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Seventh Circuit: Paid Leave May Be Required During Military Service

February 08, 2021

The US Court of Appeals for the Seventh Circuit on February 3 reinstated an airline pilot’s putative class action lawsuit alleging that United Airlines violated the Uniformed Services Employment and Reemployment Rights Act (USERRA) by failing to provide paid leave and profit-sharing-plan credit to reservists on military leave. Becoming the first federal appeals court to address the issue, the Seventh Circuit held in White v. United Airlines, Inc., et al. that USERRA’s requirement that employees on military leave receive the same “rights and benefits” as those on comparable, nonmilitary leave types mandates that employers provide paid military leave to the same extent that they provide pay during other absences, such as jury duty and sick leave.

THE COURT FINDS PAID LEAVE IS AMONG USERRA ‘RIGHTS AND BENEFITS’ BUT LEAVES OTHER IMPORTANT QUESTIONS UNANSWERED

In White, United’s collective bargaining agreement provided pilots pay during short-term leaves of absences, such as jury duty and sick leave, but did not provide paid military leave. United also maintained a profit-sharing plan that credited pilots based on the wages they earned whether from working or from paid leave. Eric White, a United pilot who had taken periods of short-term military leave to complete reserve duty, filed suit challenging that policy. The federal trial court dismissed the case, holding that White’s interpretation of USERRA would create a burden on private employers not intended by Congress, and that jury duty and sick leave are not comparable to short-term military leave for purposes of determining whether like “rights and benefits” should be conveyed.

The Seventh Circuit reversed the trial court’s decision and remanded the matter to proceed with discovery. In assessing whether paid leave constitutes one of the “rights and benefits” that an employer must provide for military leave to the same extent as comparable leaves, the court broadly interpreted the statutory definition of those terms—i.e., all “terms, conditions, or privileges” of employment—to include compensation during a leave of absence. Critically, the court not only rejected United’s various arguments based on statutory interpretation, but it also found unpersuasive United’s dire predictions about the potential financial and administrative burdens to employers. In the court’s view, such concerns were overstated because less than one percent of employees in the national economy are reservists and, of those, some are sure to work for employers who already provide paid military leave.

The court, however, declined to rule on certain important issues. First, it did not decide whether short-term military leave was comparable to jury duty or sick leave at United, concluding that the issue was primarily a question of fact that required discovery. However, the Seventh Circuit chided the trial court’s observation that jury duty and military leave were not comparable as a matter of law because joining the military, unlike serving on jury duty, is voluntary. The Seventh Circuit found that what actually matters is the timing and whether the employee has control over when to take the leave.

The court also did not address White’s contention that he was entitled to his full regular wages while on military leave, as opposed to the difference between that amount and his military pay. The Seventh Circuit, however, pointed out that employees on jury duty receive full wages without any offset, suggesting that similar treatment might be required for employees during military service.

PRACTICAL CONSIDERATIONS

Although various federal trial courts have addressed whether paid military leave may be required under USERRA, the issue may garner more attention—especially from plaintiffs’ attorneys—now that White has decided the issue favorably for employees. In its decision, the Seventh Circuit also signaled that jury duty and sick leave may be comparable to military leave for purposes of conferring comparable benefits, and that employers who have generous non-military leave policies may be on the hook to service members for their full salary during service-related absences.

Most large employers maintain military leave policies that provide differential pay for short-term military, but White could be the catalyst for opportunist litigants to challenge those policies as insufficient—both in terms of the amount and duration of pay. Potential exposure is magnified by the fact the USERRA has no statute of limitations, and older, less generous military leave policies could also be targeted. Employers should review their military leave policies against the backdrop of the Seventh Circuit’s decision and consider whether adjustments are advisable.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Princeton
Michelle Seldin Silverman
Richard G. Rosenblatt
Jason J. Ranjo

Silicon Valley
Michael D. Schlemmer