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FedEx shouldn’t have denied signing bonus for higher pay grade to pilot called to active duty

By Ronald Miller, J.D.

An Air Force reservist called to active duty just days before he was scheduled to begin training as a wide-body pilot at FedEx was improperly denied the $17,700 signing bonus he would have earned had he not served in the military, ruled the Ninth Circuit. The appeals court concluded that FedEx was not allowed to use the employee’s failure to qualify as a wide-body pilot to justify paying him a lower bonus if that failure to qualify was due to his military service. Since his bonus was based on his job position, and since FedEx was required to reemploy him in the “job position that he would have attained with reasonable certainty” had he not been deployed, his military service was a “substantial factor” in FedEx’s failure to pay the higher signing bonus (Huhmann v. Federal Express Corp. dba FedEx Express, November 2, 2017, Bea, C.).

The employee was a commissioned officer in the Air Force Reserve. He was hired by FedEx in 2001 to pilot a Boeing 727 aircraft, a “narrow body” aircraft for pay grade purposes. He was later selected for training to be a first officer on a McDonnell Douglas MD-11 aircraft, a “wide-body” aircraft that would qualify him for a higher pay grade. That training was to begin on February 19, 2003, but on February 7, the employee was mobilized for active duty. He was deployed overseas for the next 3 1/2 years.

After completing his military service, the employee was returned to active pay status with FedEx on December 1, 2006. Upon his return, he resumed training to become a first officer on a wide-body aircraft. After successfully completing training, he was activated as a wide-body pilot on February 22, 2007.

Bonus letter. While the employee was still on active duty, FedEx issued a bonus letter to the pilots’ union that offered a signing bonus to FedEx crewmembers if the union ratified a proposed collective bargaining agreement. The employee was a member of the bargaining unit. The bonus letter explained that pilots employed by FedEx on the day the CBA was signed would receive a full signing bonus applicable to their pay grade. Pilots on military leave would receive their signing bonuses upon returning to employment with FedEx. The signing bonus for pilots of narrow-body aircraft was $7,400, while that for a wide-body pilot was $17,700.

Upon returning to FedEx, the employee was paid a signing bonus of $7,400. He filed suit alleging that the FedEx violated USERRA when it failed to pay him the signing bonus owed to a wide-body pilot.

Intersecting doctrines. After a bench trial, a district court entered judgment in favor of the employee. The district court found that his military leave was a substantial factor in his receipt of the smaller signing bonus, and determined that FedEx could not demonstrate that it would have denied him the higher signing bonus absent his military leave. In performing this analysis, the district court relied on two intersecting doctrines—the “escalator principle” and the “reasonable certainty test”—used to determine the status or position to which a returning service member is entitled.

The “escalator principle” provides that a returning service member not be removed from the progress (escalator) of his career trajectory, but rather return to a “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.” The “reasonable certainty test” aids in determining the returning service member’s position on the “escalator,” inquiring into the position a returning service member would have been “reasonably certain” to have attained absent military service.

Forward-looking and backward looking. Courts applying the “reasonable certainty test” use both a forward-looking and backward looking approach. First, the court determines whether it appears, as a matter of foresight, that individuals like a given claimant who successfully completed training would have obtained a certain position had employment not been interrupted by military service. The court next analyzes whether, as a matter of hindsight, a particular claimant either has, or would have, completed the necessary prerequisites for a position.

Applying these principles, the district court found it reasonably certain that the employee would have become a wide-body pilot prior to October 30, 2006 (the date the CBA was signed) and therefore would have been owed the bonus afforded to that higher status. It therefore determined that the employee was owed the higher signing bonus. FedEx appealed.

Arbitration of dispute. As an initial matter, FedEx pointed out that it was an air carrier subject to the RLA, which mandates arbitration of “minor disputes.” FedEx argued that because the bonus letter was treated as part of the CBA, and because analyzing the bonus letter was necessary to adjudicate the employee’s rights, his claim was a minor dispute. However, the Ninth Circuit observed that the right awarded by USERRA did not arise out of the CBA nor did it rely on an interpretation of the contract. The RLA does not preempt causes of action to enforce rights that are independent of the CBA.

Here, the basis on which the employee made his claim was the independent legal right under USERRA to be returned to the position and status at FedEx he would have enjoyed had he not left for military service. Because the terms of the bonus letter did not require interpretation, the right the employee sought to vindicate was based solely on the USERRA statute.

Substantial or motivating factor. Next, the appeals court rejected FedEx’s contention that the escalator principle and reasonable certainty tests were “not applicable to discrimination claims” under 38 U.S.C. § 4311(a). Section 4311(a) claims require a two-step analysis: first the claimant must show by a preponderance of the evidence that his or her military service was a “substantial or motivating factor” to cause an adverse employment action. Second, the employer may avoid liability only by putting forward an affirmative defense that it would have taken the same action without regard to the military service.

The district court applied this two-step framework. At step one, it determined that the employee’s military service was the cause of his receipt of the smaller bonus owned to narrow-body pilots. It found that it was reasonably certain that he would have been a wide-body pilot had he not left for military service. Thus, the employee’s departure for military service was a substantial factor in FedEx’s failure to pay the higher bonus. At step two, the district court found that FedEx had offered no affirmative defense that it would have taken the same action of paying the employee a lower bonus absent his military service. Accordingly, the reasonable certainty test was used as an aid to the burden-shifting analysis required of a Section 4311(a) claim, not as its replacement. Moreover, the district court did not clearly err when it determined that the employee was reasonably certain to have achieved status as a wide-body pilot had he not left for his military service.