBCB has been in existence since 1973 and is a very knowledgeable resource on these issues. Contact the Architectural and Transportation Barriers Compliance Board, 400 Maryland Avenue, S.W., Washington, D.C. 20202, phone 1-800-USA-ABLE.

Mainstream, Inc., is a private, non-profit organization that works with both employers and rehabilitation professionals to integrate greater numbers of disabled persons into the workplace. Mainstream presents seminars and conferences, publishes newsletters and reference guides and provides technical assistance on placing persons with disabilities into the workplace. Mainstream's disability-specific series of pamphlets is particularly helpful. Mainstream, Inc., 1030 15th Street, N.W., Washington, D.C. 20005, phone 202-898-1400.

Finally, the government has published a directory listing many private organizations founded to assist those with a particular disability. The Directory of National Information Sources on Handicapped Conditions and Related Services was published in 1986 and can be ordered from the U. S. Government Printing Office, Washington, D.C. 20402, phone 202-783-3238. The GPO stock number is 065-000-00254-0.


A word of caution: this review of the Americans With Disabilities Act is intended only to provide the independent accountant with an introduction to this complex legislation. A more detailed familiarity may be required for compliance with the law's many requirements. Practitioners should endeavor to remain current on these many issues as the act is implemented throughout the next several years.

The ADA will have an indeed profound impact on American society and commerce. The improved integration of the disabled which the ADA seeks to bring about will no doubt inure to the benefit of all Americans.

Peter M. Berkery, Jr., is NSPA's director of congressional relations - tax counsel. He received his JD from The American University and his LLM in taxation from The George Washington University. He also holds a BA in classical studies from Boston College and an MA in international affairs from The American University. Prior to joining NSPA, he served as counsel to the Federal Affairs Division of the National Paint and Coatings Association.
COPYRIGHT 1990 National Society of Public Accountants
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Author:Berkery, Peter M., Jr.
Publication:The National Public Accountant
Date:Sep 1, 1990
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