Rerurning Veterans' Rights ro Fringe Benefirs Afrer Fosrer v. Draw Corporarian

• Author: David Bennet Ross
• Pages: 02

I. IhTRODCCTIOS

Section 9 of the Universal Military Training and Service Act,' requires that a former employee who has satisfactorily completed military setrice must be reemployed, upon timely application, in his former position or "a position of like seniority. status, and pay."' He does not merely hare the right to his old job. as stated in section S(cj(1) of the Act. but must be "restored" to employment in a fuller sense "without loss of seniority" and with a right to participate in "insurance and other benefits offered by the employer" to the same extent as employees on furlough or leave of absence.

In Firhgold m. Sullivnz Drydock ~4 Repair Corp.; the Supreme

Court interpreted the language now contained in section S(cj(1) by stating that the veteran "does not step back on the seniority escalator at the point he stepped off. He steps back on at the precise point he would hare occupied had he kept his position continuously during the ~ a r . ' ' ~

The rule in Fiii.goId, later known as

"the escalator principle." mas ratified by Congress when it

'The ~pinloniand C O ~ C ~ U S ~ S preslenred herem are those of the ivrhor and do

nm nec111arl1, ~epreanr rhe i l e w of The Judge Advocate Generrlr Schml or my

reenacred the prior s r m m and included the following ma pro~ision as sectloll 9(c) ( 2 )

Ir IS declared Io be the senrs of the Congress that any perion iiho 15 re-smed io a p o w m . . should be m restored /n such manner 1s to gnc/him such I ~ Y I

~n hli emp!armmr as h confinued :n such ~rpla!menr conilnuou the armed forcer until rho rime oi his re

Since Firhgold, federal coum hare run into difficult!- in at-temptine to applv the escalator principle in determinino emplovmenr rGhts under recrion U(c) ahenerer conditions 6i emploi--ment are involved rhat are not dependenr on senmiry alone. Ir has often been observed rhat the term "seniority" IS n6 defined in the .\ct;' rarher. "seniorit? derives its meaning in each individual case from the ,ob perqu&ei and the effects on employrnenr rhat flow from them. Hawerer. the perquisites and effects of ieniontv, found either in the pracrices of an employer or in collecrive bargainine agreements. are often commlneled with the effects of orher employee attributes. In cxes inrolr;ng priimotion apportunmes. for example, the employee's individual merit is uiuall? a factor equal to or more important than senianrr, and in cases involi-ine riohrs to fringe benefits. a specified amow; of iiork performed fir ti;, employer in a given year is frequentlv an eligibility requirement in addirion to "seniorit>-."

Concerning promotion opportunities. the Supreme Court has meneiall>- held ;hat a serriceman is entitled to a promotion "if, a s a matter of foresight. it was reasonably cerraimould hare occurred, and if. as a matter of hin

conraired ~n The Selecme and 5eriico Act oi 19a. io V5C App

promotion that is automatic after a minimum period of employment training can be claimed, but only after successful completion of the training period. Harmg completed the training period upon his return, a serviceman can then insist on a retrospective seniority date reflecting the delav caused by the militawn

Fringe benefit hghts raise more dificdr problems. They accrue only ~n parr as a result of mere IongeTity, and ~n parr. in proportion to and as a direct reward for the amount of aork performed. To this extent, fringe benefits share the characteristics of wages rarher than perquisites of seniority.

Insofar as eligibility requirements for benefits relating primarily to seniority or to work performed can be segregated, the escalator principle can be applied ro the requiremenrs relating to seniority alone. Yet, a ser of problems still remains in cases in which the em-ployer's practices or the collective bareaining agreement makes fringe benefirs dependent on a minim& amount of work performed, regardless of seniority. In such cases, completion of some, but not all, of the minimum requirements due to the intervention of military service results in loss of all rights to that benefit, even to a proportional amount. Unlike cases of promotion oppormnaies, the work requirement for a fringe benefit cannar be completed retroactively; rhe opportunity to earn a benefit, once missed in any year, is torally lost.

