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ADA Claims Based on “Last Chance Agreements”

Several months ago, Rush Limbaugh, a well-known radio show host, returned to the airwaves following his admission that he has an addiction to painkillers after spending five weeks away from work in drug rehabilitation.1 Rush Limbaugh is not the first celebrity, and certainly not the first employee, to return to work after battling a substance addiction. How he addresses the long-term aspects of working while recovering from a substance abuse is an issue he will have to work out with his employer.2 However, Mr. Limbaugh’s situation highlights some of the issues that face all employers: namely, what steps can employers take to prevent the negative impact of drug and alcohol abuse in the workplace, and will these steps trigger state and federal laws that have recognized that alcoholism and drug addiction can be legally protected disabilities?

The Americans with Disabilities Act (“ADA”), 42 U.S.C. § 12112(a), prohibits discrimination against a qualified individual with a disability. Courts have held that persons who are addicted to drugs or alcohol may be qualified individuals with disabilities under the ADA.3 Notwithstanding this rule, courts have held that persons who are current users of drugs or alcohol are not qualified individuals with disabilities under the ADA.4 In light of these legal principles, employers often face the difficult challenge of disciplining employees who may claim that they are recovering addicts, rather than “current users” of drugs or alcohol.

One device many employers have begun to use in delivering discipline to recovering addicts, in a way that seeks to avoid the appearance of discrimination based on addiction, is the so-called “Last Chance Agreement” (“LCAs”). A Last Chance Agreement is an agreement between the employer and the employee, typically used by employers to discipline an employee who chronically under performs or repeatedly violates workplace rules as a result of his or her addiction to illegal drugs and alcohol, and has reached the point of discharge. A LCA is a structured agreement that permits an employee to continue his or her employment (or to even be reinstated), subject to certain conditions, which typically include the following: suspension, successful completion of a treatment program, submission to random or periodic substance testing at the discretion of the employer, improvement in job performance, and an agreement to abstain from using illegal substances and/or alcohol. LCAs often also typically provide that in the event the employee resumes the use of illegal drugs or alcohol, or the employee fails to meet performance standards, then the employee’s employment will immediately be terminated without further warning.

The benefit of a LCA is that it provides objective evidence that the employer is seeking to accommodate the addicted employee and to assist the employee during his or her recovery. In litigation, such evidence may be used to rebut an employee’s argument that the employer was actually discriminating against the employee due to his or her allegedly disabling addiction. The LCA also may be used to rebut an argument by the employee that the employer failed to reasonably accommodate his or her disabling addiction. An employee would be hard pressed to argue that the employer did not reasonably make accommodations when the employee agreed to the terms and conditions of the continued employment, including participation in a rehabilitation program, and the parties agreed that relapse would lead to immediate termination of employment.

Though LCAs appear to have significant benefits both for employers and recovering addicts, a number of courts recently have questioned whether LCAs may, in certain circumstances, violate the ADA. This article reviews some of the cases and issues involved with the use of LCAs and how employers can better utilize them without violating the ADA.


Drug and alcohol abuse has been estimated to cost American employers a whopping $81 billion in lost productivity annually, according to the U.S. Department of Labor.5 These numbers confirm that alcoholics and drug abusers are not limited to the unemployed. Rather, studies show that the vast majority of drug and alcohol users work. According to a 2002 study conducted by the Substance Abuse and Mental Health Services Administration, there are 16.6 million illicit drug users in the United States aged 18 or older, 74.6 percent of whom were employed either full or part time. The numbers are equally high for alcohol users, especially binge and heavy drinkers. In 2002, there were 51.1 million adult binge drinkers, 80 percent of whom were employed either full or part time; similarly, there were 15.2 million heavy drinkers in 2002, and 79 percent of these were employed.6

In the face of these startling numbers, employers have attempted to protect their businesses from the negative impact of drug and alcohol use at work by increasing the use of LCAs. The challenge facing employers is to address an employee’s problem with substance abuse and enable that employee to return to work following a “binge,” while at the same time allowing the employer to preserve its high standards for productivity and work performance and not trigger liability under the ADA. As reflected in the two recent cases discussed below, the LCA is a beneficial tool for employers, but, if used improperly, may itself lead to liability under the ADA.

