Differential Pay Case Argued Before Supreme Court

The U.S. Supreme Court recently heard oral arguments in a case that could clarify when private-sector employers may pay differential pay to reservists without risking criminal liability.

Differential pay—also commonly called top-up pay—is the difference between a service member’s civilian pay, which is usually higher, and their military pay, which is usually lower, Mark Girouard, an attorney with Nilan Johnson Lewis in Minneapolis, told SHRM. 

Federal employers must provide differential pay for certain kinds of service obligations, he noted. Private-sector employers don’t have to provide differential pay, but many do voluntarily. 

Background

In the brief that helped persuade the Supreme Court to review the case, the petitioner said that more than 1 million people serve in the Armed Services’ Reserve.

The petitioner was called to active duty from his air traffic controller position with the Federal Aviation Administration (FAA) several times from 2012 to 2014 to perform military service in the U.S. Coast Guard. While the U.S. Department of Transportation (DOT) granted differential pay for much of the time the petitioner served, it denied top-up pay for 14 months of consensual active-duty military service. 

The petitioner challenged the failure to provide differential pay as a violation of the Uniformed Services Employment and Reemployment Rights Act but lost his challenge before the U.S. Merit Systems Protection Board and then before the U.S. Court of Appeals for the Federal Circuit. 

According to the petitioner’s brief, the question in the case is whether the catchall provision’s use of the word “during” requires only a temporal overlap with a war or national emergency, or if it requires some connection to a war or national emergency. The petitioner’s brief asserted that only a temporal overlap is required, while the DOT said that more than a temporal overlap is needed. 

Petitioner’s Argument

Arguing on behalf of the petitioner, Andrew Tutt—an attorney with Arnold & Porter in Washington, D.C.—said, “during a national emergency, reservists called to active duty under any provision of law must receive differential pay.” He said the government was wrong to argue that there must be a substantive connection between a reservist’s military service and a pending national emergency for the reservist to receive differential pay.

“It would create an impossible line-drawing problem to figure out what it means to have a sufficiently substantive connection to qualify for differential pay not just for courts, not just for agencies, but for private employers who will face criminal penalties under 18 U.S.C. Section 209 if they get the question wrong,” Tutt said.

He added that the government hasn’t said how to assess whether a reservist’s service is in the course of a national emergency other than saying that courts should defer to the government’s characterization in a reservist’s orders.

Justice Clarence Thomas asked Tutt how he would respond to the government’s argument that the petitioner’s approach would be disruptive to other sections of Title 10 that use the term “contingency operation.”

Tutt replied that the case doesn’t turn on the definition of “contingency operation,” but that the court’s ruling wouldn’t alter its meaning.

Justice Ketanji Brown Jackson asked why Congress wouldn’t have just said that everyone who’s called up gets differential pay, if that’s what it meant.

Justice Samuel Alito Jr. asked what Tutt’s response was to the government’s argument that the petitioner was bound to lose because he did not present the materials that were required by regulation to the FAA. 

Tutt responded that the statute does not include a requirement to present such materials and it would have been futile at the time.

Alito asked whether any ambiguity that Congress leaves in a statute that could provide a benefit for veterans, no matter the cost, be resolved in favor of the veteran. 

Tutt answered that this principle, called the veteran’s canon, might be elevated to a constitutional principle.

As for potential liability among private-sector companies, Justice Brett Kavanaugh said that “retroactive, unknowing liability is something that would be doubly frowned upon.”

But it will be “very difficult” for employers to figure out whether their differential pay policies are compliant under the government’s theory, Tutt answered.

Government’s Argument

Arguing on behalf of the government respondent, Nicole Reaves, assistant to the solicitor general at the U.S. Department of Justice, said, “Because multiple national emergencies are ongoing at all times, [the] petitioner’s reading renders the list of expressly cross-referenced provisions, and Congress’s multiple additions to that list, entirely superfluous.”

She added that the petitioner’s interpretation would result in anomalies, including requiring differential pay for reservists who have been court-martialed. 

If someone was trying to decide whether to sign up to be a reservist and read this provision saying they’d get the same pay if called up during a national emergency, Chief Justice John Roberts Jr. asked, how would a normal person interpret that language?

“I think a reservist wouldn’t necessarily think that, ‘Oh, if I volunteer for JAG [judge advocate general] training, that means I’m serving during a national emergency,’ ” Reaves said. 

However, Roberts said that looking at the statutory language, it seems to have a “pretty strong temporal aspect.”

Justice Neil Gorsuch asked how a private employer will figure out whether someone with orders is engaged in conduct during a national emergency, entitling them to differential pay. It’s “very difficult to figure out if there’s a substantive component that’s undefined,” he said.

Reaves answered that it will be straightforward for agencies and private employers to sort out who’s entitled to differential pay. The call or order to duty is supposed to state the contingency operation, whether it’s in support of one, the statutory authority for it, or the basis for the call-up, she said. When Gorsuch asked if that commonly happens, she said it normally does. 

If orders don’t say that, employers can ask for clarification from the Army or Navy or the branch that issued the orders, she added. She also expressed doubt that private employers would be found to be federal felons for trying to pay money to someone, saying there’s a “mens rea” requirement for such a conviction.

Even if the Supreme Court affirms and rules for the respondent, Kavanaugh asked, couldn’t the petitioner present his orders or go back to the FAA, make the request, and most likely get the differential pay for the pay periods in question?

“That’s correct,” Reaves answered. 

She added that if the Supreme Court affirmed, the Office of Personnel Management would update its guidance to be in line with the standards in the respondent’s brief, instructing agencies to look at the text of the orders. 

Justice Amy Coney Barrett asked if orders change in the middle of service.

Reaves responded that they might. “Mistakes do happen,” she added. However, Reaves noted that individuals have the option to seek clarification if there is a mistake.

However, Roberts said, “There are going to be difficult line-drawing problems under your approach.”

This case is Feliciano v. Department of Transportation.