The key litigated issue in Milhauser v. Minco Products, Inc. was whether termination is an appropriate reemployment position under the requirements of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).

Douglas Milhauser started work as a maintenance technician at Minco Products Inc. in 2006. Between 2007 and 2009 he took three military leaves of absence. After his last deployment ended in May 2009, Milhauser reported to work on June 3, 2009, at which time he learned that he had been terminated due to a reduction in force (RIF).

In 2008, Minco's customer orders had begun declining and the company posted its first ever annual loss. The decline continued through 2009 and Minco conducted a small RIF in March 2009. Needing to eliminate more jobs, Minco conducted a second RIF in June 2009.

As part of the second RIF, Milhauser's supervisor was asked to select four employees of the 13 he supervised to recommend for termination. Factors to consider included employees':

Seniority was not an important factor.

Milhauser's supervisor recommended Milhauser for dismissal because his areas of specialization were not unique and his job duties could be performed by other employees. Milhauser's work performance had also been inconsistent and occasionally poor. Other employees had expressed concern about his attitude and the work quality, and he received a written reprimand. Some of his duties had been transferred to other maintenance technicians upon returning from his first deployment and he was given menial tasks to do.

Milhauser filed suit against Minco alleging:

In its defense, Minco asserted that:

The jury found in favor of Minco on both claims. Milhauser made a motion for judgment as a matter of law, which the district court denied. Milhauser appealed the failure to reemploy him, arguing that:

On December 5, 2012, the US Court of Appeals for the Eighth Circuit issued an opinion in Milhauser v. Minco Products, Inc., affirming the district court's ruling upholding the jury verdict in favor of the employer on the reemployment issue. The court agreed with the jury's finding that although the employer had failed to prove its affirmative defense that it would have been impossible or unreasonable to rehire the employee, the employee had not proven that the company had failed to reemploy him in an appropriate position.

In reaching its holding, the court concluded that termination is a valid "position of employment" under USERRA, which is consistent with USERRA's text and its implementing regulations. USERRA requires that a person returning from military service be reemployed in the position the person would have had if the person's employment had been continuous and not interrupted by military service, which is often referred to as the escalator principle (38 U.S.C. § 4313(a) (2011)). Depending on the circumstances, "the escalator principle may cause an employee to be reemployed in a higher or lower position, laid off, or even terminated" (20 C.F.R. § 1002.194 (2012)). The Secretary of Labor's regulations on USERRA confirm that the escalator principle may properly be applied to result in an employee's termination.

The court declined to address Milhauser's argument that even if USERRA permits termination to be a valid reemployment position, it only does so if the employee would have been terminated automatically through a seniority system. Milhauser had not raised the argument during the trial.

This decision is a positive development for employers since it clarifies that there are circumstances in which an employer may lawfully terminate an employee on or returning from a deployment without violating USERRA.