LaBruzza v. McDonough — Protected-environment TDIU means lower-income employment shielded from competition

In these consolidated appeals, the Court interpreted the meaning of “employment in a protected environment” in 38 C.F.R. § 4.16(a), a phrase that determines when a veteran’s employment may still count as marginal employment for TDIU purposes. The Board had denied TDIU to both veterans during periods in which they were employed, but it used differing and legally restrictive approaches to decide whether their jobs were protected. One Board decision focused on whether the work was charitable, rehabilitative, or therapeutic and whether the veteran lost income; the other turned on whether the employer acted from altruistic or personal reasons.

Applying Kisor and the text, structure, history, and purpose of § 4.16(a), the Court held that the phrase is unambiguous. The Court concluded that protected-environment employment means a lower-income position that, because of service-connected disability, is shielded in some respect from competition in the open employment market. The Court rejected the Secretary’s proposed benevolence-based definition and explained that ADA accommodations, by themselves, do not establish protected employment because they operate within the competitive labor market. The Board’s failure to apply the correct standard and make the necessary factual findings required remand in both appeals.

Under 38 C.F.R. § 4.16(a), employment in a protected environment is lower-income employment that is shielded in some respect from competition in the employment market due to service-connected disability; it is not limited to charitable or benevolence-based work and is not established solely by ordinary ADA accommodations.

For TDIU cases involving employed veterans, advocates should focus on whether the job was actually insulated from market competition and whether income was relatively low, not merely whether the employer was accommodating or sympathetic.

This case is now a leading interpretation of the protected-environment component of marginal employment under § 4.16(a). It limits VA’s ability to deny TDIU using overly narrow, employer-motive-focused tests and gives veterans a clearer evidentiary path when they remain employed despite serious service-connected impairment.

Using an unduly narrow definition of protected employment, such as requiring charitable or benevolent employer intent or treating ADA accommodations as dispositive against TDIU.

A veteran keeps a job after repeated disciplinary issues and reduced productivity because the employer gives unusual accommodations, lowers performance expectations, and tolerates work that would not be accepted in the open labor market. The question is whether that position was shielded from competition and was low enough in income to qualify as marginal employment.

Use this case to challenge Board decisions that deny TDIU based only on continued employment, employer benevolence, or the existence of legally required accommodations. Build the record on income, workplace shielding, special treatment, and whether the position would exist under competitive market conditions.

Kisor v. Wilkie, Cantrell v. Shulkin, Ray v. Wilkie, Van Hoose v. Brown, Faust v. West, Arline v. McDonough, Tadlock v. McDonough, Tucker v. West