Robert DeLee v. City of Plymouth, IndianaRobert DeLee v. City of Plymouth, Indiana
Case Information
*1 Before F LAUM , M ANION , and H AMILTON , Circuit Judges . F LAUM , Circuit Judge
. Pursuant to a long-standing lo- cal ordinance, the City of Plymouth, Indiana pays its po- lice officers “longevity pay” after each work anniversary, calculated by multiplying $225 by the number of years that the officer has been on the force. Faced with financial difficulties in 1989, Plymouth enacted a second longevity pay ordinance pertaining to police, which prorates lon- gevity pay for officers who take a leave of absence during any given year, including for military service. During po- lice officer Robert DeLee’s twelfth year on the job, he missed nearly eight mоnths of work while serving in the United States Air Force Reserves. And so, when he re- turned, Plymouth paid him one-third of his full longevity payment for that year. DeLee sued, arguing that longevi- ty pay is a seniority-based benefit to which the Uni- formed Services Employment and Reemployment Rights Act (“USERRA”), 38 U.S.C. §§ 4301–4335, entitles him in full. Because we conclude that Plymouth’s longevity ben- efit is more appropriately characterized as a reward for lengthy service, rather than as compensation for work performed the preceding year, USERRA guarantees DeLee a full longevity payment for his twelfth year of employment. Accordingly, we reverse the district court’s grant of summary judgment in favor of Plymouth.
I. Background In addition to salary, the City of Plymouth, Indiana pays its long-serving police officers and firefighters (to- gether, “emergency personnel”) what Plymouth calls “longevity pay” on the anniversaries of their start dates. Prescribed by city ordinance, longevity pay is “additional compensation” to be paid to qualified emergency per- sonnel who have “at least three years of continuous ser- vice to the City.” See Plymouth, Ind., Ordinance Nos. 2009–1987 (Aug. 10, 2009), 2010–2009 (Aug. 23, 2010). The portion of the ordinance pertaining to police offiсers states:
Longevity pay is calculated to be $225.00. The amount to be paid to a qualified police officer is $225.00 multiplied by the number of years of continuous service. The maxi- mum amount paid shall be $4,500.00. Lon- gevity shall be paid on the pay day follow- ing the anniversary date of employment for that individual.
The record does not indicate when the longevity pay ordinance for emergency personnel was first enacted, but the parties suggest that it was long before 1989. That is a relevant fact, because 1989 is the year in which Plymouth enacted Ordinance No. 1480, which reads:
WHEREAS, lоngevity pay has long been recognized as an incentive for police and firemen to remain in the service of the City; and,
WHEREAS, a question has arisen con- cerning the advisability of paying longevity to members of the police department or fire department who have gone to an inactive status by reason of a leave of absence, or who have been assigned to duties other than the normal, customary duties of the fire department or police department; and, WHEREAS, in the interest of fiscal re- sponsibility and fairness, it should be rec- ognized that a membеr of the police de- partment or fire department who is in an inactive status, but who has reached an an- niversary date for purposes of longevity pay, should be paid said longevity, but as calculated on the number of months of ac- tive service to the City in the respective de- partments.
NOW, THEREFORE, BE IT ORDAINED * * * * * Longevity pay shall be prorated for any qualified policeman or policewoman who during the year immediately preceding their anniversary date is on a leave of ab- sence, or who is otherwise not engaged in the active performance of the normal and customary duty of the police department. Longevity shall be prorated based on the number of months of actual active duty during the year immediately preceding the anniversary date.
Plymouth, Ind., Ordinance No. 1480 (Nov. 13, 1989).
