Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) Update

As our military personnel (including reservists called to active duty) are preparing to leave for overseas destinations, more of you are finding that your employees are among those troops. It's important to be aware that they have certain rights and protections under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). This article highlights some of the rights and protections that employees have during military service and upon reemployment relating to their job and benefits.

Who's covered under USERRA?

USERRA covers employees on "qualified military service," which means service in "uniformed services" while on active or inactive duty, including training periods. Uniformed services include the Army, Navy, Marine Corps, Air Force, Coast Guard, Public Health Service Commission Corps, and the reserve components of those services as well as training or service in the National Guard or Air National Guard. Most private and government employers are subject to the Act.

Employee's obligations

To be covered by USERRA, employees must:

• give you notice of their impending military service;
• receive an honorable or general discharge from the military; and
• promptly return to work. The time frame in which employees must return to work after discharge depends on the length of their military service:
  • If the employees' military service was less than 31 days, they must return to work the first day after the completion of service.
  • If their military service was more than 30 days but less than 181 days, they must submit for reemployment within 14 days after the completion of service.
  • If their military service was more 180 days, they must submit for reemployment within 90 days after the completion of service.

Employees' rights and protections

Assuming that the employees satisfy all their obligations, they're afforded the following rights and protections under USERRA:

• Reemployment -- You must offer jobs to your employees returning from military service. The jobs that they're offered depends on the length of their military service.
  
  
• Qualified benefits plans -- As a plan sponsor of a qualified plan, you must count their military service as a time of employment for purposes of eligibility, vesting, and benefit accruals under your qualified plans. Don't treat their military leave as a break in service.
  
  
• Salary deferrals and matching contributions -- Upon reemployment, your military employees may catch up on their 401(k) contributions by contributing the amount that they could have contributed during their military service. How long do they have to make these additional contributions? Either five years or three times their period of service, whichever is shorter. To determine the amount of their additional contributions, consider their compensation during military leave to be the same as they would have been paid if were it not for the military service.
  
  You're required to make matching contributions related to the additional contributions made by the employee. But you don't have to make up for lost earnings during the period of military service.
  
  
• Loans -- Under USERRA, you may (but aren't required to) suspend employees' obligation to repay loans from your retirement plan while they're on military duty. The suspension won't result in a deemed distribution or affect the qualified status of the plan. Employees may continue to repay their loans by check if the plan permits repayment by check.
  
  In addition to USERRA, the Solders and Sailors Civil Relief Act of 1940 (SSCRA) may apply to certain employees on military service who have plan loans. SSCRA imposes a six percent limit on the interest rates that active military personnel can be charged for obligations and liabilities incurred before active duty began. The U.S. Department of Labor has indicated that this limitation apples to plan loans.
  
  Unlike USERRA, SSCRA applies only to individuals entering or called to active duty, including the period for training or education under U.S. supervision before induction into military service. Although employees may be entitled to have their loan repayments suspended, only employees on active duty are entitled to the six percent interest rate limitation. To ensure that the provisions under USERRA and SSCRA are administered properly, loan policies should clearly describe who's eligible for the protections under each law.
  
  
• Health plans -- All employers, regardless of size, must offer employees continued medical coverage for the first 18 months of military service. You may require employees whose military service is longer than 31 days to pay 102 percent of the normal premium. If employees lose coverage, the plan can't impose exclusions or a waiting period upon reemployment.
  
  
• FMLA -- You must credit your employees for all months of military service for purposes of eligibility under the Family and Medical Leave Act (FMLA).

Bottom line

If you have -- or expect to have -- employees on military duty, you should verify that your qualified plans, welfare plans, and other employee benefit programs comply with USERRA and SSCRA and that your affected employees are made aware of their rights and obligations under those laws.

Reservist Files Lawsuit Against Employer

A US Navy reserve officer has sued Pep Boys, his employer, claiming he was fired for taking time off to serve in the military. He's one of 210,000 reservists called up to active duty, resulting in an increased number of conflicts with civilian employers.

Although in concept USERRA, the employment law protecting reservists and National Guard, may appear straightforward, its reemployment requirements generate many practical questions from even the most experienced HR professionals. Below are a few of them, with answers, from the Military Leave Compliance Kit:

Q: What are the basic criteria that entitle employees to eligibility for USERRA protection?

A: Under USERRA, an employee is entitled to reemployment rights and maintenance of employment benefits only if the person returning from military service meets five eligibility criteria:

• The person must have held a civilian job with the employer.
• The person must have given advance notice to the employer that he or she was leaving the job for service in the uniformed services.
• The period of military service must not have exceeded five years (with certain exceptions).
• The person must have been released from service with a non-disqualifying discharge.
• The person must have reported back to the civilian job in a timely manner or have submitted a timely application for reemployment.

