Limits on reemployment rights under USERRA

published in McAfee & Taft EmployerLINC | January 22, 2013

By Charlie Plumb

Under the Uniform Services Employment and Reemployment Rights Act (USERRA), employers may not discriminate against employees based on military service. USERRA also affords employees returning from military leave with reemployment rights; however, USERRA does not guarantee reemployment under all circumstances.

Work at Minco Products and military leave

veteranDouglas Milhauser began working for Minco Products as a maintenance technician in 2006. During the course of his employment, Milhauser took three military leaves of absence, the last beginning in March 2009. While on the job at Minco Products, Milhauser’s work performance was inconsistent, trending towards poor, earning him a written reprimand. The quality of his work was marginal, and some of his job duties were reassigned to other maintenance technicians.

In 2008, Minco Products’ business started having problems. Based on the loss of customer orders, Minco Products experienced its first annual loss. In an effort to cut costs, the company delayed the purchase of new equipment, reduced overtime, and reduced pay.

With customer orders still declining, these cost-saving measures were not enough. In March 2009, Minco Products eliminated 18 jobs. When that first round of job reductions was not enough, 32 additional jobs were eliminated in June.

When selecting employees for the job eliminations, seniority was not a significant factor. Milhauser’s supervisor was required to select four of the 13 employees he supervised for elimination. Selection was based on job duties, technical expertise, work attitude and work ethic. Taking these factors into account, as well as the fact that Milhauser did not possess unique skills and his areas of specialization were duplicated by others, the supervisor selected Milhauser as one of the four names for termination in his department. When Milhauser was discharged from military service and reported to Minco Products on June 3, 2009, he was terminated as part of the company’s second round of job cuts.

Milhauser filed a lawsuit against Minco Products under USERRA, claiming his layoff was discriminatory on the basis of his military service and that he was entitled to reemployment rights under USERRA. Milhauser argued that he was absolutely entitled to reemployment, unless reemploying him was impossible or unreasonable for Minco Products. Milhauser also contended that he could only be terminated as part of a reduction-in-force if termination was done automatically through seniority system selection, as opposed to the discretionary selection by the Minco Products’ supervisor.

Reemployment under USERRA

Under USERRA, returning servicemen like Milhauser are to be reemployed “in the position of employment in which the person would have been employed if the continuous employment of such person with the employer had not been interrupted by such service” (38 U.S.C. § 4313(a)(1)(A)). This is often called “The Escalator Principal.” Put another way, Milhauser has the right to return to a position with Minco Products he would have occupied had he continued to work for the company continuously, without his military absence. USERRA regulations issued by the Secretary of Labor point out that even under the “Escalator Principal,” an employee may be “reemployed in a higher or lower position, laid off, or even terminated,” depending on the circumstances (20 C.F.R. § 1002.194). A jury found in favor of Minco Products regarding Milhauser’s USERRA reemployment claims. In denying Milhauser’s reemployment claims, the jury properly found that Milhauser would have been subject to the June 2009 layoff regardless of his 2009 military leave absence. An appeals court affirmed the jury’s finding in Milhauser v. Minco Products, Inc., Case No. 12-1756 (8th Cir. Dec. 5, 2012).

Bottom line

Generally, returning servicemen are entitled to reemployment with their employers. The Milhauser case is unique, but shows that if an employer can demonstrate a returning serviceman would not have been working had they been continuously employed, USERRA’s reemployment rights are not guaranteed.