Robert DeLee is a patrolman in Plymouth, Indiana, who has been with the Plymouth police since April 19, 1999. On his eleventh anniversary, DeLee received lon- gevity pay in the amount of $2,475 ($225 times 11 years). In his twelfth year on the job, DeLee was called to active service by the United States Air Force, in which he has served as a member of the Reserves since July 7, 1997 and currently holds the rank of Technical Sergeant. DeLee was mobilized for active duty on September 1, 2010 and returned to his job as a Plymouth patrolman on May 11, 2011. Upon his return, Plymouth paid him his longevity pay for that year, prorated pursuant to Ordinance No. 1480 for the time that he had spent serving in the Air 5 Force. Had DeLee been actively employed as a patrolman for the entire year, he would have earned a longevity payment of $2,700 ($225 times 12 years). Instead, because DeLee had worked approximately four months of his in- dividual fiscal year, Plymouth issued him one-third of a full longevity payment—or $900.
Believing that Plymouth violated federal law by withholding $1,800 of his longevity pay, DeLee filed a USERRA complaint with the Veterans’ Employment Ser- vice of the Department of Labor. DOL investigated and, after an unsuccessful attempt to resolve the issue with Plymouth, referred the matter to the Department of Jus- tice, which agreed to represent DeLee in litigation.
DeLee then sued Plymouth in the Northern District of
Indiana for alleged violations of USERRA. DeLee’s com-
plaint accuses Plymouth of violating 38 U.S.C. § 4316(a)
by denying him full longevity pay, which he alleges is a
seniority-based benefit to which USERRA entitles him.
Withоut taking discovery, the parties filed cross-motions
for summary judgment on the § 4316(a) claim.
[1]
The dis-
trict court granted Plymouth’s motion for summary
judgment and denied DeLee’s motion for partial sum-
mary judgment. DeLee appealed, and so we review the
district court’s ruling on the parties’ cross-motions for
summary judgment de novo.
Gross v. PPG Indus., Inc.
, 636
F.3d 884, 888 (7th Cir. 2011);
Storie v. Randy’s Auto Sales,
LLC
,
II. Discussion
USERRA, the most recent statute in a long line of fed-
eral veterans’ rights laws enacted since the Selective
Training and Service Act of 1940, was passed in 1994 to
strengthen existing employment rights of veterans of our
armed forces.
[2]
Gross
,
More precisely, § 4316(a) specifies: A person who is reemployed under this chapter is entitled to the seniority and other rights and benefits determined by seniority that the person had on the date of the commencement of service in the uniformed services plus the additional seniority and rights and benefits that such person would have attained if the person had remained continuously employed.
38 U.S.C. § 4316(a).
USERRA defines “benefits” and “rights and benefits” to mean:
аny advantage, profit, privilege, gain, sta- tus, account, or interest (including wages or salary for work performed) that accrues by reason of an employment contract or agreement or an employer policy, plan, or practice and includes rights and benefits under a pension plan, a health plan, an em- ployee stock ownership plan, insurance coverage and awards, bonuses, severance pay, supplemental unemployment benefits, vacations, and the opportunity to select work hours or location оf employment.
38 U.S.C. § 4303(2). USERRA defines “seniority” as “lon- gevity in employment together with any benefits of em- ployment which accrue with, or are determined by, lon- gevity employment.” 38 U.S.C. § 4303(12).
In other words, USERRA requires employers to ad-
here to the “escalator” principle, placing a returning ser-
vicemember at the “precise point he would have occu-
pied had he kept his position continuously” while away
from the job for his military service.
Fishgold v. Sullivan
Drydock Corp.
, 328 U.S. 275, 284–85 (1946) (interpreting
the Selective Training and Service Act of 1940’s seniority
provision);
Rogers v. City of San Antonio
,
At summary judgment, the district court focused on the language of Plymouth’s proration ordinance— mindful of the guidance promulgated by the Supreme Court in Accardi v. Pennsylvania R.R. Co. , 383 U.S. 225 (1966), and Foster v. Dravo Corp. , 420 U.S. 92 (1975)—in arriving at its conclusion that Plymouth’s longevity pay for police officers is not a benefit determined by seniority. Accardi involved returning servicemembers’ claims to severance payments, which the Supreme Court deter- mined to be a seniority-based bеnefit to which the ser- vicemembers were entitled. 383 U.S. at 232. Following honorable discharges from the armed forces, Accardi and his co-plaintiffs returned to their jobs at the Pennsylvania Railroad and were restored to their former positions with the same amount of seniority that they had when they left, plus credit for the three years they had spent in the armed forces. at 227. Fifteen years later, however, the men were laid off and, pursuant to their union agree- ment, awarded severance pay based on “the length of compensated service” with the railroad. at 227–28. The railroad excluded the three years that the men had spent in the armed forces. The men sued, alleging violations of the Selective Training and Service Act of 1940, which re- quired employers to reinstate honorably discharged em- ployees to “their former position” or “a position of like seniority, status, and pay,” without a loss of seniority. Id. at 229.
