Understanding The Rights and Obligations Of Your Military Reservist Employees Part 1 of 2

Taking Military Leave

In recognition of the workplace disruption caused by military call-ups, USERRA attempts to balance the needs of the military with the needs of employers by imposing certain requirements on service personnel. To be eligible for reemployment and other rights under USERRA, an employee must generally provide his employer advance notice of his military service obligations. See 38 U.S.C. '4312(a)(1). Such notice may be written or verbal, but generally must be given unless notice is impossible, unreasonable, or precluded by military necessity. Id.; 38 U.S.C. '4312(b). USERRA does not provide a time period in which the notice must be given, so employers generally must be flexible in this regard.

Employee Entitlements While on Leave

Leave May Be Unpaid. USERRA does not mandate that military leaves must be paid leaves. Accordingly, leave for military service may be unpaid. When leave is unpaid, an employee may elect to use accrued vacation time, annual leave or personal time in lieu of unpaid leave for all or a portion of the period of absence. See 38 U.S.C. '4316(d). An employer may not, however, require that an employee substitute accrued paid leave during a service-related absence if the employee does not choose to do so. Id.

Notwithstanding the general proposition that military leaves may be unpaid, an employer may be required to pay holiday pay if such pay is provided to other employees on leave or not at work for analogous circumstances. In one case, for example, a federal court of appeals considered whether holiday pay needed to be provided for holidays while an employee was absent for two weeks of National Guard training. See Waltermyer v. Aluminum Co. of Am., 804 F.2d 821 (3d Cir. 1986). The applicable collective bargaining agreement provided for holiday pay only if work was performed in the workweek in which the holiday fell, but it contained an exception for circumstances in which the absence was attributable to such occurrences as jury duty, personal illness, bereavement, certain layoffs and witness duty. Id. at 822. Noting that the absence for military training was analogous to absences such as those for jury duty, in that the military leave was also involuntary in nature and of limited duration, the court held the employee entitled to holiday pay. Id. at 825.

Medical Benefits. USERRA imposes special rules with respect to coverage under group health plans. Employees serving for fewer than 31 days are entitled to continued health coverage as if they had remained actively employed ' in other words, they may be charged only the normal premiums charged to employees. See 38 U.S.C. '4317(a)(1), (a)(2). Those serving more than 30 days have COBRA-like protections and may elect to continue employer-sponsored health care for up to 18 months, subject to being required to pay up to 102% of the full premium. Id.

COBRA regulations treat health coverage provided under USERRA as “alternative coverage.” Treas. Reg. '54.4980B-7, Q&A-7 (as amended in 2001). However, because an employee on military leave does not terminate employment until the end of the leave period, the “qualifying event” for purposes of COBRA would be a reduction of hours that would otherwise cause a loss of coverage. I.R.C. '4980B(f)(3) (2000). Because USERRA health coverage is more generous than COBRA health coverage, the USERRA and COBRA periods can run concurrently. See Treas. Reg. '54.4980B-7, Q&A-7. This should be explained in relevant communications materials given to employees on military leave.

Pension Plans. As discussed in more detail below, an employee who returns to pre-leave employment must be treated for pension purposes as if he had been employed during the period of military leave. See 38 U.S.C. '4318.

Vacation. If an employer allows employees on non-military leave to accrue vacation, then an employee absent for uniformed service must be treated similarly. See 38 U.S.C '4316(b)(1)(B); Non-Technical Resource Guide to USERRA, at 9. In addition, while an employer must permit an employee who desires to use vacation time to collect pay while absent for military service, it cannot require the use of vacation unless the service absence coincides with a period when all employees are required to take vacation, such as during a seasonal shut-down.

Other Benefits. USERRA makes it clear that while an individual is performing military service, he or she is deemed to be on a furlough or leave of absence and is entitled to the non-seniority rights afforded other individuals on non-military leaves of absence. See 38 U.S.C. '4316(b)(1)(A), (b)(1)(B). For example, employees in military service must be provided the same vesting rights under stock options and the same rights to coverage under life insurance and other benefits as employees on non-military leave. See 38 U.S.C. ”4303(2), 4316(a); U.S. Department of Labor Veterans Employment and Training Service, A Non-Technical Resource Guide to the Uniformed Services Employment and Reemployment Rights Act (USERRA), at 9, at http://www.dol.gov/vets/whatsnew/uguide.pdf (Mar. 2003) [hereinafter Non-Technical Resource Guide to USERRA].