Two Recent Cases

The Eighth Circuit Court of Appeals recently upheld the dismissal of an employee for drinking alcohol during non-work hours in violation of his LCA, while the Ohio Third District Court of Appeals found that the termination of an employee who was forced to sign a LCA while he was in rehabilitation violated the ADA. While the two cases seem inconsistent, their holdings can be reconciled because of different facts presented in each case. Although the outcome for the employer differed in each case, both cases confirm that a LCA can be an effective tool for employers if used appropriately to discipline employee misconduct, but in a way that does not appear to single out employees who are seeking treatment for a disabling addiction.

In Longen v. Waterous Co., 347 F.3d 685 (8th Cir. 2003), a panel of the Eighth Circuit Court of Appeals held that an agreement calling for the immediate dismissal of an employee with a history of substance abuse in the event of future drug or alcohol use either inside or outside of the workplace did not violate the ADA. In Longen, plaintiff Ira Longen was employed by Waterous Company for over 20 years, but during that time had a history of recurring substance abuse battles. He entered chemical dependency treatment, unsuccessfully, for the first time in 1993, after which Waterous learned of his chemical substance abuse problems. Longen and Waterous then entered into a number of agreements in which the parties agreed that if Longen successfully completed a treatment program, Waterous would allow Longen to return to work without any discipline. Longen entered chemical dependency treatment four more times while he was employed by Waterous. Finally, Longen’s union and the employer negotiated a LCA that provided: “Future use of any mood altering chemicals, including alcohol, or violation of working rules generally related to chemical dependency will result in immediate termination of employment from Waterous Company.”

Four years later, during non-work hours, Longen was arrested and pleaded guilty to a charge of driving while intoxicated. Upon learning of the conviction, Waterous terminated Longen’s employment. Longen sued, alleging that the LCA and his termination for off-work conduct violated the ADA, arguing that the ADA provides that an employer “may require that employees shall not be under the influence of the workplace.” 42 U.S.C. § 12114(c) (emphasis added).

In dismissing the lawsuit, however, the Eighth Circuit held that Section 12114(c) of the ADA refers only to the types of permissible restrictionsthat a company may impose on all employees at the workplace—regardless of whether they are alcoholics or not; however, the ADA does not restrict the types of further constraints that a party may place upon himself. In other words, Longen placed separate restrictions on his own conduct when he voluntarily signed the LCA. These restrictions to refrain from the “future use of any mood altering chemicals” were broader than the restrictions under the ADA, but the court noted that “these additional restrictions were not gratuitous. Because of them, Longen was able to continue working at Waterous.”7 Longen covenanted that he would refrain from any future use of drugs or alcohol in exchange for valuable consideration—the opportunity to continue working at Waterous. As a result, the Longen court found that the LCA was a valid agreement and that Longen breached this agreement by driving under the influence of alcohol (even though the drinking was done off-work). As such, the court concluded that his termination was permissible. The Longen court found that the restriction on any use of mood altering substances, including during off-work hours, was permissible because Longen voluntarily agreed to it as a condition of his continued employment. It should be noted that in New York, the New York Legal Activities Law prohibits an employer from taking action against an employee for the use of lawful products off of work premises during non-working hours. See N.Y. Lab. Law § 201-d(2)(b). However, the New York statute permits employers to take action against employees pursuant to “an established substance abuse or alcohol program or workplace policy” or where it affects the employee’s work performance. See N.Y. Lab. Law § 201(d)(4)(ii-iii). Under the ADA, there is legislative history that suggests that an employer may make employment decisions based on alcohol abuse during non-working hours.8 Moreover, several courts have recognized a distinction between termination of employment because of a disability and termination because of misconduct and held that termination precipitated by misconduct does not violate the ADA.9

By contrast, the Third District Court of Appeals in Ohio in DePalma v. City of Lima, Ohio, 2003 WL 22331986 (Ohio App. 3 Dist. Oct. 14, 2003), found that the LCA utilized by the employer violated the ADA. In DePalma, the Ohio court held that a drug addicted employee was not bound by a LCA that was agreed upon while he was actively seeking rehabilitation.