The statute’s purpose, the Supreme Court said, was
“to preserve for the returning veterans the rights and
benefits which would have automatically accrued to
them had they remained in private employment rather
than responding to the call of their country.”
Id.
at 229–
230. Although the severance payments were based pri-
marily on the employees’ length of service with the rail-
road, the railroad argued that severance was “not based
on seniority, but on the actual total service rendered by
the employee.”
Id.
at 230. The Supreme Court rejected
that argument for two reasons. First, the Court noted, the
railroad’s rules afforded severance credit for an entire
year to an employee who had worked just seven days,
undercutting the railroad’s argument that the severance
payments were compensation for services rendered. Next, the Court said, “the real nature” of severance pay-
ments are compensation for loss of a job, not payment for
services rendered. For those reasons, the Supreme
Court concluded that severance payments are “a means
of compensating employees for the loss of rights and
benefits accumulated over a long period of service”—not,
as the railroad had argued, a form of deferred compensa-
tion for work done in the past.
Foster
,
By contrast, Foster involved the accrual of vacation benefits, which the Supreme Court deemed a form of short-term compensation for work performed, and thus not a benefit based on an employee’s seniority to which a servicemember was entitled pursuant to the Military Se- lective Service Act. 420 U.S. at 100. Foster’s union’s col- lective bargaining agreement required employees to work twenty-five weeks in a calendar year to accrue the company’s full amount of allotted vacation time. Id. at 94. Foster worked seven weeks in 1967, took military leave, and then returned for thirteen weeks in 1968. When his employer denied him vacation days for both years, he sued, arguing that vacation days are a seniority-based benefit. The Supreme Court disagreed, highlighting the difference between the vacation benefits at issue and the severance payments addressed in Accardi . Both included a work requirement, but unlike the work requirement in Accardi (which “appear[ed] plainly designed to measure time on the payroll rather than hours on the job”), the work requirement to аccrue vacation benefits “consti- tute[d] a bona fide effort to compensate for work actually performed.” at 99. Critical to the Court’s conclusion that “vacation benefits were [not] intended to accrue au- tomatically as a function of continued association with the company” was the fact that employees accrued extra vacation time as they worked overtime hours, and that if an employee was laid off before hitting the 25-week mark, he was compensated for vacation days on a pro rata basis. Id . at 100-01. Thus, the Court held, the vacation benefits at issue were more appropriately characterized as “a form of shortterm compensation for work per- formed.” at 100.
The district court considered the circumstances and reasoning of these two cases and concluded that Plym- outh’s longevity pay for police officers is more akin to a vacation benefit than to a severance payment because of the operation of Ordinance No. 1480, which, as dis- cussed, serves to prorate the benefit according to the months that an emрloyee was on a leave of absence. The district court concluded that the longevity rate ( i.e., the number of years of employment by which $225 is multi- plied) “is plainly a seniority benefit,” but that the longev- ity amount “is clearly intended to be compensation for work actually performed in the preceding year.” DeLee v. City of Plymouth, Ind. , 2014 WL 1316870, at *4 (N.D. Ind. Mar. 31, 2014). Therefore, in the district court’s view, DeLee was not deprived of the seniority benefit—the $225 was multiplied by 12, even though his total longevi- ty payment then was prorated—and Plymouth did not run afoul of USERRA.
