Seventh Circuit Holds That Federal Military Leave Statute Might Mandate Paid Leave

Employers—particularly those in Illinois, Indiana and Wisconsin—should revisit their military leave policies in light of the Seventh Circuit’s holding in White v. United Airlines Inc., No. 19-2546 (Feb. 3, 2021), that failure to provide paid military leave, while simultaneously offering paid time off for other absences such as for jury duty or sick leave, might violate the Uniformed Services Employee and Reemployment Rights Act (USERRA).  Judge Diane Wood wrote the opinion, which addressed this issue of first impression; she was joined by Judges Michael Brennan and Michael Scudder. On February 17, 2021, United Airlines filed a petition for rehearing en banc on the ground that the panel’s ruling was a “sudden and dramatic change in USERRA’s interpretation” since “virtually nobody thought the statute imposed a paid military leave requirement in any circumstances.”

USERRA protects servicemembers by mandating that employers provide leave to accommodate military leaves of absences and re-employ individuals who return to work after military service.  In White, an airline pilot brought a class action lawsuit on behalf of himself and other military reservists who took periodic unpaid leaves of absence to attend military training; the plaintiff alleged that his leave should have been paid, like other short-term absences that were paid, including jury duty and sick leave.  The plaintiffs argued that their employers’ failure to provide comparable paid time off for military leave violated USERRA’s guarantee that absent servicemembers are entitled to the same “rights and benefits” provided to other employees.

The district court dismissed the plaintiffs’ USERRA claims, reasoning that the statute does not guarantee paid leave.  On appeal, the Seventh Circuit reversed, emphasizing that USERRA defines “rights and benefits” broadly, to include: “any advantage, profit, privilege, gain, status, account, or interest (including wages or salary for work performed) . . . [and] rights and benefits under a pension plan, a health plan, an employee stock ownership plan, insurance coverage and awards, bonuses, severance pay, supplemental unemployment benefits, vacations, and the opportunity to select work hours or location of employment.”  38 U.S.C. § 4303(2).  Simply put, the court determined that this broad language encompasses paid leave.

The Seventh Circuit considered and rejected several arguments put forth by the employers that “rights and benefits” do not include paid leave, including that the phrase “for work performed” in parentheses demonstrates Congress’s intent to exclude paid leave.  The court also rejected the policy argument that it was imposing a “costly sea-change” on employers by mandating paid military leave, observing that fewer than one percent of employees in the United States are reservists.

It is worth emphasizing that USERRA does not itself mandate paid leave, but rather requires that employees on military leave receive comparable treatment to those on non-military leaves of absence.  The Seventh Circuit remanded to the district court to decide whether other types of paid leave available to the pilots were “comparable” to military leave and pointed to the Department of Labor’s guidance on this issue, which entails considering factors such as the duration and frequency of leave.

Again, in light of this ruling, employers should review their military leave policies and evaluate benefits provided to employees during comparable leaves of absence.  Stay tuned for further legal developments in this area.