Benefits and Compensation

Escalator Principle: Are Returning Servicemembers Entitled to Bonuses?

The federal Uniformed Services Employment and Reemployment Rights Act (USERRA) gives many rights to employees who leave work to enter active military service. First and foremost, of course, is the right to reinstatement when they are released from active duty. But it’s not just reinstatement in the job the employee left, however.Servicemember

The employee is entitled to be reinstated into the position he would have held if his employment hadn’t been interrupted by military service. This is called the “escalator principle,” the analogy being that the employee is entitled to be placed back on the employment status escalator where he would have been if he hadn’t stepped off to enter military service.

Applying this principle is reasonably simple when job advancement is strictly a matter of seniority. But how is it applied when advancement depends on additional training and passing qualifying tests? That was the central question in a case recently decided by the 9th Circuit—which covers Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington.

Employment by FedEx

“Dominic” was a pilot for FedEx, assigned to fly a smaller, “narrow-body” jet. FedEx had an extensive training program for pilots like Dominic to become qualified to fly a larger, “wide-body” jet. The training was demanding, requiring the passing of difficult exams at each stage, and not all pilots selected for it were able to successfully complete it.

Dominic was selected for the training. However, just before his training was to start, he was recalled to active military service. During the 3 years he remained on active duty, FedEx and the union that represented the pilots negotiated a new labor agreement, and FedEx offered its pilots a “signing bonus” if the new contract was ratified. The bonus for the pilots of wide-body planes was higher than the bonus for the pilots of narrow-body planes. The bonus was payable to all active pilots and those absent on military service (after they returned to FedEx). The labor agreement was ratified, and FedEx paid the bonuses to active pilots.

When Dominic returned to FedEx at the conclusion of his military service, the company paid him the smaller bonus because he had not yet qualified to become a wide-body pilot. However, Dominic promptly entered the training program, successfully completed it about 3 months later, and became a wide-body pilot. He sued FedEx, claiming entitlement to the larger bonus.

How Does Escalator Principle Apply?

The escalator principle requires that a returning servicemember be given the status he would have been “reasonably certain” to have attained absent the leave for military service. Although it’s most commonly applied to determine placement in higher- or lower-level jobs (depending on what had transpired during the employee’s absence), it also applies to benefits that flow from length of service.

To apply the “reasonably certain” criteria, courts use both a “forward-looking” test and a “backward-looking” test. First, the court must determine whether it appears, as a matter of foresight, that individuals like the person in question who successfully completed the required training would have obtained the position if their employment had not been interrupted by military service.

Second, if so, the court determines whether, as a matter of hindsight, the person either has or would have completed the necessary prerequisites for the position.

Only the first determination was in question because following his return to work, Dominic did in fact pass the training and became a wide-body pilot.

Reasonable Certainty

The court next addressed the question of whether it was reasonably certain that Dominic would have qualified and become a wide-body pilot if he hadn’t left for military service. FedEx argued that the answer was “no” because achieving that position wasn’t automatic merely based on the passage of time, but required skill, ability, and the judgment of the flight instructors. In support of that argument, it emphasized that not everyone selected for the training passed it.

The 9th Circuit panel disagreed, noting that absolute certainty wasn’t required. Pointing out that Dominic had diverse and long experience as both a military and a civilian pilot, his past job performance was good, he was selected for the training, and trainees were given multiple opportunities to pass portions of the training they initially failed, the court concluded that there were sufficient facts to support the trial court’s conclusion that, as a matter of foresight, it was reasonably certain Dominic would have become a wide-body pilot but for his absence for military service. Therefore he was entitled to the higher bonus. Huhmann v. Federal Express Corporation, Case No. 15-56744 (9th Cir., November 2, 2017).

Understand Your Obligations Under USERRA

Correctly applying USERRA can be difficult, especially in unusual circumstances. Advice from experienced counsel is often warranted.

This article originally appeared in the February issue of Oregon Employment Law Letter.