The US Court of Appeals for the Third Circuit held on August 10 in Travers v. Federal Express Corporation that paid leave is among the “rights and benefits” that the Uniformed Services Employment and Reemployment Rights Act (USERRA) requires for employees on military leave if an employer provides them to employees on comparable, nonmilitary leave types, such as jury duty and sick leave. The ruling, which is the second by a federal appeals court to make a similar holding after the Seventh Circuit’s decision in White v. United Airlines, Inc. et al., will likely lead to more litigation around unpaid military leave, and makes it even more critical for employers to review their policies to limit risk.
Gerard Travers served in the United States Navy Reserve while working for FedEx. He received no compensation from his civilian employer during periods of military leave. As alleged, however, FedEx paid employees during periods missed for jury duty, illness, and bereavement, among other reasons. Travers challenged FedEx’s military leave policy on behalf of a putative class, but a district court in Pennsylvania dismissed his claims, holding that paid leave was not a “right and benefit” under USERRA. The Third Circuit reversed.
First, the Third Circuit rejected FedEx’s argument that the “benefit” at issue was “paid military leave” as opposed to paid leave generally. The court found that this reading “veers away from the text of USERRA,” which “describes a process for evaluating alleged disparate treatment of service members on military leave,” and does not “create a class of rights and benefits.” In other words, the court disagreed with FedEx’s reliance on “extra-textual labels”—i.e., the distinction between “paid leave” and “paid military leave”—and focused its inquiry on whether USERRA “extends a right and benefit in the form of pay to the group of employees who miss work for non-military reasons, but then denies pay to the group absent for military service.”
The Third Circuit held that the statutory phrase “benefit of employment”—as defined by USERRA to mean “terms, conditions, or privileges of employment”—“reaches a wide range of benefits, including payment during leave.” This broad reading of USERRA mirrors the one taken in White, though the Third Circuit’s opinion contains no substantive discussion of the Seventh Circuit case. Both courts, however, also rejected a number of similar text-based arguments seeking to narrow USERRA’s reach as conflicting with the “ordinary meaning” of the statutory language and the legislative history. According to the Third Circuit, “It all tells the same story: Congress enacted a broad definition encompassing a wide range of benefits illustrated, not exhausted, by a list of examples.” Further, the court concluded: “Best understood, USERRA does not allow employers to treat servicemembers differently by paying employees for some kinds of leave while exempting military service.”
Notably, the Third Circuit declined to address the issue whether military leave was, in fact, “comparable” to any paid leave type offered by FedEx. As in White, the court concluded that the question was “for the District Court to determine on remand.”
Since White, plaintiffs around the country have commenced putative class action suits against employers in various industry sectors, including airlines and retailers. The Third Circuit’s decision in Travers will only proliferate litigation centering on unpaid military leave.
As we noted when covering White, these cases will focus not only on whether employers are paying employees on military leave and “comparable” leave types, but also whether the “differential” pay offered by many employers is sufficient under USERRA. Moreover, the potential exposure arising from any noncompliant policies is amplified by the fact that USERRA generally has no statute of limitations. All this makes it critical for employers to review their policies as soon as possible to limit any possible risk.
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