Alabama Power Co. v. Davis
In Alabama Power Co. v. Davis, 431 U. S. 581 (1977), the Supreme Court held that pension benefits were perquisites of seniority for purposes of the National Labor Relations Act.
Although the amount of the payment was directly dependent on the years of accredited service, the true nature of the benefits was "a reward for length of service," id., at 593.
The lengthy period required for vesting, the use of payment formulas based on earnings at the time of retirement, and "the function of pension plans in the employment system"-namely, to provide financial security to employees, assure a stable work force, and increase efficiency-all led to the conclusion that pension payments "are predominantly rewards for continuous employment with the same employer." Id., at 594.
In Alabama Power, the Supreme Court summarized the principles that have emerged from the cases and concluded that they establish a two-pronged test for determining whether a benefit is a perquisite of seniority under the Act.
First, there must be a reasonable certainty that the benefit would have accrued if the employee had not gone into the military service. Id., at 589.
Second, the nature of the benefit must be "a reward for length of service," rather than a form of "short-term compensation for services rendered." Ibid.