On April 4, 2010, a federal trial court ordered Wachovia Securities to pay a former employee more than $1.6 million dollars in damages under the Uniform Services Employment and Reemployment Act (USERRA) because the Company failed to return the Plaintiff to the position to which he was entitled upon return from military duty.
The Plaintiff, Michael Serricchio, was originally employed by Prudential Securities, Inc., as a financial advisor, when he was called to active duty in the United States Air Force in 2001. At the time Serricchio was called to duty, he managed approximately 237 accounts totaling $4.1 million dollars in assets, which yielded around $75,000 in commission income between 2000 and 2001. Serricchio’s military tour of duty lasted until October 2003, when he was honorably discharged. Before Serrichio’s return, Prudential sold its brokerage business to Wachovia Corporation, which formed a new subsidiary and business model that shifted its focus from servicing a smaller number of well-to-do clients to a larger quantity of clients through a national telephone customer service center. During this time period, many of Serricchio’s previously held accounts either ceased to be Wachovia clients or were transferred to the national call center.
When Serricchio returned from duty in 2003, he sent a letter to Wachovia asking that he be reinstated to his financial advisor job and reminded Wachovia of its affirmative responsibilities under USERRA. In response, Wachovia offered Serricchio a financial advisor position which included some of Serricchio’s former accounts, a $2,000 per month advance against commissions, and the opportunity to cold-call new clients. Serricchio refused the job and filed a complaint alleging, among other things, that under USERRA, Wachovia failed to return him to the proper “escalator position” to which he was entitled. In response to Serricchio’s USERRA claims, Wachovia argued that: (1) Serricchio was not entitled to be reinstated because his notification that he would return to work was conditional; (2) Serricchio refused to accept the job that Wachovia offered to him; and (3) Wachovia met its reinstatement obligations under USERRA by offering Serricchio a financial advisor position.
Requirements for Employer Under USERRA
Under USERRA, servicemembers called to military service must be “promptly reinstated” if the servicemember notifies the employer of his intent to return to his position of employment by submitting an application for reemployment within 90 days after the completion of service. Notably, a servicemember seeking reemployment after active duty is entitled to the seniority and other rights and benefits that the person had on the date that service began plus additional seniority, rights and benefits the servicemember would have attained had the person not been called to duty. This is referred to under USERRA as the “escalator” position, or a job the employee would have attained with “reasonable certainty” had the employee remained continuously employed.
District Court’s Decision
In denying Wachovia’s motion for summary judgment on Serricchio’s USERRA claims, the court held, in part, that factual issues remained regarding Wachovia’s duty to reinstate Serricchio to the proper escalator position. Arguing that its business model changed significantly in the time Serricchio was on duty—indeed, Prudential sold its business to another company and the economic climate had changed—Wachovia maintained that it fulfilled its duties under USERRA by offering Serricchio a financial advisor position that included some of Serricchio’s former clients and gave him the chance to rebuild his book of business. Although the court recognized that an employer is not obligated to provide an employee his identical book of business upon return from duty, it held that a jury should determine whether the position offered by Wachovia provided Serricchio with a comparable earning potential and a chance for advancement.
At trial, the jury ruled in favor of Serricchio, ultimately finding that the Company did not provide him with a position to which he was entitled upon return from military leave, and it awarded him nearly $400,000 in back pay. Concluding that Wachovia’s violation was willful, the court also added nearly $400,000 in liquidated damages, and it separately awarded Serricchio $830,107.21 in attorneys’ fees and costs. Combined with prejudgment interest, Serricchio’s award totaled $1,645,581.
Lessons for Employers
The current economic climate makes reinstatement issues arising under USERRA doubly challenging for employers, particularly because there is a lack of case law advising employers on how they should handle the reinstatement of military servicemembers upon their return to the workplace. While USERRA provides limited exceptions to an employer’s duty to reinstate (such as when the servicemember’s position was eliminated in a reduction in force or where reinstatement would create an undue hardship for the employer), these issues must be carefully evaluated on a case by case basis, keeping in mind the broad employee protections provided for under USERRA.