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FULLER & HENRY, LTD.
CLIENT MEMORANDUM
Employer Obligations to Employee-Reservists Called
to Active Military Duty
Introduction
The current situation in the aftermath of terrorist attacks on the World
Trade Center in New York City and on the Pentagon in Washington, D.C.,
presents employers with several issues regarding their obligations to
employees who are called to active military duty. Such issues include
employee pay during military leave, health and vacation benefits, reemployment
upon completion of military duty, pensions and other benefits, etc.
The President has already authorized a call-up of 50,000 military reservists,
and thus all employers should be informed of their obligations to any
employees who are called to active duty.
An employer’s obligations to employee-reservists are governed by
federal law, state law, and the employer’s established policies.
Under federal law, these obligations extend to employees called to active
duty in the United States Army, Navy (including the Marine Corps), Air
Force, and Coast Guard, their reserves, the Army and Air National Guards,
and the commissioned corps of the Public Health Service.
In 1994, Congress passed the Uniformed Services Employment and Reemployment
Rights Act (USERRA). This federal statute is the latest in a continuous
line of federal laws addressing the employment and reemployment rights
of members of the uniformed services. It is currently enforced by the
United States Department of Labor. In addition, state legislatures have
enacted similar laws, which in some instances are even more generous
(i.e., pro-employee) than the federal statute. USERRA does not preempt
such more generous state laws.
USERRA is binding on all employers in both the private and public sectors.
It applies to virtually all employers, regardless of size.
As a general rule, USERRA mandates that an employer must allow employees
to take a leave of absence for active or training duty in the uniformed
services of the United States, must hold open the employee’s position
- or at least one of similar seniority, status and pay -- while he or
she is on such leave, and may not discriminate against the employee
during or after his or her military leave.
This memorandum is intended to provide an overview of the highlights
of USERRA, and thus give employers a basic understanding of how their
businesses may be affected. If you are in fact confronted with an issue
or question pertaining to an employee-reservist called to active duty,
it is recommended that you consult with an attorney in order to discuss
the matter in more detail.
Purposes of USERRA
Congress has indicated that the overall purpose of USERRA (and similar
previous legislation) is to encourage service in the uniformed services
and to minimize disadvantages to civilian careers and employment which
might otherwise result from such service. In passing the Act, Congress
intended to provide clear guidelines for prompt reemployment of employee-reservists
called to active duty and to prohibit any discrimination against such
persons because of their military service. The Act provides that an
employer cannot deny any employment benefit to an employee on the basis
of that employee’s performance of past, current, or future military
service. However, it should be noted that an employee is not entitled
to any additional benefits that he or she would not be entitled to if
not on military leave.
Employee’s Duty to Provide Notice
An employee who is called to active military duty must provide his or
her employer with advance written or verbal notice of such duty. USERRA
does not set a specific time for the giving of such notice, but employees
are required to provide reasonable notice based on the specific circumstances
of their call to duty. The Act does recognize that an employee is not
always able to provide such notice, such as when the giving of such
notice is precluded by military necessity or if it is otherwise impossible
or unreasonable under the circumstances. A determination of military
necessity is made based on regulations prescribed by the Secretary of
Defense, and it is not subject to judicial review.
Duration of Service
An employee-reservist who enters active military duty is entitled to
reemployment rights if he or she is absent from employment for five
years or less. There are certain exceptions whereby an employee is exempt
from the five-year limitation and thus is still entitled to reemployment
benefits, e.g., military service whereby a person, through no fault
of his or her own, is unable to obtain a discharge from duty within
the five-year limit.
Pay During Military Leave and Use of Vacation Time
Under USERRA, an employer is not required to pay an employee-reservist
during his or her military leave. However, a company may voluntarily
pay the difference between an employee’s regular wages and military
pay received during active duty. The Act gives employee-reservists the
option to use any paid vacation or similar leave with pay they accrued
prior to active military service. This option is available only to the
employee-reservist; the employer cannot require the employee to use
vacation time while on military leave.
Some state laws may have additional pay requirements for certain employees
who are called to active duty. For example, certain Ohio public employees
must receive their full regular pay for the first month of military
leave in any calendar year, without offset for military pay. After the
first month, such Ohio public employees are entitled to receive the
difference between their regular pay and military pay, up to a maximum
of $500 per month. These payroll continuation and make-up rules under
Ohio law do not apply to private sector employers in Ohio, and it has
been held that a home-rule municipality may enact different provisions
for its employees.
