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RISKVUE ARCHIVE | INDUSTRY WATCH > EMPLOYMENT PRACTICES
Military Leaves — New Regulations Employers Share in War on Terrorism
By Kenneth M. Haneline
On December 19, 2005, the United States Department of Labor (DOL) issued final regulations for the Uniformed Services Employment and Reemployment Rights Act (USERRA) concerning the obligations of employers to members of the Armed Services who must take leave from work to comply with military service orders. These new regulations go into effect on January 18, 2006. Some of the most important aspects of the new rules include:
Eligibility Requirements: An employee must meet the following criteria to be eligible for reemployment under USERRA at the end of military service: (1) the employer had advance notice of the employee’s service; (2) the employee has five years or less of cumulative service in the uniformed services (with a number of exceptions); (3) the employee timely returns to work or applies for reemployment; and (4) the employee has not been dishonorably discharged.
Escalator Principle: The addition of an “escalator principle” which requires the employee to be reinstated to the position he or she would have obtained with reasonable certainty but for the military absence. The regulations also address how the specific reemployment position is determined and provide that the reemployment position includes the seniority rights, status, and pay that the employee would ordinarily have obtained in that position given his or her job history, including prospects for future earnings and advancement. Notwithstanding the escalator principle, the regulations emphasize that USERRA does not require an employer to reinstate a returning service member in an employment position if the returning service member is not qualified to perform the civilian job, although the employer is obligated to make reasonable efforts to assist the returning employee to become qualified for employment.
Under the new regulations, employers may now examine the returning employee’s own work history, the employee’s history of merit increases, and the work and pay history of employees in the same or similar position in determining whether the returning employee is entitled to non-seniority, performance-based “merit pay” increase which might have been earned during the employee’s leave of absence. The preamble to the regulations provides the following example: if the employer offers continued life insurance coverage, holiday pay, bonuses, or other non-seniority benefits to its employees on a leave of absence, the employer must also offer the service member similar benefits during the time he or she is absent from work due to military service. According to the preamble, the accrual of vacation is a non-seniority benefit.
Leave Notice: Employees are not required to give written or formal notice of their need for leave, but only such notice as is necessary to reasonably inform the employer.
Prompt Reemployment: Employers are required to reemploy returning employees “promptly,” meaning “as soon as practicable under the circumstances.” Under normal circumstances, reemployment must occur within two weeks. Where the employee is returning from weekend National Guard duty, “prompt reemployment” is the next regularly scheduled workday. “Prompt reemployment” after several years of active duty may require more time, because the employer may have to reassign or give notice to another employee who occupied the returning employee’s position.
Job Elimination: An employer need not reemploy a returning employee if the employer conducted a reduction in force during the employee’s period of military service and can demonstrate that the reduction would have included the employee.
Health Coverage: If an employee’s health coverage lapses during a period of service, it must be reinstated immediately upon the employee’s return, regardless of any waiting period that would normally be imposed under the employer’s plan. Last year, the COBRA rules were changed to require a continuation period of 24 months, rather than the usual 18 months, for employees on military leave.
Pension Contributions: Pension plans must allow employees to make up all or part of any contributions they missed by virtue of their terms of military service. This duty extends even to service members who are no longer employed by the plan sponsor.
Employer Definition: The definition of employer includes supervisors and managers in certain situations. Thus, there can be individual liability under USERRA. To establish a discrimination claim under USERRA, the individual must show that a status or activity protected by USERRA was “one of the reasons” the employer took action against him or her, not necessarily the sole cause of the employment action.
Protection from Discharge
The regulations clarify a returning service member’s special protections from discharge except for “just cause.” The regulations now provide that although the “just cause” requirement is an exception to at-will employment, the protection from discharge is not absolute. The regulations provide that “the employer bears the burden of proving either that the discharge was based on the employee’s conduct or it was the result of some other legitimate nondiscriminatory reason that would have affected any other employee in the reemployed service member’s position regardless of his or her protected status or activity.” The regulations list other illustrative examples for discharge to include “elimination of the employee’s position, corporate reorganization or ‘downsizing’ and layoff, provided that those reasons are legitimate, nondiscriminatory, and non-pretextual.”
New USERRA Notice Poster
The Veterans’ Benefits Improvement Act of 2004 (VBIA) requires employers to provide notice to all employees of their rights under USERRA. The DOL has revised the notice poster by stating that USERRA may apply to certain National Disaster Medical System personnel. Because this service is the only USERRA-covered service not contained in USERRA itself and, as a result, may be overlooked, the DOL modified the text of the notice to include this service. This change is separate from the new USERRA regulations. The latest version of the poster is available at the following website: www.dol.gov/vets/programs/userra/USERRA_Private.pdf. 
ABOUT THE AUTHOR
Kenneth M. Haneline is a shareholder with the Akron, Ohio, law firm of Kastner Westman & Wilkins, LLC (www.kwwlaborlaw.com). He advises clients in all areas of employee benefits law, including compliance and tax issues, welfare and pension plans, and ERISA litigation. He represents clients in federal and state courts at the trial and appellate levels, and before the DOL, IRS, and the PBGC. He can be reached at 330-867-9998 or khaneline@kwwlaborlaw.com.
This article originally appeared in the Winter 2006 issue of kwwlaborlaw.communicator, a publication of Kastner Westman & Wilkins LLC. Reprinted with permission.
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April 2006
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