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7th Circuit: Sick Leave Policy Not Seniority-based Benefit Under USERRA

January 31, 2022

The Uniformed Services Employment and Reemployment Rights Act (USERRA) is a federal statute that protects military servicemembers’ and veterans’ civilian employment rights. In addition to requiring employers to put individuals back to work in their civilian jobs after military service, USERRA mandates they provide employees on military leave with any seniority-based benefit they would have accrued but for the leave. In a class-action lawsuit originally filed in an Illinois district court, the U.S. 7th Circuit Court of Appeals (which also covers Wisconsin) answers whether the employer’s sick leave benefit is a seniority-based benefit under the Act.

Facts

Michael Moss was a pilot employed by United Airlines. Throughout the relevant period, he also held a commission as a lieutenant colonel in the reserve component of the U.S. Marine Corps. In August 2016, he sued United individually and on behalf of other class members, alleging the airline violated USERRA by denying sick-time accrual to pilots on military leave. He argued:

  • Sick time is a seniority-based benefit and thus should have continuously accrued; and
  • Sick-time accrual was available to pilots on comparable periods of leave.

The district court dismissed the sick leave claim on summary judgment (without a trial), and Moss appealed. Only his first argument was at issue on appeal to the 7th Circuit.

United’s Sick Leave Policy

Under United’s sick leave policy, set forth in a collective bargaining agreement (CBA), five hours of sick leave would be deposited in a pilot’s sick leave bank for each “bid period” of active employment, up to a maximum of 1,300 hours. A bid period was essentially one month. “Active employment” was defined as when a pilot is available for assignment, on sick leave, or on vacation for any part of the bid period

All pilots accrued a consistent five hours of sick leave per bid period. The policy also provided (1) sick leave with pay would be granted only in cases of actual sickness, and (2) upon separation of employment, pilots wouldn’t receive payment for any balance in their sick leave bank.

Law’s Application to United’s Sick Leave Benefit

Under USERRA, workers reemployed after military service are entitled to seniority and other rights and benefits determined by seniority that they had on the date of the commencement of military service plus additional seniority and rights and benefits they would have attained if they had remained continuously employed.

Under what is known as USERRA’s “escalator principle,” returning servicemembers don’t step back on the seniority escalator at the point they stepped off but reenter at the precise point they would have occupied had they kept the position continuously during service. Under the principle, returning servicemembers also receive any seniority-based benefits to which they would have been entitled had they remained continuously employed.

The test applied to determine whether a benefit is seniority-based asks: First, would the benefit have accrued, with reasonable certainty, if the servicemember had been continuously employed by the private employer? Second, is the benefit in the nature of a reward for length of service?

The 7th Circuit answered “yes” to the test’s first prong. Moss would have continued to accrue sick leave with reasonable certainty if he had been employed continuously with United. Under the airline’s policy, sick leave was a benefit awarded automatically. No discretion was involved.

The 7th Circuit answered “no” to the second prong. The court thought it was clear the sick leave in question wasn’t a reward for length of service, concluding rather it was in the nature of compensation for services rendered. The court considered whether the sick leave benefit was backward-looking compensation for work performed or a future-oriented longevity incentive.

In addressing the inquiry, the 7th Circuit noted the sick leave benefit had no vesting period. All pilots earned five hours per bid period starting on their first day of employment. A lack of vesting threshold suggested the sick-time accrual wasn’t tied to seniority but was deferred compensation designed to cover periods when an employee is unable to work because of illness.

Additionally, United’s pilots didn’t accrue more sick time the longer they had been at the airline, which also suggested sick leave wasn’t a product of seniority. The 7th Circuit compared the sick leave to other benefits (such as pensions, severance pay, and supplemental unemployment benefits) which, unlike sick time, incentivize workers to continue working at a company and give them a reason to stay at a job. Sick leave was merely a respite, a break from work when ill, as compensation for services rendered.

The 7th Circuit also noted United’s sick leave policy contained a work requirement, pointing out that benefits conditioned on a bona fide work requirement are more likely to be compensation rather than a reward for long service. By conditioning sick leave accrual on active employment, the airline conditioned benefit accrual on work, according to the court.

Based on all the above factors, the 7th Circuit concluded United’s sick leave benefit wasn’t a seniority-based benefit under USERRA. Moss v. United Airlines, Inc., No. 20-3246 (7th Cir., Dec. 14, 2021).

Bottom Line

The principles set forth in USERRA may appear relatively straightforward, but their application in a practical setting isn’t always easy and is dependent on each policy’s particular facts. In other words, you shouldn’t always assume that in all circumstances a sick leave benefit isn’t seniority-based for the Act’s purposes. Also, keep in mind various states, including Wisconsin, may have laws providing reemployment rights and benefits to covered military servicemembers.

This article, slightly modified to note recent updates, was featured online in the Wisconsin Employment Law Letter and published by BLR®—Business & Legal Resources. Reproduced here with the permission of BLR®—Business & Legal Resources.