Reservist’s Pay Case Puts Spotlight on Financial Cost of Service

A US Supreme Court fight over supplemental pay for federal workers who also serve in the military reserves could affect the private sector and national security, depending on how the justices rule after Monday’s argument.

Nick Feliciano, an air traffic controller with the Federal Aviation Administration and a Coast Guard reservist, says his agency must make up the difference between his civilian pay and the lesser amount he earned while called up to active duty. Whether the high court agrees could affect everything from whether others in his position join the reserves to how private employers handle their own workers’ military leave.

Federal agencies are legally required to provide differential pay for reservists activated during a war or national emergency, but the parties dispute what exactly “during” means.

The US Transportation Department, the FAA’s parent agency, says reservists’ service must be substantively connected to that war or emergency to qualify, not just take place at the same time, as Feliciano argues.

He served pursuant to the emergency declaration after the terrorist attacks of Sept. 11, 2001.

The Supreme Court typically favors a pro-veteran approach when interpreting servicemember protection laws. If the justices overturn the US Court of Appeals for the Federal Circuit’s ruling “on more general terms” and simply agree that “during” has a “straight forward temporal meaning,” then their reasoning “could have more broad application,” said Matthew Purushotham, a McGillivary Steele Elkin LLP associate who represents federal workers.

And if the justices simply adopt the Federal Circuit’s “narrow reading,” that “could portend ominous things” for future interpretations of civilian employee pay statutes, he said.

A ruling for DOT curbing reservists’ eligibility for that compensation when called to duty, would have a “chilling effect” on federal employees’ willingness to join the reserves, attorneys who filed separate friend-of-the-court briefs supporting Feliciano told Bloomberg Law.

Recent military recruiting challenges mean reservists are called up more frequently, said Seyfarth Shaw LLP partner Jesse Miller, who represents employers in Uniformed Services Employment and Reemployment Rights Act cases. Even so, the cost of providing differential pay to this segment of the government workforce isn’t “a budget buster,” he said.

Until a 2021 Federal Circuit ruling in a different reservist’s case, agencies “routinely granted differential pay” in circumstances like Feliciano’s, said Orrick, Herrington & Sutcliffe LLP partner Mel Bostwick.

Reservists’ Hardships

Studies show reservists suffer “much greater financial hardships” than other service members, said Lukman Azeez, who filed one of those amicus briefs. Reduced differential pay opportunities “would add another layer of financial pressure” to the stress of mobilization, said Azeez, a Wiley Rein LLP partner who represents veterans pro bono in USERRA cases.

If the justices side with DOT, “I could not, in good conscience, suggest” that federal employees become reservists “without carefully considering the potential negative financial consequences,” added Wiley Rein partner Scott Felder, a retired Army Reserve lieutenant colonel who filed the Reserve Organization of America’s brief with Azeez.

That outcome would “change the cost-benefit conversation in a lot of households,” said the other amicus brief filer, Katie Becker, a University of Missouri School of Law Veterans Clinic staff attorney. It’s already tough for families to figure out if they can afford a deployment. Adding worries about whether someone will think you didn’t contribute to the emergency response is “tough and invalidating,” she said.

Deterring federal employees from serving because of financial costs is “the opposite of what Congress intends and laws like USERRA are designed to do,” said Hampton Dellinger, who heads the US Office of Special Counsel, which enforces the law.

Three members of Congress filed a brief supporting Feliciano, so there’s “clearly congressional interest in addressing the issue of military pay,” said Bradford Kelley, a former Army officer now at Littler Mendelson PC who defends employers in USERRA cases. Any new legislation following the justices’ decision “may not necessarily be limited to civilian federal employees,” he added.

Private Sector Spillover

Approximately 80% of reservists work in the private sector, Azeez said. Any decision restricting differential pay could increase scrutiny of their employers’ policies, too, he added.

If the justices make it harder to predict whether a reservist’s service qualifies, “we could see private employers refusing to provide differential pay at all, because it’s too risky,” added Bostwick, who filed Military-Veterans Advocacy Inc.'s brief supporting Feliciano.

“We should seek to inspire our citizens to pursue military service and reward it, not disadvantage those who chose to serve or mire them in red tape,” said Miller, who’s also an assistant division commander with the California National Guard.

Wiley Rein’s Felder agreed. “If your people are not taken care of, or if they have to worry about what’s going on at home, they are not focused on the mission,” he said.

The case is Feliciano v. Dep’t of Transp., U.S., No. 23-861, oral argument 12/9/24.