An unresolved issue is to which other employer-provided leaves of absence a military leave should be compared for purposes of employee benefits treatment. In this regard, USERRA's legislative history suggests that “to the extent the employer policy or practice varies among various types of non-military leaves of absence, the most favorable treatment accorded any particular leave would also be accorded the military leave, regardless of whether the non-military leave is paid or unpaid.” H.R. Rep. No. 103-65(I), at 33-34 (1993), reprinted in 1994 U.S.C.C.A.N. 2449, 2466-67. Similarly, the Department of Labor's Non-Technical Resource Guide to USERRA provides that employees in military service “must be entitled to participate in any rights and benefits not based on seniority that are available to employees on nonmilitary leaves of absence, whether paid or unpaid.” Non-Technical Resource Guide to USERRA, at 9. Thus, the Department of Labor's enforcement position apparently is that benefits provided during military leaves must equal those provided during the most benefit-generous leave, whether paid or unpaid, provided by the employer. For example, if employees on leave under the Family and Medical Leave Act receive the most generous benefits when compared to other types of leaves, such leave will serve as the baseline for benefits during a USERRA leave.

Next month: Reemployment rights upon military employees' return and the effect of USERRA on other laws.

Karl G. Nelson is a partner in the Dallas office of Gibson, Dunn & Crutcher LLP, where he practices in the firm's labor and employment practice group. He can be reached at 214-698-3203. This article additionally reflects the substantial contributions of Pamela L. Hemminger, Michael J. Collins and Marshall J. Lerman.

With the recent conflict in Iraq and the country's ongoing focus on homeland security, many employers find themselves confronting for the first time a significant body of employment rights and obligations imposed by the Uniform Services Employment and Reemployment Rights Act of 1994 (USERRA). 38 U.S.C. '4301, et seq. (2000). As of April 1, 2003, the Department of Labor estimated that 220,000 reservists and National Guard members were on active duty, and that roughly 280,000 reservists and Guard members had been called up since September 11, 2001, surpassing the total number called to active duty for the first Persian Gulf War. See “USERRA Legal Inquiries Up Regarding Jobs; DOL Says Possible Rise in Claims Expected,” Daily Lab. Rep, (BNA) No. 63, at A-12 (Apr. 2, 2003), available at http://pubs.bna.com/ip/BNA/dlr.nsf/is/a0a6r0y9t7. Not surprisingly, the number of complaints filed under USERRA has increased by roughly 30% since 2001, and Department of Labor officials anticipate a further surge in complaints as activated reservists are released from duty and begin to return to the workforce. Id. Because of the value of their contribution to the nation's defense, reservists and National Guard members are among the most highly protected of employee groups. Particularly as these workers begin to return from active duty, law firm employers must be familiar with the substantial protections USERRA affords service men and women.

Background

USERRA was enacted following the first Persian Gulf War to encourage noncareer military service by providing enhanced employment rights to those who perform duty in the “uniformed services,” (38 U.S.C. '4301(a)) including the Army, Navy, Marine Corps, Air Force, Coast Guard, and Public Health Service Commissioned Corps (as well as their reserve components), the Army National Guard, and the Air National Guard. See 38 U.S.C. '4303(13), (16). The statute provides protections to employees on military leave, guarantees reemployment rights for such individuals following their military service and prohibits discrimination against military personnel. Importantly, USERRA applies to all employees, regardless of their length of employment service or number of hours worked.

Taking Military Leave

In recognition of the workplace disruption caused by military call-ups, USERRA attempts to balance the needs of the military with the needs of employers by imposing certain requirements on service personnel. To be eligible for reemployment and other rights under USERRA, an employee must generally provide his employer advance notice of his military service obligations. See 38 U.S.C. '4312(a)(1). Such notice may be written or verbal, but generally must be given unless notice is impossible, unreasonable, or precluded by military necessity. Id.; 38 U.S.C. '4312(b). USERRA does not provide a time period in which the notice must be given, so employers generally must be flexible in this regard.

Employee Entitlements While on Leave

Leave May Be Unpaid. USERRA does not mandate that military leaves must be paid leaves. Accordingly, leave for military service may be unpaid. When leave is unpaid, an employee may elect to use accrued vacation time, annual leave or personal time in lieu of unpaid leave for all or a portion of the period of absence. See 38 U.S.C. '4316(d). An employer may not, however, require that an employee substitute accrued paid leave during a service-related absence if the employee does not choose to do so. Id.

