Americans with Disabilities Act Handbook

An overview and resource handbook about the Americans with Disabilities Act (ADA)
for employers and their HR professionals

Part 5:

Undue hardship

Undue hardship refers to any accommodation that causes significant difficulty or expense to you as employer. To determine whether an accommodation represents an undue hardship for your business, you need to consider:

  • the cost of the proposed accommodation, particularly balanced against the projected benefit of the accommodation;
  • your business unit's finances;
  • your company's finances;
  • the number of employees at your facility;
  • the nature of your operation; and
  • the effect of the accommodation on your company.

According to a Job Accommodation Network (JAN) study, employers reported that providing accommodations resulted in such benefits as retaining valuable employees, improving productivity and morale, reducing workers' compensation and training costs, and improving company diversity. These benefits were obtained with little investment. The employers in the study reported that a high percentage (57%) of accommodations cost absolutely nothing to make, while the rest typically cost only $500.5 Affordable accommodations can include an ergonomically correct workstation, a larger screen or fonts for visually impaired employees, or a flexible schedule in certain circumstances.

The ADA and confidential information

The ADA has specific rules prohibiting employers from gathering disability-related information, either in the form of medical examinations or disability-related questions. It also has rules around how to keep confidential information once it is received. The rules vary depending on where in the hiring or employment process you are with an individual.

In the hiring process, if an employee is pre-offer, the ADA prohibits all disability-related questions and medical examinations, even if the questions or examinations are related to the job. It is permissible to describe the job and ask if the applicant can perform the functions of the job, with or without reasonable accommodation. Avoid asking about whether the applicant has a disability that would prevent the person from doing the job. Keep the focus on the applicant’s abilities.

At the stage after an offer is made but before an applicant begins work, you may ask disability-related questions so long as all entering employees in the job category are asked the same questions or given the same examinations. Your job offer can be conditional on a satisfactory result for all potential employees.

Once an employee has begun work, you may ask disability-related questions or require medical examinations only if they are job-related or consistent with business necessity. At this stage, you may also conduct voluntary medical examinations as part of an on-site health and wellness program. Once a person is hired, you may always inquire about the person's ability to perform job-related functions. Again, it is most prudent to focus on abilities and not disabilities.

Once you have sensitive medical information (either doctor's notes, notes from the employee describing his or her condition, or examination results), you must maintain that information with the same confidentiality as medical records, and you cannot use the results to discriminate against a qualified individual on the basis of disability. You should keep it in a separate file in a secure file cabinet to avoid any access of that information by anyone else.

As always, to ensure that you are meeting all privacy requirements, you should check with your own legal counsel to make sure you understand your obligations under both federal laws and your state’s privacy laws. Also, work with your legal counsel to keep track of the EEOC rules on how the ADA applies to your wellness program.

Remedies under the law

If an applicant or employee with a disability believes discrimination has occurred in the workplace, the following are examples of remedies available to him or her that could affect your business:

An injunction — a court could order you to provide auxiliary aids or services, modify existing policies, practices or procedures, or make facilities accessible.

A restraining order — a court could forbid you from taking action that may be discriminatory, such as firing an employee instead of making reasonable accommodation.

Compensatory and punitive damages — a court could assess damages to be paid by your company based upon the size of its employee population:

Number of Employees Damages Value
15 - 100 employees $50,000
100 - 200 employees $100,000
201 - 500 employees $200,000
501+ employees $300,000

Court costs, attorney's fees and expert witness fees — a court could order your business to reimburse the applicant or employee for these costs and fees, which are often higher than the combined punitive and compensatory damages, and are not subject to any cap.

Tax credits that can help

Your business may be eligible for tax credits that can help ease the financial impact of an accommodation. You may also obtain financial assistance from vocational rehabilitation agencies, or, in undue hardship situations, perhaps from the employee being accommodated. Any assessment of undue hardship, however, must be based only on the net cost to your company, not on the total cost of the accommodation.

A particularly helpful publication produced by the U.S. Department of the Treasury, Internal Revenue Service (IRS), in coordination with the U.S. Department of Health and Human Services (HHS), Office on Disability, is “Living and Working with Disabilities: Tax Benefits and Credits.” It can be accessed at or by calling 800-829-3676 (Voice) or 800-829-4059 (TTY/TDD).

Tax credits are constantly shifting; ask your tax advisor for the appropriate IRS form that must be completed or more information about these tax incentives.