Anthony DePalma, a firefighter in the Lima Fire Department for more than two decades, received very high scores on exams and numerous awards for valor and dutiful service during his career. In 2000, he was promoted to Assistant Chief. Later that year, however, he developed kidney stones and was prescribed various narcotic pain medications to which he became addicted. When he was no longer able to obtain the medications by prescription, DePalma began to purchase them illegally and eventually began taking heroin. Realizing that he had a drug addiction, he voluntarily checked into an addiction treatment center. He was visited by the fire chief, who informed DePalma that he would have to sign a LCA or else his employment would be terminated. The department’s first indication of DePalma’s drug addiction was when he sought treatment. No incidents had previously occurred to indicate his drug use.

The court held that forcing DePalma to sign a LCA merely because he sought treatment for an addiction was in violation of the ADA. The court found that DePalma’s termination was improper. The court reasoned that the LCA was a form of discipline and that the fire department changed the terms of his employment by forcing him to sign the agreement once he entered rehabilitation:

His performance and behavior at work were excellent. However, once DePalma voluntarily entered the treatment program, the City became aware of his drug addiction and immediately changed the terms of DePalma’s employment by having him sign the LCA...a written reprimand is discipline if it is placed in an employee’s file and the implications of the writing continue beyond the placement in the file. This court does not see any difference between the LCA and a written warning that is placed in one’s file. Id. at *8.

Though Longen and DePalma reach different conclusions as to the enforceability of the LCAs in the circumstances presented to them, the cases are reconcilable and hold several important lessons for employers. For example, in Longen the court concluded that the employer properly used the LCA as a form of discipline for an employee who had a long history of work-related incidents due to the use of illegal drugs and alcohol and was at the point of discharge. In DePalma, however, the court concluded that the timing of the LCA and the absence of any facts indicating the existence of any prior work violations or performance issues provided an inference that the employer “disciplined” an employee as a result of his status as a recovering drug addict, rather than for work-related behavior. In order to avoid the result in Longen, employers must strive for consistency in taking disciplinary actions that may relate to behavior resulting from a covered disability and not take action based on an employee’s status as a recovering addict.

Practice Pointers

As in all areas of employment law, employers should be careful when dealing with alcohol and drug abuse in the workplace. In order to avoid violating the ADA, employers should keep a well-documented record, as they should in all areas of discipline. The following steps are suggested:

1) Implement a policy prohibiting the use of drugs and alcohol at work, and working while under the influence of any controlled substances.10

2) Enforce the policy consistently. In other words, if an employer implements a tardiness policy, it may enforce that policy against an individual with an alcohol problem, but it must also enforce the policy in the same manner against other employees.

3) Do not label any employees as “alcoholics” or “drug addicts.” Using such a label may suggest, rightly or wrongly, that the employer “regards” him or her as having a protected disability.

4) Discipline the misconduct, not the disability. In many situations, employers may discipline or discharge an employee for alcohol abuse, despite the fact that alcoholism may be a disability under the ADA, if that employee has substandard performance or other disciplinary issues. An employee who requests treatment, but who has not violated any employment rules, should not be discharged solely on the basis that he/she requested treatment.

LCAs may play an important part in effectuating a comprehensive program for dealing with recovering addicts in the workplace. The LCA benefits the employee because it provides the employee who is recovering from substance abuse problems with an opportunity to rehabilitate and retain his or her job, rather than being discharged after a first violation of a substance abuse policy. LCAs also benefit the employer because they create a clear record showing that the employer tried to accommodate the employee’s addiction. If the employer must discharge an employee who has signed a LCA, the LCA provides an objective basis for review by a court or arbitrator, which will indicate that the disciplinary action was taken because the employee violated the LCA, not because of the employee’s addiction.