A: Yes. The time limits for reporting back to work depend on the length of the returning employee's military service. The longer the service, the greater the length of time for reporting back to work. The reporting time limits are:

• Service of one to 30 days: not later than the beginning of the first regularly scheduled work period on the first full calendar day following completion of service and the expiration of eight hours (i.e., an eight-hour 'rest period') after a reasonable period allowing for safe transportation home from the place where military service was performed. In some circumstances, time limits for returning to work may be 'as soon as possible' if reporting on the first regularly scheduled work period is 'impossible or unreasonable through no fault of [the returning employee].'
• Service of 31 to 180 days: not later than 14 days following completion of military service, or 'as soon as possible' if the failure to make timely application is through no fault of the returning employee. Also, for returning employees whose length of service is more than 30 days, an employer may require the employee to provide documentation that: (1) the application is timely; (2) the leave has not exceeded the five-year limit; and (3) the separation from military service was not disqualifying.
• Service of 181 days or more: not later than 90 days from completion of military service.

Q: Is an employer allowed to fill the position of an employee who is away on military leave, or must the position be held open for the length of that leave?

A: An employer may hire a new employee or transfer an existing employee to perform the work of the employee on military leave. Upon return from military service, however, the returning employee is entitled to reemployment. The position into which a returning employee is reinstated is based on the length of military service. For returning employees whose military service was one to 90 days: the position is the one the person held or would have held had the person remained continuously employed without interruption for military service, so long as the person is qualified to perform the job or can become qualified after reasonable efforts by the employer. Where military service was for 91 or more days, USERRA establishes the following order of priority:

1. the position the person held or would have held as described above;
2. a position of like seniority, status, and pay, so long as the person is qualified for the job or can become qualified after reasonable efforts by the employer; or
3. where the person cannot become qualified, any other position that most nearly approximates those positions described above, with no loss of seniority even if the position is of lesser status and pay.

Q: If a company that is going through a RIF decides not to terminate veterans on leave, does USERRA offer any protection for employers against other discrimination actions (e.g., adverse impact for gender)?

A: USERRA does not protect a service member from a bona fide RIF. There is no provision in the Act that would protect an employer that provided such generous treatment to employees serving in the uniformed services from other actions.

Q: What workplace accommodations are required for returning employees who incurred or aggravated disabilities while in military service? What is the relationship of USERRA to the Americans with Disabilities Act (ADA)?

A: The reemployment requirements under USERRA are more generous to employees than the ADA is. The ADA only requires employment of individuals who are qualified to perform the essential functions of a position, while USERRA requires training or retraining of persons returning from military service who are not currently qualified for the position so that they may become qualified. Both laws require the employer to make 'reasonable accommodations' to the returning employee's disabilities.

The following three-part reemployment scheme is required for persons with disabilities incurred or aggravated while in military service:

1. The employer must make reasonable efforts to accommodate a person's disability so that the person can perform the position that he or she would have held if he or she had remained continuously employed.
2. If, despite reasonable accommodation efforts, the person is not qualified for the position due to his or her disability, the person must be employed in a position of equivalent seniority, status, and pay, so long as the employee is qualified to perform the duties of the position or could become qualified to perform them with reasonable efforts by the employer.
3. If the person does not become qualified for the position after reasonable efforts by the employer, the person must be employed in a position that most nearly approximates the position in terms of seniority, status, and pay.

In addition, the deadline for reinstatement may be extended for up to two years for returning employees who are convalescing due to a disability incurred or aggravated during military service.

Q: Are employers required by USERRA to pay an employee who is on military leave of absence?

A: No. Many employers, however, voluntarily offer differential pay (difference between civilian pay and military pay) or provide a specific number of paid military leave days. Continuation of health insurance for employees on military leaves of absence is treated like COBRA, where the employees may elect to pay for continued coverage. Just as many employers voluntarily compensate employees for military leave, some employers also pay the health insurance premiums for COBRA coverage for a certain period of time or to maintain dependent coverage.

Q: May we require that an employee use other forms of leave, paid or unpaid, for purposes of military service? What if the employee wants to use other leave?

A: USERRA forbids an employer from requiring an employee to use his or her vacation, annual, or similar leave during such period of military service. The employee is permitted, but not required, to request that such military service be counted by the employer as vacation, annual, or similar leave with pay. Some employees, for example, may want to use these other forms of leave as a way of receiving additional compensation where such leave is paid leave.

There are many additional issues at work, such as compensation, benefits, remedies, and a raft of individual state laws, many of which are more restrictive than the federal version.

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