Serricchio v. WACHOVIA SECURITIES LLC
658 F.3d 169 (2011)
Rule of Law:
Under the Uniformed Services Employment and Reemployment Rights Act (USERRA), an employer's obligation to reemploy a returning service member in a position of like 'pay' requires restoring the employee's actual earning capacity. For a commission-based employee, this means providing a comparable book of business or other means to achieve similar total compensation, not merely offering the same commission rate.
Facts:
- Michael Serricchio, an Air Force reservist, worked as a commission-based financial advisor for Wachovia Securities LLC.
- Prior to his military activation, Serricchio had built a substantial book of business, servicing accounts with assets of approximately $4.1 million and earning over $75,000 in annualized net commissions.
- Following the events of September 11, 2001, Serricchio was called to active military duty.
- During his absence, Serricchio's business partners left Wachovia, taking several large client accounts with them, and his remaining accounts were dissipated or reassigned.
- After his honorable discharge in October 2003, Serricchio requested reinstatement to his position at Wachovia in a letter dated December 1, 2003.
- Wachovia did not formally offer Serricchio a position until March 31, 2004, nearly four months after his request.
- The position offered to Serricchio included his pre-service commission rate and a $2,000 monthly draw, but provided only a small fraction of his former client accounts, requiring him to rebuild his business by making 'cold calls'.
Procedural Posture:
- Michael Serricchio sued Wachovia Securities LLC in the U.S. District Court for the District of Connecticut, alleging violations of the Uniformed Services Employment and Reemployment Rights Act (USERRA).
- The district court denied Wachovia's motion for summary judgment.
- Following a trial, a jury found Wachovia liable for failing to promptly reinstate Serricchio, failing to offer him a proper reemployment position, and for constructively discharging him.
- In a subsequent bench trial on damages, the district court awarded Serricchio backpay, liquidated damages for a willful violation, and equitable relief in the form of reinstatement with a temporary salary.
- The district court denied Wachovia's post-trial motion for judgment as a matter of law or, in the alternative, for a new trial.
- Wachovia (appellant) appealed the district court's orders to the U.S. Court of Appeals for the Second Circuit.
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Issue:
Under the Uniformed Services Employment and Reemployment Rights Act (USERRA), does reemploying a commission-based financial advisor at the same commission rate but with a significantly diminished book of business satisfy the requirement to provide a position of like 'seniority, status and pay'?
Opinions:
Majority - Pooler, Circuit Judge
No. Reemploying a commission-based employee at the same commission rate but with a diminished book of business does not satisfy USERRA's requirement to provide a position of like 'seniority, status and pay.' The court reasoned that USERRA must be construed liberally for the benefit of service members and protects not just the 'rate of pay' but the employee's actual pay and earning capacity. Citing Department of Labor guidance and case law, the court held that 'pay' refers to the total compensation an employee would have received with reasonable certainty had they not been absent. Merely providing an identical commission percentage on a new or diminished territory that yields substantially less income does not comply with the statute. Furthermore, forcing an experienced advisor to engage in 'cold calling' amounted to a demotion in 'status' by diminishing his responsibilities and opportunities for advancement. The court affirmed that Wachovia's failure to promptly reinstate Serricchio and its offer of a 'financially precarious and professionally degrading' position violated USERRA.
Analysis:
This decision significantly clarifies the scope of an employer's reemployment obligations under USERRA for commission-based employees. It establishes that 'pay' is not limited to the compensation formula but encompasses the employee's real-world earning potential, shifting the focus from technical pay terms to actual financial outcomes. The ruling places a substantial burden on employers to proactively ensure that a returning service member's book of business, or an equivalent earning opportunity, is restored. This precedent strengthens protections for veterans in sales and other performance-based roles, making it more difficult for employers to return them to an empty shell of their former position.
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