by John Irving, Kirkland & Ellis
As you may know the federal government recently has ordered military reserve units to active duty in the United States armed forces as a consequence of the tragic events of September 11, 2001. Pursuant to the requirements of the Uniformed Services Employment and Reemployment Rights Act of 1994, 38 U.S.C. §§ 4301 et seq. ("USERRA"), employers have certain obligations relating to the reemployment of members of the uniformed services. The following is a general overview of the principal requirements of USERRA applicable to non-government employers, and is intended to assist you in understanding your potential responsibilities under USERRA in the event your business becomes affected.
Purpose and Coverage
USERRA broadly prohibits discrimination in the terms and conditions of employment against members of the uniformed services and establishes reemployment rights and certain benefit entitlements for individuals who return to their former employers after military training or service. These rights and benefit entitlements apply to individuals who serve on a voluntary or involuntary basis in any of the following uniformed services: (i) Army, Navy, Marine Corps, Air Force, or Coast Guard; (ii) Reserve units of any of the foregoing; (iii) Army or Air National Guard; and (iv) Commissioned Corps of the Public Health Service. In order to be eligible for coverage under USERRA, an employee generally must provide advance notice to his or her employer of a military service obligation.
Reemployment Rights and Obligations
1. In General
USERRA requires an employer to promptly reemploy a returning service member in the position the service member would have held if he or she had been continuously employed throughout the duration of the uniformed service. If the returning service member is not qualified for that position (other than as a result of a service-related disability) after reasonable efforts have been made by the employer to assist the service member in becoming so qualified, then the returning service member must be reemployed in the position he or she left. Solely with respect to individuals whose period of uniformed service exceeds 90 days, the employer may substitute for either of the foregoing a position of like seniority, status and pay. If a returning service member cannot become qualified for the foregoing positions even after the employer has made reasonable efforts, the returning service member must be reemployed with full seniority in a position for which he or she is qualified that is the nearest approximation to the positions described above.
Reemployment rights under USERRA do not extend to employees absent for a cumulative length of service that exceeds 5 years (with certain exceptions for mandatory service) or to employees whose separation from uniformed service occurs under other than honorable circumstances. Also, an employer is not required to reemploy an individual whose employment prior to military service was for a brief or non-recurrent period with no reasonable expectation that the employment would continue indefinitely. An employer can be excused entirely from reemploying uniformed service members if the employer's circumstances have changed so much that reemployment would be impossible or unreasonable.
3. Disabled Employees
An employer must make reasonable efforts to accommodate a returning employee who has a service-related disability so that the employee can work in the position that he or she would have held if the service member had remained continuously employed during the period of uniformed service. However, if the disabled returning service member is not qualified for that position despite the employer's reasonable accommodation efforts, the returning service member must be employed in a position of equivalent seniority, status, and pay for which he or she is qualified or could (with reasonable efforts by the employer) become qualified. If the returning service member is not or cannot become qualified for either of the foregoing positions, he or she must be employed in a position that, consistent with the circumstances of the returning service member's individual situation, most nearly approximates a position of equivalent seniority, status and pay.
4. Reasonable Efforts
Under USERRA employers must make reasonable efforts to qualify returning service members for reemployment. Such "reasonable efforts" include refresher training, any training necessary to update a returning employee's skills for technological advances, and any other action that does not place an undue hardship on the employer. An action causes an "undue hardship" if it entails significant difficulty or expense on the employer's part when considered in light of the type of action required and the overall financial resources and circumstances of the employer.
5. Employee Reporting Obligations
In order to qualify for reemployment under USERRA, employees absent on account of uniformed service for periods of less than 31 days must report back to work by the beginning of the first full regularly scheduled working period on the first calendar day that begins 8 hours after a time period for safe transportation from the location of uniformed service to the employee's residence. If the period of uniformed service is more than 30 days but less than 181 days, the returning service member must submit an application for reemployment to the employer no later than 14 days following completion of service. For service of over 180 days, the returning service member must submit an application with the employer no later than 90 days after completion of military service. In all cases, if reporting to work within the specified period is impossible or unreasonable through no fault of the returning service member then USERRA requires that the individual report to work as soon as possible. In addition, all time limits for reporting back to work may be extended for up to 2 years if the returning service member is hospitalized or convalescing from an injury caused by active duty.
