EBIA Weekly Newsletter

USERRA Claims Permitted for Terminated Employees Unaffiliated With the Uniformed Services

   July 28, 2016

Whittington v. Vossloh Track Material, Inc., 2016 WL 3460430 (S.D. W.Va. 2016)

An employee who was planning to retire was asked to interview replacements for his position. He thought he had found a suitable replacement, but the candidate was rejected by the company’s president—allegedly because of his military service. The employee informed the candidate of the company’s decision not to hire him, and the candidate sued the company. Meanwhile, the employee resigned, and signed an agreement releasing the company from any employment claims. His wife and son, who also worked for the company, were allegedly coerced into signing noncompete agreements and were later terminated. During this time, all three family members allegedly provided assistance to the candidate and his counsel in connection with the lawsuit. The company settled the lawsuit with the candidate, but the employee, along with his wife and son, separately sued the company and certain of its officers for violation of the Uniformed Services Employment and Reemployment Rights Act (USERRA). The wife and son also brought claims under COBRA for untimely election notices.

The court explained that USERRA protects individuals unaffiliated with the uniformed services from discrimination and adverse employment actions for helping another individual enforce USERRA rights, but dismissed the employee’s claim because the illegal conduct he alleged had occurred when he was no longer employed at the company. However, the court declined to dismiss the claims of the wife and son that the company had violated USERRA by requiring them to sign noncompete agreements, terminating them, and denying them COBRA benefits because of the assistance they provided to the candidate. The court also allowed the COBRA claims against the employer to proceed but dismissed the COBRA claims against the officers, citing previous cases holding that corporate officers cannot be held liable under ERISA where there is no basis for “piercing the corporate veil.”

EBIA Comment: While it remains to be seen whether the employees will prevail, this case serves as a reminder that employers should be familiar with USERRA’s requirements, including the protections it provides for individuals who are not actually in the uniformed services. While not an issue in the case, USERRA also includes health plan continuation and reinstatement requirements. Plan administrators that may be experienced in COBRA administration must also understand the additional continuation coverage obligations imposed by USERRA and how these obligations may differ from those imposed by COBRA. For more information, see EBIA’s Group Health Plan Mandates manual at Section XVIII.A (“What Is USERRA and Who Must Comply?”) and EBIA’s COBRA manual at Sections XVIII.C (“Plan Administrator Must Provide Election Notice and Notice of Unavailability”) and XXXVI (“Uniformed Services Employment and Reemployment Rights Act (USERRA)”).

Contributing Editors: EBIA Staff.