LaBruzza and McBride v. McDonough — ‘Employment in a protected environment’ means lower-income work shielded from competition in the labor market

LaBruzza & McBride v. McDonough addressed one of the most disputed unresolved TDIU issues in veterans law: the meaning of “employment in a protected environment” under 38 C.F.R. § 4.16(a). The consolidated appeals arose from Board decisions denying TDIU despite arguments that the veterans’ employment was protected or sheltered rather than substantially gainful employment.

The Court revisited its earlier decision in Cantrell v. Shulkin, which had found the phrase ambiguous but declined to define it. In LaBruzza, the Court conducted an extensive regulatory interpretation analysis using the text, structure, history, and purpose of § 4.16(a), as well as dictionary definitions and the regulation’s historical development.

The Secretary argued that protected-environment employment meant noncompetitive employment motivated by employer benevolence or charity toward disabled workers. The appellants argued for broader definitions focused on whether the veteran was shielded from normal competitive workplace consequences because of service-connected disabilities. The Court rejected the Secretary’s narrow interpretation and held that the phrase unambiguously refers to lower-income employment that is shielded in some respect from competition in the employment market because of service-connected disability.

Importantly, the Court explained that ordinary ADA accommodations alone generally do not establish protected employment because ADA accommodations are part of the ordinary competitive labor market. However, accommodations exceeding those normally required under the ADA may support a finding that employment exists in a protected environment. The Court emphasized that the analysis is highly fact-specific and that no single factor is dispositive.

The Court further clarified that protected employment is not automatically established merely because a veteran remains employed despite occupational impairment. Instead, the record must demonstrate that the employment is meaningfully shielded from normal market competition due to the veteran’s service-connected limitations. The Court emphasized that relatively low income remains an important consideration in the analysis.

The decision became the first major precedential case providing a workable framework for analyzing protected employment and marginal employment under the TDIU regulation.

“Employment in a protected environment” under 38 C.F.R. § 4.16(a) means lower-income employment that, because of service-connected disabilities, is shielded in some respect from competition in the employment market.

Protected employment does not require employer charity or benevolent intent. The focus is whether the veteran’s position is meaningfully shielded from normal competitive employment pressures because of service-connected disabilities.

LaBruzza is now the leading precedential case interpreting protected employment within the TDIU framework. Before this decision, VA adjudicators and advocates lacked a workable definition for protected-environment employment, leading to inconsistent decisions nationwide.

VA frequently:
• denies TDIU merely because the veteran remains employed,
• improperly equates ADA accommodations with substantially gainful employment,
• fails to analyze whether employment is shielded from competitive market forces,
• or incorrectly requires proof of charitable or benevolent employer intent.

A veteran remains employed by a family-owned business where productivity standards are relaxed, attendance problems are tolerated, and duties are substantially modified beyond normal workplace accommodations. Although technically employed, the veteran may still qualify for TDIU if the employment is shielded from ordinary labor-market competition.

LaBruzza is especially valuable when:

• arguing protected or sheltered employment,
• addressing family business employment,
• analyzing heavily accommodated positions,
• distinguishing ADA accommodations from protected employment,
• or challenging Board findings that employment alone defeats TDIU entitlement.

The case is particularly useful when combined with vocational evidence explaining why the veteran could not maintain similar employment in the competitive labor market.

38 C.F.R. § 4.16(a), Cantrell v. Shulkin, Ortiz-Valles v. McDonald, Van Hoose v. Brown, Kisor v. Wilkie