6. Special Protection from Discharge
Employees returning from uniformed service may not be discharged from employment without cause for one year after the date of reemployment if the person's period of military service was for more than 180 days, or for 6 months after the date of reemployment if the person's period of military service was from 31 to 180 days. Returning employees whose uniformed service period was 30 days or less are not protected from termination of employment without cause.
Conditions of Employment and Employee Benefits
1. Seniority Rights
Upon reemployment, a uniformed service member is entitled to the seniority and rights and benefits determined by seniority to which he or she was entitled on the date the uniformed service began, plus any additional seniority and rights and benefits to which the service member would have been entitled if he or she had remained continuously employed. A right or benefit is seniority-based if it is determined by or accrues with length of service.
2. Rights Not Based on Seniority
Uniformed service members must be treated as if they are on a leave of absence from their employers and are therefore entitled to any rights and benefits not based on seniority that are available to employees on non-military leaves of absence. However, a uniformed service member may be required to pay the employee cost, if any, of any benefit continued pursuant to the requirements of USERRA to the extent other employees on leave of absence are so required. Upon reemployment, the uniformed service member is also entitled to any non-seniority rights and benefits that became effective during the period of military service.
3. Health Benefits
If an employee's health plan coverage would terminate because of an absence for uniformed service, USERRA entitles the employee to elect to continue health plan coverage for up to 18 months after the absence begins or for the period of uniformed service, whichever is shorter. A uniformed service member cannot be required to pay more than the normal employee portion of any premium cost for military service absences of 30 days or less, or more than 102 percent of the full cost of the premium for absences of more than 30 days. In addition, reemployed service members are entitled to reinstatement of health coverage without pre-existing condition exclusions or waiting periods, with certain exceptions for illnesses or injuries deemed by the Department of Veterans' Affairs to be service related.
4. Pension Benefits
A reemployed uniformed service member must be treated as not having incurred a break in service for purposes of any pension or retirement plan maintained by his or her employer. In addition, the period of uniformed service must be considered as service with the employer for purposes of vesting and benefit accrual, and the employer is liable for funding any resulting obligation. However, the returning uniformed service member is entitled to any benefits derived from employee contributions (e.g., employer matching contributions under a 401(k) plan) only to the extent he or she makes the employee contributions on which such benefits are based. Repayment of employee contributions can be made over a period that is 3 times as long as the duration of military service but no longer than 5 years. For purposes of determining the amount of an employer's liability or an employee's contributions under any pension or retirement plan, the employee's deemed compensation during the period of uniformed service is based on the rate of pay the service member would have received but for his or her absence.
5. Vacation Pay
A uniformed service member must be permitted -- but cannot be required -- to use any vacation time that accrued before the beginning of his or her military service in lieu of unpaid leave.
A uniformed service member's rights under USERRA may be enforced by the Veterans' Employment and Training Service (VETS) of the Department of Labor, the United States Attorney General, or the affected uniformed service member. The United States courts may use their full equity powers to vindicate rights under USERRA, including requiring an employer to comply with specific provisions of USERRA and to compensate a uniformed service member for the loss of any wages or benefits. In addition, USERRA specifically provides that awards of back pay or lost benefits may be doubled in cases where violations of USERRA are found to be willful, i.e., where the employer's conduct is found to be knowingly or recklessly in disregard of the law. USERRA permits a court to award attorneys' fees, expert witness fees, and other litigation expenses to successful plaintiffs who retain private counsel, and prohibits the charging of court fees or costs against uniformed service members who bring suit.
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The foregoing is only a summary and does not include all the provisions of USERRA that may be applicable to a particular set of circumstances. In addition, State and local laws and other federal laws such as the Americans with Disabilities Act could affect your obligations to employees who enter the uniformed services. Thus, we encourage you to contact us with any questions you may have about military leave issues.
KIRKLAND & ELLIS
Employee Benefits Practice