When an employer believes an employee may have mental health concerns, requiring counseling as a condition of continued employment can create serious legal risk. And after a 2024 Supreme Court decision lowered the legal bar for what counts as an “adverse action,” that choice could be a fast track to the courtroom.
TL;DR: A hospital billing employee with a history of productivity and behavioral issues was put on a performance plan. After she disclosed personal struggles, prompting HR reports of “talks of suicide,” the plan was revised to require EAP counseling as a condition of continued employment. She signed the plan but refused to let the EAP confirm her attendance and compliance, calling the requirement tied to her job discrimination based on a perceived mental health disability. The Tenth Circuit vacated the case’s dismissal after the Supreme Court lowered the standard for proving an adverse action. Even well-intentioned job conditions tied to mental health can now be riskier than you think.
Counseling as a job condition leads to termination
An employee in a hospital’s physician billing department worked there from 2014 to 2019, appealing medical claims and handling special projects. Over the years, she received multiple corrective actions for productivity and counseling for behavioral concerns.
In August 2019, after she disclosed personal struggles to co-workers and supervisors, HR received reports of “talks of suicide.” A planned performance improvement plan was revised to require participation in the company’s employee assistance program as a condition of continued employment.
She signed the plan but refused to let the EAP confirm her attendance and compliance with counseling recommendations. After consulting a lawyer, she declined and was terminated. She later filed suit under the ADA Amendments Act and the Rehabilitation Act, claiming the employer’s actions were based on a perception that she had a mental health disability.
The trial court applies the old standard
To prevail on an ADA discrimination claim, an employee must show she has a disability under the statute (or is perceived as having one), is qualified to perform the job with or without reasonable accommodation, and suffered an adverse employment action because of the disability. In this case, the dispute centered on the third element.
Before the Supreme Court’s 2024 decision in Muldrow v. City of St. Louis, the Tenth Circuit defined an adverse employment action as one that caused a significant change in employment status – for example, hiring, firing, failure to promote, reassignment with substantially different responsibilities, or a decision causing a significant change in benefits. This higher threshold meant that more minor changes, even if unwelcome, generally did not qualify.
Applying that definition, the district court concluded that requiring participation in the EAP did not cause a significant change in the employee’s employment status. It found her termination was for refusing a condition of her performance plan, not because of a perceived disability.
The appeal under the new standard
While the case was on appeal, the Supreme Court in Muldrow replaced the significant-change test with a lower threshold: some harm respecting an identifiable term or condition of employment. Under this standard, an employer’s action must leave the employee worse off, but it no longer needs to be a major change in status or benefits.
Though Muldrow arose under Title VII, the Tenth Circuit, like other courts, applied that new definition to ADA claims, vacated the dismissal, and sent the case back for the district court to decide whether requiring participation in the EAP and the related form caused some harm to a term or condition of employment.
What employers should know
- The adverse action bar is now lower. Even less severe changes, if they cause some harm, can qualify under both Title VII and the ADA.
- Mandatory counseling tied to job retention can be risky. It may support a discrimination claim if connected to a perceived disability.
- Tread carefully with performance plans for conditions involving health treatment or perceived disabilities. These can raise ADA concerns, and any such requirements should be justified, documented, and legally vetted.
Bottom line: This decision does not decide whether the counseling requirement was illegal – only that the lower standard means the claim gets another look. Employers should be aware that more ADA claims involving health-related conditions or perceived disabilities could survive early dismissal under this lower standard, but the outcome here will depend on the lower court’s ruling.