Company Selling Assets Must Include Employees on Military Leave in List of Employees Available for Hire

by Parker Poe Adams & Bernstein LLP
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The Uniformed Services Employment and Reemployment Rights Act (USERRA) provides broad protections to employees called for active military service. Last month, the Eighth Circuit Court of Appeals found that these protections extend to an employer’s characterization of employees during the sale of its assets.

 

In Dorris v. TXD Servs., LP, the plaintiff’s National Guard unit was called to active duty in Iraq. While serving abroad, the defendant sold its assets to another company, and fired employees involved in this part of the business, including the plaintiff. Virtually all of the terminated employees were hired by the asset purchaser based on a list of employees provided to it during the sale. The defendant did not include the plaintiff on this list of employees, even though it did include employees on medical or other leaves of absence. After returning from Iraq, he was informed that he had been terminated, and was eventually hired by the asset purchaser. He sued his former employer under USERRA, challenging both the termination and the failure to include him in the list of hirable employees.

 

The Eighth Circuit rejected the termination claim, noting that at the time of his discharge from military service, the defendant had fired all employees and was no longer engaged in these business activities. However, the court found that the former employer had violated the plaintiff’s USERRA rights by failing to include him in the list of employees provided to the asset purchaser. USERRA requires that employees on military leave be treated equally to any other employees on non-military leaves. The plaintiff’s departure from employment on military leave did not remove his right to enjoy all benefits of employment, such as his inclusion on the list of employees provided to the asset purchaser.

 

USERRA’s leave protections go well beyond those extended to employees on medical or other types of leaves. In essence, employers are required to maintain benefits and privileges of employment not directly affected by the leave, and to reinstate the service member to his previous or predicted position upon discharge. In the event of any uncertainty, employers should err on the side of caution, and not take steps that could be seen as discriminatory against employees on military leaves.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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