Until the Supreme Court rulings in Accardi v. Pennnicania Rdroad Co.'O and Eagar v. ,lfogm copper Co.," federal cou& had consistently denied the claims of veterans for racarion or holiday benefits for the Year of their departure or return from militarv service ahenever.the requirements for vacation elieibilitv \I ere ndr fulfilled. Accmdi and Maginu Copper did mu& to change this result but ultimately failed to establish principles of decision for a uniform approach m fringe benefit cases. Now, by a brief opinion in Foster z.. Drwo the Supreme Court has rurned the rights of veterans around again mirhaut saving much about the problems of interpreting collective bargaining'agreements under [he Act which had produced a split m circuir court opinion. JThile rhe result dictated by Foiter i. Drauo may be clear enough, at least in

OT~llran v \lirroun Pac. RR. 376 US 169. 179-80 (l96il

the conrext of ramion benefits which the case inidred, the Court's opinion may not be easily applied m cases involving more complex fringe benefit str~ctuies.

This article examines the evolving principles underlying the decisions pertaining to 1 icmm and holidav benefiri. rhe impact r n f Foster 1Jraio on their del elopmenr, and finallv. attempts to appl, the principles in light of Form to related problems involring "qualified benefits' administered rhroueh tmst funds. such as pension. profit-sharing. and supplemental u&nployment benefit funds. Claims by servicemen for lox payments of funded benefits. administered rhrouph m s r i qualified under the tax crdc. hai-c not r-er hem extensively litigated. although they present the mast serious i d -

ridual inequities and potcntial employer liability.

Section 9(c) ( 1 ) contains two apparenrly separate mandates. The finr requirci that rcrurnine senicemen br restored rc rhcir former lobs or 1ke posmon' "wrhaut Iim of seniorit!-" and the second entitles returnmg serv~ernen ro particpte "in insur3nce or other benefits afiered by the employer purcuant to embllrhcd niles and practices relatin: ro employees on furlough UI leave of absence."

21s. r h ~ coni-enrional analps of federal courrs

the .IC[has been IC determine n hether the

Id bc characrerued ac "perqoisircli] of wniorI[>-." and rhus due ro senicemen uncondmimallr under rhe 6r5t mandate. or chnracteriicd instead as "insiiran~~or other lieneh and. rhereforc. under the second mandate. due to trriicem~n accordance with the employer's tieatintnt of mhrr emplorees furlouph or leaves of ab~ence.'~

Followin! this analysis. amud paidclassified under the caregory of "insrather than as a "pcrqutcite of senmirequiremenrs far the iscation benefits included more than mere

1lUh 01.

See iJ'o Karrncicr v Cb,icign. Ruck 1,laid and Pac R R , 43' FZd lil. 116

19.1)

longevity of service but also a minimum amount of work performed in a preceding year. As a result, vacation benefits would not be due to returning servicemen unless emplavees on leave or furlough for a like period would also be entitled io the vacation benefit under the same circumstances.

In Siarkieuicz Y. Gmeral Electric Co.," fire veterans returned to their jobs during the latter half of 1945 and 1946 and claimed a full year's vacation pay for the calendar vear in which they returned. The collective bargaining agreement brorided that employees "re-engaged" after being off the payroll must work a period of sixmonths before ther are eligible for vacation pav. Since the Teteranr returned later in

The Second Circuit Court of Appeals rejected the reterans' claim for vacation pay, reasoning that paid racations were "not merely a perquisite of s;moriry." IVhile the amount of the vacation pay, concededlv, was conditioned upon seniority, the eligibilitv for vacation pay i i anv year depended upon a minimum of six months' work actually perfdrmed in that year. Therefore, the right to the vacation in the court's view did not depend on seniority alone and "must fall under the heading of 'other benefits.'" which neither employees on leave nor returning veterans mould be entitled to under the applicable collective bargaining agreement. The argument that the veterans would never hare Tost their racation eligibilitv In the first place but for their military service and would not' hare had to requalify by six months' work did not persuade the court to the contrary.

In two decisions contemporaneous aith Siarkie-uicz, the Thud Circuit tentatively sought a mme pragmatic approach.'j Sererthe-less, other courts eventually followed the reasoning in Siarkie.;cz, until the Supreme Court opinions in Accnrdi c. Pennsjilunia Rzilroad Co.,ld and Eagnr L'. .Clagnia Copper Co." interpreted 9(c) in a new light.

Had the approach of the Third Circuit m .ZfcLmrghliiz T. Union Switch tb Signal CO.'~prevailed, the later problems in Accardi or.Magma Coppt-r might hare been totally avoided. McLaughlin war a member of an electricians' union and had worked for...