DOL Issues Final Rules Interpreting USERRA

On December 19, 2005, the U.S. Department of Labor (DOL) published final rules interpreting the Uniformed Services Employment and Reemployment Rights Act (USERRA), 38 U.S.C. §§4301 et seq. The rules are the first issued regarding USERRA since it was enacted in 1994. They became effective on January 18, 2006. This advisory highlights key aspects of the new rules and the major rights and obligations created by USERRA.

Fortunately for employers, the final rules do not include many new mandates. There are no significant new compliance burdens. Primarily, the new rules clarify various definitions and legal burdens of proof in the USERRA law.

The rules modify slightly the poster that employers may use to meet their obligation to provide employees with notice of their USERRA rights. Since March 2005, employers have been required to provide their employees with such notice, and the DOL made available a model poster that employers could post to meet this obligation. The DOL’s December 16, 2005 final regulations made slight modifications to the model poster, which is available for download in its revised form by clicking on this link: Revised USERRA Poster.

Employers are not required by law to post the DOL’s model USERRA poster. The new rules expressly acknowledge that employers may meet the legal obligation to provide employees with notice of their USERRA rights by handing out the poster to all employees, by mailing it, or by sending it to employees electronically (via e-mail, for instance).

Enacted with little fanfare in 1994, USERRA strengthened significantly the employment rights of persons who must be absent from work for military service, and created new responsibilities for their civilian employers. The Act enhanced greatly the right to take military leave and to reinstatement upon returning from leave. One such enhancement created the right to take five years cumulative leave. Another mandated that employees reinstated after leaves of more than 181 days may not be discharged, without cause, for one year after the date of their reemployment. Those reinstated after leaves of less than 181 days but more than 30 days may not be terminated, without cause, for 180 days after the date of their reemployment.

USERRA, unlike many other employment laws, does not make exceptions for small employers. All public and private-sector employers must allow leave to persons required to be absent from work due to service in the uniformed services. "Uniformed services" includes the Army, Navy, Air Force, Marine Corps, Coast Guard, Army National Guard, Air National Guard, commissioned corps of the Public Health Service, and any other category of persons designated by the President in time of war or national emergency. The term "service" encompasses more than involvement in major calamities such as war or national emergencies. It also covers any duty—voluntary or involuntary—including active duty; active duty for training; initial active duty for training (e.g., boot camp); inactive duty training (e.g., reserve weekends); full-time National Guard duty; and absences for examinations to determine fitness for duty (e.g., mandatory physical examinations).

Regardless of the type of military leave, employees are protected for a cumulative period of five years of absences caused by military duty. Some types of leave may not be counted, however, as part of the cumulative five-year period. Leave taken for boot camp, to complete an initial period of service, caused by inability to secure orders releasing the employee from active duty, or required for mandatory training such as the two-week annual training periods may not be counted as part of the five-year cumulative period. USERRA protects these types of military service without limitation.

Employers may and should work with employees individually to schedule the leave necessary to satisfy routine military obligations such as weekend training. They may not, however, refuse proper requests for leave merely because they think the duration, timing, or frequency of such leaves is unreasonable.

Employees must notify employers in advance of the need to be absent for military duties, but the Act gives them flexibility in providing the notice. Notice may be either oral or written, and may be given by the employee or an appropriate representative of the employee’s military branch. No notice is required when military necessity precludes it or giving notice is otherwise impossible or unreasonable.

While on military leave, employees may use the time for purposes other than military service. An employee is not required to leave the employment position for the sole purpose of performing service in the uniformed services. For example, if the employee is required to report to an out of State location for military training and he or she spends off-duty time during that assignment moonlighting as a security guard or visiting relatives who live in that State, the employee will not lose reemployment rights simply because he or she used some of the time away from the job to do something other than attend the military training. Also, if an employee receives advance notification of a mobilization order, and leaves his or her employment position in order to prepare for duty, but the mobilization is cancelled, the employee will not lose any reemployment rights.

USERRA guarantees the right to "prompt reemployment" following absence due to military service whether the employees are full-time or part-time. Temporary employees do not have rights to re-employment. And, employees on fixed-term contracts (e.g., one year or seasonal) are entitled to re-employment rights only within the time frame of the contract, unless it is customary for the contract to be renewed at the expiration of its term.

The Act does not define "prompt reemployment." For relatively short absences, such as weekend drills or annual two-week active duty training, it would be prudent to reinstate employees on the next available working day. A reasonable interpretation of the term "prompt" should, however, give employers some flexibility in reinstating employees who have been on military leaves for long periods. Using that flexibility may be prudent or necessary after longer absences to permit adequate time to evaluate available positions and arrange required retraining.

Employees must notify employers of intent to return to work after military service. The requirement for notice varies, however with the duration of the employee’s absence. USERRA requires the following:

• Absences of less than 31 days

Employees who have been absent from their jobs for less than 31 days or for a "fitness for duty" exam, such as a required physical, must report back to work not later than the beginning of the first full regularly scheduled work period on the first full calendar day following completion of service. Time must be added to that period, however, for safe transportation back to the employee’s residence, and for an eight hours rest period. If proving such notice is impossible, through no fault of the employee, they must return as soon thereafter as possible.

• Absences of more than 30 days but less than 181 days

Employees who have been absent from their jobs for more than 30 but less than 181 days of service must submit an application for re-employment not later than 14 days after the completion of service, unless timely application is impossible or unreasonable through no fault of the employee.

