December 2012

Employers are generally aware that the Uniformed Services Employment and Reemployment Rights Act (USERRA) requires that an employee returning from military leave be placed in the position he or she would have occupied “with reasonable certainty” had his/her employment not been interrupted by military service. This reinstatement right is commonly referred to as the “escalator principle.” However, what if while an employee is on military leave the employer experiences a downturn in business or comes across other extenuating circumstances and needs to do a reduction in force or eliminate positions? Moreover, what if one of the positions targeted for elimination is held by the employee out on military leave and he returns to find no job waiting? Can the employer lawfully eliminate that position leaving the employee without a job? The Eighth Circuit Court of Appeals recently upheld a jury decision that determined the answer to this question is yes.

The facts of this case are fairly straightforward: The employee worked as a maintenance technician and had taken military leaves in the past, with the most recent one beginning in March of 2009 with clearance to return to civilian employment in May of 2009. Accordingly, the employee reported back to work with his civilian employer on June 3, 2009. However, at the end of 2008 the company posted its first ever annual loss and business continued to decline into 2009. In order to address this situation, the employer began cutting costs, delayed purchases and unfortunately in March of 2009 had to enact a reduction in force, eliminating eighteen (18) jobs. Despite that reduction, the company’s position did not improve and in June of 2009 it had to enact a second round of cuts, eliminating thirty-two (32) more positions.

As part of this second round of cuts, the employee’s supervisor was asked to name four employees to be considered for termination. Nominations were based on job duties, technical expertise, and subjective factors such as attitude and work ethic. Ultimately the supervisor nominated the employee on military leave for termination. The supervisor stated this was based on the fact that prior to taking leave the employee’s performance was inconsistent and poor, all of which was supported by co-worker complaints and disciplinary documents. Further, the supervisor stated that the employee’s areas of specialization duplicated those of his co-workers and as a result his duties could more easily be absorbed by others. Therefore, when the employee reported to work from leave on June 3, 2009, he was informed that his position was eliminated in the reduction in force and that he no longer had a job.

Thereafter the employee brought an action alleging his employer violated USERRA because it failed to reinstate him after his return from military leave. The employer, however, argued it did not violate USERRA because in light of the required reduction in force and the employee’s prior work history, the employee’s position would have been eliminated resulting in his employment termination regardless of his military service. After trial the jury agreed and the Eighth Circuit has now upheld the jury’s determination.

The Court focused on USERRA’s regulations that state, among other things, “[d]epending on the circumstances, the escalator principle may cause an employee to be reemployed in a higher or lower position, laid off, or even terminated.” Therefore, the court ruled that even though the employee was terminated upon his return from military leave, the termination was consistent with USERRA because the employer provided evidence that regardless of the military leave, the employee would have been included in the reduction in force. In sum, the position the employee would have returned to no longer existed, having nothing to do with taking leave.

This decision illustrates that although USERRA has strong reinstatement rights, it is on par with other leave laws, such as those under the FMLA, by affirming that an employer is not required to reinstate an employee if it has a justifiable reason for taking action against an employee that is wholly separate from the leave. In this case, the employer understood its burden to show it would have made the same decision regardless of the military leave and had ample evidence to support its decision. Because the burden lies with the employer, decisions to take any adverse action against an employee taking or returning from military leave, or any other type of leave, should only be done after careful consideration of the facts and circumstances and with the advice of competent legal counsel. Wessels Sherman’s attorneys are experienced in dealing with USERRA and other leave laws providing reinstatement rights and can help guide you when decisions have to be made regarding employees who are on or returning from protected leave.