There is logic to the district court’s reasoning: by pro-
rating longevity pay, the benefit aрpears to be more
closely tied to the number of months an employee has
worked in the short term than to the number of years that
he has been employed by the City. And the result seems
equitable because it provides DeLee
some
seniority bene-
fit (in the form of the rate calculation) for his missed time,
without requiring the City to provide him a full longevi-
ty payment for a year in which he took a leave of ab-
sence. But a pair of more recent Supreme Court cases—
Alabama Power Co. v. Davis
,
In Alabama Power , a reemployed servicemember sued his employer pursuant to the Military Selective Service Act, after he was denied employer pension credit for the time he had spent on military leave. 431 U.S. at 582. Again the Supreme Court stressed the importance of identifying the “real nature” of the payments, noting that, in Accardi , the Court had rejected an employer’s at- tempt to “disguise” severance payments by “use of a ‘compensated service’ formula to calculate the amount of payments.” Id. at 588. And the Court reiterated Foster ’s conclusion that vacation benefits were “a form of pay for work dоne” largely on account of the “common concep- tion of a vacation as a reward for and respite from a lengthy period of labor.” Id. at 589.
The Court stressed that there are “two axes of analy- sis” for determining whether a benefit is a right of senior- ity secured by a veteran: (1) whether the benefit would have accrued, with reasonable certainty, if the veteran had been continuously employed during his military service, and (2) whether the benefit is a “perquisite of seniority.” Prong one was easily satisfied, the Court held. at 591. In analyzing prong two—and this is par- ticularly instructive in DeLee’s case—the Court empha- sized that Foster “turned on the nature of vacation bene- fits, not on the particular formula by which those benefits were calculated”—“[e]ven the most traditional kinds of seniority privileges could be as easily tied to a work re- quirement as to the more usual criterion of time as an 13 employee,” the Court said. Id. at 592. Against that back- drop, the Court noted:
It is obvious that pension payments have some resemblance to compensation for work performed. Funding a pension pro- gram is a current cost of employing poten- tial pension recipients, as are wages . . . . The same observations, however, can be made about any benefit and therefore are of little assistance in determining whether a particular benefit recompenses labor or re- wards longevity with an employer.
Id. at 592–93. Taking into account all of the different as- pects of pension plans, the Court concluded that the “‘true nature’ of the pension payment is a reward for length of service.” Id. at 593. To the Court, the “most sig- nificant factor pointing to this conclusion [was] the lengthy period required for pension rights to vest in the employee.” at 593. But the Court аlso was swayed by the “function of pension plans in the employment sys- tem”—“[by] rewarding lengthy service, a plan may re- duce employee turnover and training costs and help an employer secure the benefits of a stable work force.” at 594. These same objectives are accomplished by Plym- outh’s longevity payments, as even the preamble of Or- dinance No. 1480 acknowledges. [3] The ordinance’s preamble—which speaks to the ordi- nance’s purpose and therefore aids us in assessing the fundamental nature of Plymouth’s longevity benefit— tells us several things. First, by noting that “longevity pay has long been recognized as an incentive for police and firemen to remain in the service of the City,” the or- dinance acknowledges the benefit’s history as a reward for lengthy service. (Indeed, Plymouth concedes that longevity pay, in the absence of proration, is a seniority- based benefit.) Second, by flagging the advent of “ques- tions . . . concerning the advisability of paying longevity” to those on inactive status, the ordinance highlights the potential unsustainability of that policy. Finally, by an- nouncing that it was informed by considerations of “fis- cal respоnsibility and fairness,” the ordinance self- identifies as a compromise that remains true to Plym- outh’s long-standing tradition of paying firefighters and police a longevity payment, while accounting for the fi- nancial realities of the day. The plain language of the ity-based, Jackson is of little utility. Plymouth overlooks that the Su- preme Court specifically granted certiorari in Alabama Power because of a conflict among the circuits, and that Alabama Power ’s holding (that pension benefits are seniority-based) overruled the holding in Jackson (that they are not). That result renders questionable the con- tinuing force of Jackson ’s ruling concerning longevity pay. Moreover, the “longevity pay” in Jackson was fundamentally different from the one at issue here. In Jackson , longevity pay took the form of “an hour- ly premium of 5 cents per hour” after five years and “10 cents per hour” after ten years on the job. at 1323. The benefit in Jackson , therefore, was more akin to a raise, than to the “longevity pay” that Plymouth provides.
preamble, therefore, strongly suggests that by enacting its proration policy, Plymouth sought to cut the cost of paying an expensive benefit, without disturbing its un- derlying purpose. The Supreme Court’s decision in Coffy underscores the importance of the ordinance’s origins in our diagnosis of its true nature.
