The U.S. Supreme Court ruled on April 30, 2025, that federal civilian employees who are also military reservists are entitled to differential pay when called to active duty “during a national emergency,” regardless of whether their service is directly connected to the declared emergency. The case, Feliciano v. Department of Transportation, resolves longstanding uncertainty over the scope of the law and will have broad implications for reservists and federal agencies nationwide.
The 5–4 ruling clarifies how differential pay under 5 U.S.C. § 5538 should be applied and strengthens protections for reservists who serve while continuing their civilian careers in federal service. The ruling emphasized a plain reading of the statute that prioritizes legal clarity and practical fairness for those in uniform.
Background: What Is Differential Pay?
Federal employees who are called to active duty often face a significant pay gap. Military wages are frequently lower than civilian government salaries. To address this disparity, Congress enacted differential pay provisions allowing eligible employees to receive the difference between their military compensation and their regular civilian pay.
Specifically, 5 U.S.C. § 5538 entitles federal employees to this differential if they are called to active duty during a “contingency operation,” including military service, during a war, or a national emergency declared by the President or Congress.”
The Case: Feliciano v. Department of Transportation
The plaintiff, Nick Feliciano, was a U.S. Coast Guard reservist and civilian air traffic controller employed by the Federal Aviation Administration. He served on active duty from 2012 to 2017. Although his service occurred during an ongoing national emergency (stemming from post-9/11 declarations), he was denied differential pay on the grounds that his deployment lacked a “substantive connection” to the emergency itself.
Both the Merit Systems Protection Board and the U.S. Court of Appeals for the Federal Circuit upheld the denial, interpreting the statute to require more than temporal overlap between active duty and a national emergency.
The Supreme Court’s Decision
In reversing those decisions, the Supreme Court adopted a broader and more straightforward interpretation of the law. The majority rejected the notion that reservists must prove a direct causal link between their service and a specific emergency. Instead, the Court concluded that the term “during a national emergency” means exactly what it says: if a reservist is called to active duty while such an emergency is in effect, they qualify.
Justice Neil Gorsuch wrote, “Just ask yourself how an ordinary American might approach the law’s terms.” He argued that nothing in the statute suggests a need to prove the nature of the reservist’s duties or their relation to the emergency.
The Court emphasized that clarity in statutory language is critical not only for federal employees but also for the agencies and employers responsible for implementing the law.
The Court also noted that the government’s interpretation could unintentionally criminalize private employers who voluntarily offer differential pay under 18 U.S.C. § 209, which prohibits salary supplements unless specifically allowed by law. If the law is too ambiguous, employers risk liability for trying to support military employees.
Implications for Federal Employees
This ruling significantly expands the number of federal employees who may now be eligible for differential pay. Given that some national emergency declarations—such as the post-9/11 emergency—have remained in place for over two decades, many reservists who served during that time may have a valid claim for compensation under the clarified standard.
Federal agencies should review their internal policies and reevaluate any past denials of differential pay that relied on the “substantive connection” requirement. Reservists who believe they were wrongly denied benefits or other forms of military service discrimination should talk to an employment lawyer about their legal options.
If you have questions about your entitlement to differential pay or believe your rights were violated under federal employment statutes, Lipsky Lowe is here to help. Contact us today for a confidential consultation.
About the Author
Douglas Lipsky is a co-founding partner of Lipsky Lowe LLP. He has extensive experience in all areas of employment law, including discrimination, sexual harassment, hostile work environment, retaliation, wrongful discharge, breach of contract, unpaid overtime, and unpaid tips. He also represents clients in complex wage and hour claims, including collective actions under the federal Fair Labor Standards Act and class actions under the laws of many different states. If you have questions about this article, contact Douglas today.