Notwithstanding the general proposition that military leaves may be unpaid, an employer may be required to pay holiday pay if such pay is provided to other employees on leave or not at work for analogous circumstances. In one case, for example, a federal court of appeals considered whether holiday pay needed to be provided for holidays while an employee was absent for two weeks of National Guard training. See Waltermyer v. Aluminum Co. of Am. , 804 F.2d 821 (3d Cir. 1986). The applicable collective bargaining agreement provided for holiday pay only if work was performed in the workweek in which the holiday fell, but it contained an exception for circumstances in which the absence was attributable to such occurrences as jury duty, personal illness, bereavement, certain layoffs and witness duty. Id. at 822. Noting that the absence for military training was analogous to absences such as those for jury duty, in that the military leave was also involuntary in nature and of limited duration, the court held the employee entitled to holiday pay. Id. at 825.

Medical Benefits. USERRA imposes special rules with respect to coverage under group health plans. Employees serving for fewer than 31 days are entitled to continued health coverage as if they had remained actively employed ' in other words, they may be charged only the normal premiums charged to employees. See 38 U.S.C. '4317(a)(1), (a)(2). Those serving more than 30 days have COBRA-like protections and may elect to continue employer-sponsored health care for up to 18 months, subject to being required to pay up to 102% of the full premium. Id.

COBRA regulations treat health coverage provided under USERRA as “alternative coverage.” Treas. Reg. '54.4980B-7, Q&A-7 (as amended in 2001). However, because an employee on military leave does not terminate employment until the end of the leave period, the “qualifying event” for purposes of COBRA would be a reduction of hours that would otherwise cause a loss of coverage. I.R.C. '4980B(f)(3) (2000). Because USERRA health coverage is more generous than COBRA health coverage, the USERRA and COBRA periods can run concurrently. See Treas. Reg. '54.4980B-7, Q&A-7. This should be explained in relevant communications materials given to employees on military leave.

Pension Plans. As discussed in more detail below, an employee who returns to pre-leave employment must be treated for pension purposes as if he had been employed during the period of military leave. See 38 U.S.C. '4318.

Vacation. If an employer allows employees on non-military leave to accrue vacation, then an employee absent for uniformed service must be treated similarly. See 38 U.S.C '4316(b)(1)(B); Non-Technical Resource Guide to USERRA, at 9. In addition, while an employer must permit an employee who desires to use vacation time to collect pay while absent for military service, it cannot require the use of vacation unless the service absence coincides with a period when all employees are required to take vacation, such as during a seasonal shut-down.

Other Benefits. USERRA makes it clear that while an individual is performing military service, he or she is deemed to be on a furlough or leave of absence and is entitled to the non-seniority rights afforded other individuals on non-military leaves of absence. See 38 U.S.C. '4316(b)(1)(A), (b)(1)(B). For example, employees in military service must be provided the same vesting rights under stock options and the same rights to coverage under life insurance and other benefits as employees on non-military leave. See 38 U.S.C. ”4303(2), 4316(a); U.S. Department of Labor Veterans Employment and Training Service, A Non-Technical Resource Guide to the Uniformed Services Employment and Reemployment Rights Act (USERRA), at 9, at http://www.dol.gov/vets/whatsnew/uguide.pdf (Mar. 2003) [hereinafter Non-Technical Resource Guide to USERRA].

An unresolved issue is to which other employer-provided leaves of absence a military leave should be compared for purposes of employee benefits treatment. In this regard, USERRA's legislative history suggests that “to the extent the employer policy or practice varies among various types of non-military leaves of absence, the most favorable treatment accorded any particular leave would also be accorded the military leave, regardless of whether the non-military leave is paid or unpaid.” H.R. Rep. No. 103-65(I), at 33-34 (1993), reprinted in 1994 U.S.C.C.A.N. 2449, 2466-67. Similarly, the Department of Labor's Non-Technical Resource Guide to USERRA provides that employees in military service “must be entitled to participate in any rights and benefits not based on seniority that are available to employees on nonmilitary leaves of absence, whether paid or unpaid.” Non-Technical Resource Guide to USERRA, at 9. Thus, the Department of Labor's enforcement position apparently is that benefits provided during military leaves must equal those provided during the most benefit-generous leave, whether paid or unpaid, provided by the employer. For example, if employees on leave under the Family and Medical Leave Act receive the most generous benefits when compared to other types of leaves, such leave will serve as the baseline for benefits during a USERRA leave.

Next month: Reemployment rights upon military employees' return and the effect of USERRA on other laws.

Karl G. Nelson is a partner in the Dallas office of Gibson, Dunn & Crutcher LLP, where he practices in the firm's labor and employment practice group. He can be reached at 214-698-3203. This article additionally reflects the substantial contributions of Pamela L. Hemminger, Michael J. Collins and Marshall J. Lerman.