In Coffy , the Court deemed supplemental unemploy- ment benefits (“SUBs”) to be a seniority-based benefit, the denial of which violated the plaintiff’s rights under the Vietnam Era Veterans’ Readjustment Assistance Act of 1974. 447 U.S. at 193. As in Alabama Power , the Court found the reasonable certainty prong of the two-axes test to be easily satisfied (SUBs are a benefit that would have accumulated had Coffy not taken a leave of absence to perform military service), and so the Court focused on ascertaining the “real nature” of the benefit. Id. at 199– 200. In doing so, the Court traced the history of SUBs, which evolved from the demand by orgаnized labor for a guaranteed annual wage. at 200. As the Court ex- plained, once it became evident to unions in certain in- dustries that their fight for a guaranteed minimum wage was a losing battle, they switched their focus to supple- menting existing unemployment compensation pro- grams. “From the beginning, then, the purpose of SUB plans was to provide employment security regardless of the hours worked rather than to afford additional com- pensation for work actually performed. From the em- ployer’s standpoint, SUBs, like pension benefits, help to assure a stable work force through periods of short-term layoffs.” Id . Moreover, the “essential function of SUB plans is to provide economic security for regular em- ployees in the event they are laid off. Protection against layoff is, of course, one of the traditional attributes of sen- iority.”
In its appellate brief, Plymouth explains the historical
context in which it enacted its proration policy, explain-
ing that its adoption was precipitated by the Supreme
Court’s ruling in
Garcia v. San Antonio Metropolitan Trans-
it Authority
,
Besides the historical context in which SUBs came about, three elements of the SUB plan influencеd the Cof- fy Court’s decision, all of which cut convincingly in DeLee’s favor with regard to characterizing longevity pay as a seniority-based benefit. First, the Supreme Court rejected the district court’s conclusion that SUB payments were so closely related to hours worked as to demon- strate that the plan was a “bona fide effort to compensate for work actually performed,” since that conclusion “is at odds with the literal terms of the plan, which provide that SUB credits are earned for all weeks in which an employee has any hours.” 447 U.S. at 201 (emphasis in original). Like Coffy’s employer, Plymouth claims that the contested benefit is compensation for work per- formed, but the literal terms of the benefit do not support that conclusion. Recall that DeLee’s anniversary date is April 19 and that DeLee deployed from September 1, 2010 until May 11, 2011. DeLee therefore missed 7 months and 19 days of his twelfth year on the job and another 23 days in his thirteenth year. Yet Ordinance No. 1480 calls for proration “based on the number of months of actual active duty,” and so when Plymouth calculated his prorated benefit, it discounted his longevity pay by 8/12. The rough estimation usеd by Plymouth suggests the same thing that Ordinance No. 1480’s preamble im- plies—that Plymouth prorates the longevity payments as a cost-savings mechanism pursuant to a fiscal compro- mise, not because the longevity pay is payment for days in which work was actually performed.
Second, the Supreme Court took into consideration the fact that an employee earned SUB credits for time that the employee did not actually work, such as while attending jury duty, out disabled, or performing certain union duties. Id. at 202. For that reason, the Court reject- ed the employer’s argument that the 32-hour work-week minimum revеaled the SUB plan’s nature as deferred compensation for work performed. The Court also highlighted that Coffy’s SUB plan made no provision for accrual of additional credits for hours worked over 32 per week or for overtime. “This omission is not sugges- tive of a desire to compensate work actually performed,” the Court reasoned. at 202. Similarly, Plymouth issues full longevity pay, without proration, to employees who missed significant time from work (for jury duty, vaca- tion, sick time, etc.), as long as the employee was not out on an official leave of absence. Moreover, Plymouth does not award employees any extra longevity pay for over- time.
