What Every Company Needs to Know About Military Leave

Two Case Studies

Meet Doug (Big Box Electronics) and Charley (Small Time Printing). We'll use them as two case studies to illustrate an employer's rights and challenges under USERRA.

Doug is a 15-year employee of Big Box Electronics. He runs a division located in Milwaukee, WI. Doug is a Colonel in the Army National Guard and was just informed that he is being deployed to Iraq in 30 days. His unit will train for 2 months in the U.S., followed by a 16-month deployment to Iraq. Doug advised his supervisor immediately, but has not provided any paperwork, since he has none himself.

Charley is employed by Small Time Printing, a 20-employee operation located in Memphis. Charley started with the company 6 months ago. He is a member of a collective bargaining unit and works as a printing press assistant. Charley is not a member of the military reserves, but has decided to enlist in the Army for a 2-year period. Charley advised his supervisor of his enlistment 10 days before he was required to report for active-duty training.

USERRA entitles both Doug and Charley to military leave. Under
USERRA, an employee need not provide written orders before obtaining military leave; oral notice is sufficient. Employers are entitled to receive a copy of an employee's written orders once they are issued. Employers may not deny military leave simply because the orders have not yet been issued.

What Happens While Doug and Charley Are on Military Leave?

USERRA permits Doug and Charley to take time off prior to the start of a military service obligation to put their personal affairs in order, but their military leave is unpaid. Some employers choose to pay employees for portions of military leave, but it is not required. Doug and Charley are entitled to maintain the levels of benefits (ie, sick leave, PTO, vacation) they had prior to their military leave, and cannot be forced to use these accrued benefits while on leave. However, they do not amass additional benefits while on leave. Employees on military leave also do not accrue additional payments to pension funds or 401K plans while on military leave. They are, however, entitled to certain recapture rights upon return from leave. Unlike the FMLA, an employee on military leave may choose to work in a non-military position without jeopardizing his or her leave rights.

Reinstatement

Once Charley and Doug have completed their 2-year military obligations, what rights do they have to be reinstated to their former employment? As long as they obtain what amounts to an honorable discharge and they contact their former employers within the time period specified in USERRA (based on the amount of time they are on military service), Charley and Doug qualify for reinstatement. Since they have been gone in excess of 180 days, they have 90 days from the completion of military service to seek reinstatement (this period varies by length of military leave). If they fail to request re-employment within the 90-day period, their employers may not simply terminate their employment; rather, these employers must apply the company policies governing absences from employment without permission. Consequently, employers should esta-blish written policies regarding treatment of employees who fail to return from leave. Upon receiving a request for reinstatement, an employer is required to 'promptly reemploy' the returning employee ('promptly' often means within several weeks, but varies depending on the length of service).

A Unique Reinstatement Principle

Companies must be aware of USERRA's 'escalator principle,' which requires employers to reinstate an employee to the position he or she would have attained with 'reasonable certainty' but for the military service. This principle may require employers to go beyond reinstating the employee to his or her prior position and advance the employee to a higher position than previously held.

Escalator Principle

The escalator principle is clear in strict seniority-based situations (such as Charley's, where a union seniority system exists), but its application to a non-seniority-based system is much more difficult. For example, Doug was the head of a Big Box Electronics division and reported directly to the vice-president of operations. During Doug's military service, his boss retired and Big Box filled the position while Doug was on leave. Upon Doug's return, Big Box must determine 'with reasonable certainty' whether Doug would have attained this position. The company must have careful documentation regarding the hiring process, since Doug was not available to interview for the position. Employers that face these non-seniority situations must be cognizant that an employee on military leave may, months after the fact, assert that he or she is entitled to the position. Employers, therefore, should document and retain detailed records of the hiring and decision-making process in these situations.

The escalator principle also applies in the case of layoffs, reductions in force and business consolidations, and may cause an employee to be reemployed in a lower position, laid-off or even terminated as a result of business conditions. Thus, if Doug's Milwaukee division had been consolidated with a division in Dallas, what would have happened to Doug's employment at that time? Doug may have been chosen to head up the new combined division, demoted to a lesser position or even terminated, all of which are appropriate under USERRA and the proper circumstances. Employers that deal with situations in non-seniority-based settings must properly document and demonstrate their decision-making process.

'Reasonable Efforts'

Employers must take 'reasonable efforts' to help the employee become qualified to perform the duties of the position at issue. For example, if Charley had the seniority to attain the position of printing press operator during his military service, Small Time Printing would be required to offer Charley the printing press position and provide him with reasonable efforts to qualify him for that position. If Charley does not qualify for the position despite his employer's reasonable efforts, he must first be employed in the position he previously held on the date his military service began. If he is not qualified to perform the duties of his prior position after reasonable efforts by Small Time Printing to qualify him, he then must be reemployed in any position that is the nearest approximation to the first escalator position and then to the pre-service position.

Benefits upon Return

When Doug and Charley return from military leave, they are entitled to receive the rate of pay and benefits they would have received had they remained continuously employed during the period of service. Depending upon the circumstances, an employee's rate of pay may increase, remain the same or decrease. Employers must examine what would have happened to the employee had he or she remained employed with the company. With respect to benefits, the time spent in military service is considered continuous time worked by the employee.