Health Benefits
USERRA mandates that an employer must provide an employee-reservist
(and his or her dependants) with an election to continue health care
coverage during military leave for up to 18 months. This election is
available whether or not the employer provides health care coverage
during other types of leaves of absence, and regardless of whether the
employer is subject to the continuation of coverage provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA). Employee-reservists
can be required to pay up to (but no more than) 102% of the full premium
for the health insurance coverage. However, if the military leave is
for 31 days or less, then an employee must only be required to pay the
same premium as that paid by active employees.
Under USERRA (and unlike COBRA), an employer cannot discontinue an employee-reservist’s
health care coverage merely because that employee is receiving additional
health care coverage as an active member of the armed forces. In addition,
an employer cannot discontinue health care coverage for dependants of
an employee-reservist merely because those dependants are entitled to
coverage under the Civilian Health and Medical Program of the Uniformed
Services (CHAMPUS). Finally, when the employee-reservist returns to
active employment, a waiting period or exclusion cannot be imposed before
reinstatement of regular health care coverage if such coverage would
have been provided to an employee who had not been absent for military
service.
Other Welfare Benefits
USERRA makes it clear that any benefits in which the employee-reservist
(and his or her dependants) participated in upon departure for military
leave must be reinstated upon that employee’s reinstatement after
military service. In addition, an employee on military leave is entitled
to participate upon his or her return in any benefit programs that began
during his or her military leave (so long as that employee would have
been eligible if military leave had not occurred).
Retirement and Pension Benefits upon Reemployment
USERRA clarifies the issue regarding continuation of pension plan coverage
for employee-reservists called to active duty – all pension plans
are protected in favor of the employee. The Act clearly mandates that
military leave does not constitute a break in employment for the purpose
of continuation of pension benefits. There is no need for a reinstated
employee-reservist to requalify for participation in any pension benefit
program. These rules also require employers to make any pension plan
contributions that would have made if an employee-reservist had not
been absent for military service. Thus, it is clear that an employee-reservist’s
pension benefits are fully protected.
USERRA also provides special rules for pension plans which require elective
deferrals whereby the employee must make contributions to the program
(such as 401(k) and 403(b) programs). An employee-reservist must be
given the opportunity to “make up” any deferrals that were
missed during active military duty. The Act states that upon reinstatement
of employment, an employee has three times his or her length of military
service (up to a maximum of five years) to make up any necessary contributions.
If the employer makes matching contributions under the plan, then the
employer must also match any such make-up employee contributions.
USERRA does not require employers or the plan to make-up for any forfeitures
that might have been allocated for an employee’s benefit during
his or her absence for qualified military service. It should be noted
that any investment earnings on an employee’s pension or profit-sharing
account at the time of leave for military service must continue to accrue.
However, employers are not required to pay any interest or other earnings
with respect to any make-up contribution payable after an employee returns
from military service.
Reemployment Rights: Employment Position
Under USERRA, the law regarding an employee’s reemployment rights
after military service is quite lengthy and complex. Generally, upon
reinstatement after military leave, an employee is entitled to reemployment
in the same position he or she would have been in had no military leave
been taken. Thus, the employee is entitled to maintain his or her seniority
status and other employment benefits. Specifically, USERRA allows a
returning employee to count his or her military service as part of his
or her seniority within the company for purposes of accrual of benefits,
e.g., pension eligibility, vacation time, insurance benefits, etc. In
addition, a returning employee-reservist is entitled to the employment
position required by the Act regardless of whether another person occupies
that position. Thus, an employee’s position is not unavailable
merely because another employee occupies it. Furthermore, USERRA requires
that in order for a returning employee-reservist to be eligible for
reemployment, he or she must have obtained an honorable discharge upon
his or her release from military service.
If an employee-reservist is absent from employment for 90 days or less,
the employer must return the employee to the employment position in
which the person would have been employed if employment had not been
interrupted for military service. This requirement has been termed the
“escalator principle.” Basically, the escalator principle
requires that a returning employee-reservist must step back onto the
seniority escalator at the point the person would have occupied if he
or she had remained continuously employed. However, if the employee
is not qualified to perform the duties of that position, then the employer
must reinstate the employee to the position he or she was employed in
on the date military service began.