Finally, the Coffy Court took note of the fact that em- ployees received no benefits if they were laid off or quit before having worked for the company for two years. at 205. “Such a threshold requirement is more character- istic of seniority provisions than of compensation.” Likewise, for a Plymouth police officer to earn a longevi- ty payment, he must have been with the City continuous- ly for three years.
Applying the Alabama Power test to DeLee’s situation, there is no question that a full longevity paymеnt would have accrued but for his leave of absence. And, as de- scribed above, every meaningful aspect of the “perqui- sites of seniority” considered by the Supreme Court in Alabama Power and Coffy cuts decisively in DeLee’s favor. Nevertheless, Plymouth maintains that its longevity ben- efit is compensation for work done during the prior year, staking its position on the “simple idea that wages are earned through work.” But longevity payments are not wages. And, in any event, that “simple idea” contravenes USERRA’s guarantee of seniority benefits, which include seniority-based bonuses. See 38 U.S.C. § 4303(2). [4] In Coffy , the Supreme Court emphasizеd that “[e]ven if eligibility for SUB payments were closely related to hours worked, that fact would not, by itself, render them compensation rather than seniority rights.” 447 U.S. at 203. That is be- cause the nature of the benefit, not the formula by which it is calculated, is the “crucial factor, ‘for even the most traditional kinds of seniority privileges could be as easily tied to a work requirement as to the more usual criterion of time as an employee.’” Id. at 204 (quoting Alabama Power , 431 U.S. at 592). Ultimately, the history of SUB plans, as well as the plan’s specific provisions, compelled the Coffy Court’s conclusion that the benefit was a reward for lengthy service. Id. These same considerations dictate the outcome here, where we conclude that the original purpose of Plymouth’s longevity pay for police was to reward them for lengthy service and that that purpose survived the subsequently-enacted proration ordinance. Accordingly, the “real nature” of longevity pay foreclos- es the City’s argument that its prorated payments to po- ployees who work in excess of forty hours per week at a rate one- and-a-half times the regular rate at which they are employed. Id. at 903. Among other things, the Featsent plaintiffs argued that the city failed to incorporate longevity pay into the calculation of its “regular hourly rate,” which the statute defines to include “all remuneration for employment paid to, or on behalf of, the employee.” at 904. In light of the statute’s requirement that the “regular rate” include all remuneration for employment, the Sixth Circuit held that longevity pay must be included in the calculation, even though “by definition” longevity pay is “ payment[] given on the basis of length of service ” “ to compensate police officers for their service to the city .” 905–06 (empha- ses added). If anything, therefore, this cаse undermines, rather than supports, Plymouth’s argument.
lice officers are compensation for work actually per- formed that year.
III. Conclusion
For the foregoing reasons, we R EVERSE the judgment of the district court and R EMAND for further proceedings consistent with this opinion.
Notes
[1] DeLee also sought statutory damages for a willful USERRA viola-
tion pursuant to 38 U.S.C. § 4323(d)(1)(C). A plaintiff is entitled to a
jury trial on a liquidated damages claim under USERRA,
Middleton v.
City of Chicago
,
[2] “ Congress emphasized when enacting USERRA that to the extent it is consistent with USERRA, the ‘large body of case law that had de- veloped’ under the predecessor statutes to USERRA ‘remained in full force and effect.’” Gross , 636 F.3d at 888 (quoting 20 C.F.R. § 1002.2).
[3] Plymouth devotes a sizable portion of its brief to an analysis of Jackson v. Beech Aircraft Corp. , 517 F.2d 1322 (10th Cir. 1975), which Plymouth believes to be the only circuit court decision addressing longevity pay under USERRA or a predecessor statute. Although the court found the “longevity pay” at issue in that case not to be senior-
[4] Plymouth points to
Featsent v. City of Youngstown
,