By Jim Cline and Jordan L. Jones
In DeLee v. City of Plymouth, the Court of Appeals for the Seventh Circuit held that a police officer returning from military leave was entitled to full longevity pay for his twelve years of employment under the Uniformed Services Employment and Reemployment Rights Act (USERRA). The Court noted that the City’s of Plymouth’s “longevity benefit is more appropriately characterized as a reward for lengthy service rather than as compensation for worked performed the preceding year” and therefore protected by USERRA.
In this case, a police officer brought suit against the City alleging that it violated USERRA when it prorated his annual longevity payment after he returned from serving eight months in the Air Force Reserve. The City had a program by which officers were given annual payments based on the number of years they had been on the force. When the officer returned from active duty, he was paid a prorated amount of $900 instead of $2,700 for twelve years of service. The officer argued that his longevity pay is a seniority-based benefit, which was protected by USERRA, and therefore should not have been prorated.
In contrast, the City argued that prorating the amount of the officer’s longevity pay based on time actually worked is a legitimate means of paying compensation for work actually performed; that the longevity pay was not a seniority-based benefit that was protected by USERRA. The City pointed to an ordinance that was passed to control costs that mandated that longevity pay be prorated when an officer was on military leave to support its argument.
The court noted that USERRA “requires employers to adhere to the ‘escalator’ principle, placing a returning servicemember at the ‘precise point he would have occupied had he kept his position continuously’ while away from the job for his military service” and this federal law supersedes state and local ordinances that conflict with it. Specifically, the Court pointed out that under USERRA:
A person who is reemployed . . . is entitled to the seniority and other rights and benefits determined by seniority that the person had on the date of the commencement of service in the uniformed services plus the additional seniority and rights and benefits that such person would have attained if the person had remained continuously employed.
The Court stated that in Alabama Power Co. v. Davis, the U.S. Supreme Court stressed that there are two axes of analysis for determining whether a benefit is a right of seniority secured by a veteran:
(1) whether the benefit would have accrued, with reasonable certainty, if the veteran had been continuously employed during his military service, and (2) whether the benefit is a “perquisite of seniority.”
The Court noted that in analyzing “prong two” of the Alabama Power test, it must identify “the real nature” of payments and reject an “employer’s attempt to ‘disguise’” payments based off a “use of a ‘compensated service’ formula to calculate the amount of payments.”
The Court found that “there is no question that a full longevity payment would have accrued but for [the officer’s] . . . leave of absence” and that these longevity payments are not compensation for work performed but seniority-based benefits protected by USERRA. The Court explained that the nature of the benefit, not the formula by which it is calculated, is the “crucial factor, ‘for even the most traditional kinds of seniority privileges could be as easily tied to a work requirement as to the more usual criterion of time as an employee.’” The Court stated that “the original purpose of [the City’s] . . . longevity pay for police was to reward them for lengthy service” and consequently “the ‘real nature’ of longevity pay forecloses the City’s argument that its prorated payments to police officers are compensation for work actually performed that year.”
This case is not as straightforward as it appears. Certainly courts have repeatedly ruled, as this court did, that USERRA requires that employees lose no service credit for wage purposes due to the period of time that they are engaged in service. In this case the Federal District Court had ruled that the nature of the payment for was wages earned during that year and not simply a service credit. The Seventh Circuit disagreed and characterized the wage payments as an incentive for time in service, not as a payment for hours worked during the course of the year.
This seems to be a generous interpretation that favored the employee. It isn’t clear that all courts would have arrived at this result, and certainly the lower court didn’t here. But it does demonstrate the seriousness with which courts take the USERRRA obligations that service members should not be penalized for their service.