• Absences of more than 180 days

Employees who have been absent from their jobs for more than 180 days must submit an application for re-employment not later than 90 days after the completion of service.

Each of these periods can be extended for up to two years if an employee is hospitalized or convalescing from a service-related illness or injury. This two-year period may be enlarged when reporting or reapplying at the end of the two-year period is impossible or unreasonable due to circumstances beyond the employee’s control.

Employees do not automatically forfeit the reinstatement protections provided by USERRA solely because they fail to report to work or apply within the required time period. Employers must apply their established policies and practices concerning similar absences to such employees. They may, however, require employees to document that applications are timely, i.e., not more than the cumulative five-year period and the completion of military service under honorable conditions.

In addition to the right of prompt reinstatement, a qualifying employee has the right to the position that he or she would have obtained but for having taken military leave. An employer must not only reinstate the employee to his or her former position, but also may be required to award a pending promotion interrupted by the military leave or an increase in seniority that would have been achieved but for the military leave. This position is often referred to as the "escalator" position. It is conceivable that a massive call-up could result in more than one employee having the right to and seeking reemployment in the same position. Under that circumstance, the employee whose military leave began first has the right to be reinstated in the position. The other employees retain, however, rights to reemployment with full seniority in positions of like seniority, pay and status.

Reinstatement rights of employees vary with the duration of the military leave taken. For leaves of less than 91 days, the employee must be promptly reinstated in the position he or she would have attained but for the military leave. If because of the military leave, the employee is not qualified or is no longer qualified for the position he or she would have attained, the employer must make reasonable efforts to allow the employee to obtain the required qualifications. If the employee cannot attain the required qualifications for the escalator position, the employee must still be reinstated in the position he or she held when the military leave began.

For leaves of more than 90 days, employees must also be promptly reinstated to the escalator position, but employers have more discretion after longer leaves. That discretion is available because the Act allows reinstatement to any position of like seniority, status and pay that the employee would have attained but for the military leave. Employers must, however, make reasonable efforts to allow the employees to obtain the qualifications needed for the escalator position. If the employee cannot attain the required qualifications, he or she must still be reinstated to the position he or she held when the military leave began or one of like seniority, status and pay.

USERRA requires employers to make reasonable accommodations for employees returning from military leave with disabilities incurred or aggravated during military leave. The accommodations must allow the employee to perform the duties of the escalator position. Employers should take note that by requiring employers to find a position of like seniority, pay and status for which the employee is qualified or could become qualified after reasonable efforts, the Act imposes a duty greater than that required by the Americans with Disabilities Act. An employer who cannot find such a position must identify, nevertheless, a position resembling most closely, in terms of seniority, pay and status, the employee’s former position.

Employers are not required to continue compensating employees during military leave unless their policies provide for compensation. Employees may choose to use accrued vacation rather than take unpaid military leave. Employers may not, however, require employees to do so. Regarding military leave lasting less than an entire workweek, employers should be mindful that the Fair Labor Standards Act prohibits reducing the salary of exempt employees who are absent part of a workweek. They are not, however, required to pay for an entire workweek missed because of such leave.

During military leaves, employees are entitled to the same benefits that the employer provides during other types of leave—whether such absences are paid or unpaid.

Employees retain the right to health insurance coverage for themselves and previously covered dependents. For periods of military service up to 30 days, employers may require employees to pay only the established employee share, if any, of the cost of such coverage. For longer periods of military service, employers may charge employees desiring to retain coverage up to 102 percent of the entire premium. Employers are not required to provide any health insurance coverage after 18 months. Regardless of whether or not the employees elected to continue coverage during military service, they must be immediately reinstated to health insurance coverage upon returning from military leave. There may be no waiting period or exclusion for preexisting conditions other than those determined connected to military service.

Upon returning from a military leave, employees are entitled to the seniority and any rights or benefits determined by seniority that would have been attained but for their military leave. Such employees also must be extended benefits that are not based on seniority; such as those established by contract or policy, whether the benefits were effective when military leave commenced or became effective during it. Employees may be required to pay their part of the costs of benefits, but only to the extent that employees on other leaves of absence are required to do so.

USERRA also protects the pension rights of employees. For vesting and accrual rights under any plan maintained by the employer, returning employees must be treated as though they had no break in service. If the employer makes contributions under its pension plan, it must make the same contribution to a returning employee that it would have made but for the military leave. For employers offering plans in which only the employees make contributions, such as 401(k) plans, returning employees must be given three times the period of the absence, not to exceed five years, to make up any missed contributions to the plan. To the extent that an employee makes up his or her missed contributions, employers who make matching contributions are also required to make up the match.

The Act prohibits discrimination or retaliation because of past, current or future military obligations. As additional protection, employees reinstated after military leaves of 181 days or more may not be discharged, without cause, for one year after the date of their reemployment. Those reinstated after military leaves of less than 181 days, but more than 30 days, may not be discharged, without cause, for 180 days after the date of their reemployment.

The rules provide that, to establish that the action was discrimination or retaliation in violation of USERRA, the individual employee has the burden of proving that a status or activity protected by USERRA was one of the reasons for which the employer took action against him or her. If the individual succeeds in proving that the status or activity protected by USERRA was one of the reasons the employer took action against him or her, the employer has the burden to prove the affirmative defense that it would have taken the action anyway.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.