  1. See Ray Richmond, Real Test Ahead For Contrite Limbaugh, MSNBC NEWS, Nov. 18, 2003, available at

  2. Recent articles discussing Rush Limbaugh’s return to work do not indicate the terms and conditions on which he was allowed to return, or if he has entered into a last chance agreement with his employer, Clear Channel Communications. See generally John Gorman, John Gorman on Rush Limbaugh, RADIO DAILY NEWS, Oct. 11, 2003, available at; Clear Channel Sees Record Profits In Quarter, TIMES-NEWS, Nov. 20, 2003, available at StoryID=3562.

  3. Alcoholism, like drug addiction, can qualify as an “impairment” under the definitions of a disability set forth in the ADA. See Reg’l Econ.Cmty. Action Program, Inc. v. City of Middletown, 294 F.3d 35, 46-47 (2d Cir. 2002); Altman v. New York City Health and Hosp. Co., 903 F. Supp. 503, 508 (S.D.N.Y. 1995). However, mere status as an alcoholic or substance abuser does not necessarily imply a “limitation” under the definition of a disabled individual under the ADA. Alcoholism and substance abuse are not per se disabilities under the ADA—a recovering drug addict or alcoholic must demonstrate that he or she was actually addicted to drugs or alcohol in the past, and that the addiction substantially limits one or more of his or her major life activities. See id.

  4. Congress did not expressly exclude current users of alcohol from the ADA’s coverage, even though current users of illegal drugs are excluded. See Mararri v. WCI Steel, 130 F.3d 1184-85 (6th Cir. 1997); Jurman v. Coca-Cola Bottling Co., 2003 WL 22331986 at *1 (S.D.N.Y. July 31, 2003). Nevertheless, employers appear to retain significant discretion under the “qualification” prong of the ADA cause of action. See, e.g., Bailey v. Georgia-Pacific Corp., 306 F.2d 1162, 1167 (1st Cir. 2002); Altman v. New York City Health and Hosp. Corp., 100 F.3d 1054, 1060 (2d Cir. 1996). For an in-depth discussion of how employers should deal with alcoholic employees, see Jeffrey S. Klein and Nicholas J. Pappas, “How to Deal With Alcoholic Employees,” New York Law Journal, October 7, 1996, p. 3.

  5. See United States Department of Labor, Office of the Assistant Secretary for Policy, Working Partners for an Alcohol- and Drug-Free Workplace, General Workplace Impact, available at (last visited Nov. 20, 2003).

  6. See id.; see also United States Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, Results from the 2002 National Survey on Drug Use and Health: National Findings (2002), available at; United States Department of Health and Human Services, Substance Abuse and Mental Health Services Administration, New Release: 22 Million in U.S. Suffer From Substance Dependence or Abuse (Sept. 5, 2003), available at

  7. 347 F.3d at 689.

  8. See Remarks of Senators Armstrong and Harkin, 135 Cong. Rec. S10,782 (daily ed. Sept. 7, 1989).

  9. See, e.g., Maddox v. Univ. of Tenn., 62 F.3d 843, 848 (6th Cir. 1995) (employers permitted to discipline for egregious or criminal conduct, including off-duty drunk-driving, regardless of disability); Despears v. Milwakee Cty., 62 F.3d 635, 637 (7th Cir. 1995) (alcoholic employee demoted for off-duty drunk driving arrest); Little v. F.B.I., 1 F.3d 255, 259 (4th Cir. 1993) (employer permitted to discipline for egregious or criminal conduct and could discharge an employee who was intoxicated while on duty and was involved in several off-duty alcohol-related incidents); see also Newland v. Dalton, 81 F.3d 904, 905 (9th Cir. 1996) (employer permitted to terminate employee who attempted to fire assault rifle in a bar as part of a “drunken rampage”).

  10. For more information on how employers may successfully implement or maintain drug testing programs to deal with drug abuse in the workplace, see Jeffrey S. Klein and Nicholas J. Pappas, “Implementing and Enforcing Drug-Testing Programs—Part I,” New York Law Journal, Aug. 3, 1998, at p.3. col. 1; Jeffrey S. Klein and Nicholas J. Pappas, “Implementing and Enforcing Drug-Testing Programs—Part II,” New York Law Journal, Oct. 5, 1998, at p.3, col. 1.