If an employee-reservist is absent from employment for more than 90
days, the employer must return the employee to the position he or she
would have been employed in if his or her employment had not been interrupted
by military service, or to a position of like seniority, status and
pay if he or she can perform those job duties. However, if the employee
is not qualified to perform the duties of that position, then the employer
must reinstate the employee to the position he or she was employed in
on the date military service began. Finally, regardless of the length
of military service, USERRA mandates that an employer must make reasonable
efforts to qualify (i.e., train) a returning employee for the appropriate
reemployment position.
Reemployment Rights: Timing of Return to Work
USERRA also provides specific rules regarding the amount of time a returning
employee has to reapply for his or her employment position after termination
of military service. The rules vary depending on the length of time
that the employee was away on active military duty. If the military
leave period is more than 180 days, the employee must submit an application
for redeployment within 90 days after completion of military service.
If the military leave period is between 31 and 180 days, the employee
must submit an application within 14 days following completion of military
service. Finally, if the military leave period is for 30 days or less,
the employee must report to his or her employer at the start of the
next regularly scheduled shift following eight hours of returning safely
home (unless reporting within eight hours is impossible or unreasonable
through no fault of the employee).
All of the aforementioned time limits for applying for reemployment
may be extended for up to two years if an individual is hospitalized
for, or convalescing from, an illness or injury incurred during the
performance of military service. If the employee does re-cover from
such illness or injury within two years, then he or she must report
to his or her employer for reemployment.
Reemployment Rights: Disability Cases
An employee-reservist who is disabled as a result of his or her military
service has certain special reemployment rights under the law. USERRA
provides that if a disabled employee is not qualified for reemployment
in the same position he or she would have attained if continuously employed,
then that employee must be reemployed in any other position of similar
seniority, status and pay. The employer is obligated to make reasonable
efforts to qualify the employee for such position. However, an employer
is not required to reemploy a disabled returning employee if doing so
would be of such difficulty or expense as to constitute an undue hardship
on the employer.
Post-Reemployment Protection of Returning Employees
USERRA also provides extraordinary protection for employees following
reemployment. An employee returning from a protected military leave
of more than 180 days may only be discharged “for cause” during
the one-year period following his or her return to work. An employee
returning from a military leave of 30 to 180 days is entitled to 180
days of such “for cause” job protection. These protections
apply even where employment-at-will is the rule for employees generally.
USERRA does not include a definition of discharge “for cause”,
but the term has been narrowly applied by the courts in other contexts
where the law is primarily intended for the protection of employees.
Ban on Employment Discrimination Against Persons Who Serve in the Uniformed
Services
USERRA prohibits employment discrimination based on past, present, or
future military obligations. This prohibition is quite broad and extends
to most areas of employment, including initial employment/hiring, retention
in employment, promotion, reemployment, termination, benefits, etc.
In addition, employers are prohibited from taking any adverse employment
action or retaliating against anyone (regardless of whether the person
has performed military service) who takes an action to enforce a protection
afforded by USERRA.
Enforcement
As noted above, the U.S. Department of Labor has regulatory and enforcement
authority under USERRA. This includes the power to issue binding rules
and regulations under the statute and the authority to obtain court-ordered
compliance. Private individuals who claim violations of their employment
and reemployment rights under the statute also have standing to sue
in federal court. Potential remedies include reinstatement plus back
pay. If a violation of the Act is found to be willful, the court may
award liquidated damages, in effect doubling the amount of the back
pay award.
There does not appear to be any specific statute of limitations applicable
to USERRA, so an employer’s only time-based defense may be the
equitable doctrine of “laches”, a stringent standard for the
employer to meet.
Conclusion
As stated at the outset of this memorandum, the foregoing is intended
to bring to your attention your obligations as an employer to any employees
who have already been called, or may be called in the future, to active
military duty. As is probably evident from the information contained
herein, an employer’s obligations and responsibilities with regard
to employee-reservists, are quite extensive and in some instances, complex.
Thus, if you currently employ a reservist who is called to active duty
in connection with the current crisis in the United States, it is strongly
suggested that you consult with an attorney so you can be advised regarding
your compliance with all applicable laws.
FULLER & HENRY LTD
October 2001
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This memorandum is meant to describe only the general impact of the
USERRA and related legal authorities. Employers should be aware that
the application and impact of the laws discussed in this memorandum will
vary depending on specific facts. As a result, this memorandum should
not be relied upon as providing legal advice on any specific situation,
but should instead be viewed as a general guideline. For advice on any
particular question under the USERRA or on other aspects of employment
and reemployment rights, employers should consult with their legal advisors.
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