It may seem common-sensical that a handicapped worker is more likely to suffer on-the-job injury than someone with no disability, but employers who use that rationale to make hiring decisions had better have hard facts to back up their conclusions. That's the thrust of a tough new ruling from the U.S. Court of Appeals in San Francisco on the reach of the 1973 Rehabilitation Act.

The decision comes in a suit by an epileptic who claimed that the U.S. Postal Service refused to hire her as a letter-machine operator because of fears she would hurt herself in an accident. The trial court had said that an employer can legally refuse to hire a handicapped person if there is "an elevated risk" that the worker would have a serious accident, but the appellate judges rejected that interpretation of the statute. The case is the first in which a federal court has had to define what the 1973 law meant when it prohibited government agenices from discriminating against any "qualified handicapped person"; the interpretation also applies to private employers who get some of their funding from Uncle Sam.

The Aug. 9 ruling, in Mantolete v. Bolger, agrees that sometimes an applicant's handicap so clearly increases the risk of an on-the-job injury that the employer can say no for that reason alone, but stresses that such situations are few and far between. More important, the ruling bars employers from making sweeping judgments about either the difficulty of jobs or the extent of handicaps: Job decisions must be based on applicants' medical and work records. Their reasoning: A disability that might keep one person out of a job might not bar another applicant with a better track record of overcoming the handicap.

But employers must consider more than the records, Judge Thomas Tang explained, even when the evidence suggests it would be dangerous to give the handicapped person the job. Employers also must consider the job applicant's suggestions for making the job safer: buying special equipment, for instance, or adding safety devices to existing machinery. Only if the cost of making those changes is unreasonably burdensome -- after taking into account the operation's ability to absorb some extra cost -- does a handicap become a legitimate reason for rejection.

In other cases, courts ruled that:

*Owners of businesses can avoid U.S. capital-gains taxes if they are willing to move north of the border with their wealth. That's just what Tedd N. Crow did in 1978 in a deal that only now has been approved by the U.S. Tax Court. Four days after Crow moved to Canada, he formally renounced his U.S. citizenship. Exactly one week later, he sold a company he owned for $6.4 million. The tax code gives the Internal Revenue Service the power to collect taxes from former citizens if they gave up their citizenship merely to avoid taxes. Crow freely admitted that avoiding taxes was his primary reason for moving north, but insisted that he is shielded by a 1942 treaty between Ottawa and Washington that bars collection of capital-gains taxes. Judge Mary Ann Cohen agreed. She noted that in the official Treasury explanation of the 1965 provision giving the IRS authority to go after those who have shed U.S. citizenship, the department said the new statutory language would not override any existing international tax treaties. (Crow v. Commissioner, Aug. 21)

*It may be illegal for an insurance company to force a claimant to go to trial. A California woman who won a jury award of just over $50,000 in a medical malpractice case then turned around and sued her clinic's insurance carrier. Her contention: She would not have incurred litigation expenses if the company had been quicker to investigate her case and had made a counteroffer when it rejected her bid to settle. State insurance law says claims must be processed promptly, she argued. The trial court threw out her suit, but now the U.S. Court of Appeals in San Francisco has reinstated it. Enough questions remain about the insurance company's actions that a jury might decide it had violated the law, the appellate panel decided. (Pray v. Foremost Insurance, Aug. 6)

*A contractual promise not to compete may mean more than it says. A new ruling from the North Carolina Supreme Court enforces the "spirit" rather than the letter of a lease clause that bans competition with another firm, pushing the ban beyond what is spelled out in the document. A building owner who had promised not to compete with a bicycle sales operation leased space in the same commercial location to a customer who, in turn, subleased it to another bike outlet. The justices decided that violated an agreement not to compete. (Bicycle Transit Authority v. Bell, Aug. 13)

*Politicians can be as biased as they want in hiring. The U.S. Court of Appeals in New Orleans recently threw out a sex discrimination case brought by a woman lawyer who sued a county after she failed to get a job as an assistant district attorney. The controversy hinged not on whether her rejection was based on sex, but on whether the ban in the 1964 Civil Rights Act even applied to her situation. The judges decided it did not, because the statute specifically exempts the "personal staff" of elected officials. The district attorney is unquestionably elected, but arguments arose over whether his assistants are "personal staff." Given that state law lets district attorneys hire whomever they please and gives no control over those employes to county personnel departments, the jobs can be considered exempt from the equal employment rules, the appeals court concluded. (Teneyuca v. Bexar County, Aug. 2)