Doug was entitled to 3 weeks of vacation prior to military leave; however, during military leave his vacation would have increased to 4 weeks. Thus, he is entitled to 4 weeks of vacation upon reinstatement. The employer also has certain obligations with respect to defined benefit plans or 401(k) plans. Generally speaking, the employer must make contributions to a defined benefit plan or allow an employee to make contributions to a 401(k) plan over a period that equals three times the length of the employee's military service. Additionally, if an employer makes matching contributions under a 401(k) plan, its obligation to make those contributions would commence when the employee reaches the contribution level needed for matching funds.

Finally, USERRA protects employees who return from military leave beyond the date of their reinstatement. For example, for Doug and Charley, their most recent period of service was more than 180 days; thus, they may not be terminated except for 'cause' for 1 year after the date of re-employment. This protection varies according to the length of service.

Conclusion

The breadth and scope of USERRA can be a trap for the unwary employer. Employers need to understand their obligations ' and rights ' under USERRA with respect to employees seeking to take leave, and then reinstatement. The right preparation and consideration will help an employer deal with all aspects of USERRA quickly and proactively.

George Wood is a shareholder with Littler Mendelson, one of the nation's largest employment and labor law firms. Wood is located in the firm's Minneapolis office and can be reached at [email protected].

Current U.S. troop deployments are affecting those who serve our country and their families, as well as the businesses that support their employees' military leave. Approximately 1.8 million personnel are on active military duty, with an additional 860,000 active Reserves. As of November 2005, National Guard and Reserve units comprised 50% of the ground forces stationed in Iraq. To add to this burden, President Bush recently recommended the deployment of 6000 troops to patrol the Mexican border.

With increasingly longer military leaves (since 2001, the National Guard's deployment policy has shifted from a 6-month to a 24-month maximum service overseas), companies must understand their legal obligations under military leave laws, specifically the Uniformed Services Employment and Reemployment Rights Act (USERRA). Employers must be aware of what happens before, during and after their employees take military leave.

First, some USERRA basics are in order. USERRA applies to all private and public employers, regardless of size. All employees, in spite of the length of employment, have military leave rights under USERRA. All types of military leave, voluntary or involuntary, are covered under the statute. In addition, states may enact more stringent military leave requirements for employers, but may not establish requirements less than USERRA. Employers should be aware of state statutes governing military leave.

Two Case Studies

Meet Doug (Big Box Electronics) and Charley (Small Time Printing). We'll use them as two case studies to illustrate an employer's rights and challenges under USERRA.

Doug is a 15-year employee of Big Box Electronics. He runs a division located in Milwaukee, WI. Doug is a Colonel in the Army National Guard and was just informed that he is being deployed to Iraq in 30 days. His unit will train for 2 months in the U.S., followed by a 16-month deployment to Iraq. Doug advised his supervisor immediately, but has not provided any paperwork, since he has none himself.

Charley is employed by Small Time Printing, a 20-employee operation located in Memphis. Charley started with the company 6 months ago. He is a member of a collective bargaining unit and works as a printing press assistant. Charley is not a member of the military reserves, but has decided to enlist in the Army for a 2-year period. Charley advised his supervisor of his enlistment 10 days before he was required to report for active-duty training.

USERRA entitles both Doug and Charley to military leave. Under
USERRA, an employee need not provide written orders before obtaining military leave; oral notice is sufficient. Employers are entitled to receive a copy of an employee's written orders once they are issued. Employers may not deny military leave simply because the orders have not yet been issued.

What Happens While Doug and Charley Are on Military Leave?

USERRA permits Doug and Charley to take time off prior to the start of a military service obligation to put their personal affairs in order, but their military leave is unpaid. Some employers choose to pay employees for portions of military leave, but it is not required. Doug and Charley are entitled to maintain the levels of benefits (ie, sick leave, PTO, vacation) they had prior to their military leave, and cannot be forced to use these accrued benefits while on leave. However, they do not amass additional benefits while on leave. Employees on military leave also do not accrue additional payments to pension funds or 401K plans while on military leave. They are, however, entitled to certain recapture rights upon return from leave. Unlike the FMLA, an employee on military leave may choose to work in a non-military position without jeopardizing his or her leave rights.

Reinstatement

Once Charley and Doug have completed their 2-year military obligations, what rights do they have to be reinstated to their former employment? As long as they obtain what amounts to an honorable discharge and they contact their former employers within the time period specified in USERRA (based on the amount of time they are on military service), Charley and Doug qualify for reinstatement. Since they have been gone in excess of 180 days, they have 90 days from the completion of military service to seek reinstatement (this period varies by length of military leave). If they fail to request re-employment within the 90-day period, their employers may not simply terminate their employment; rather, these employers must apply the company policies governing absences from employment without permission. Consequently, employers should esta-blish written policies regarding treatment of employees who fail to return from leave. Upon receiving a request for reinstatement, an employer is required to 'promptly reemploy' the returning employee ('promptly' often means within several weeks, but varies depending on the length of service).

A Unique Reinstatement Principle

Companies must be aware of USERRA's 'escalator principle,' which requires employers to reinstate an employee to the position he or she would have attained with 'reasonable certainty' but for the military service. This principle may require employers to go beyond reinstating the employee to his or her prior position and advance the employee to a higher position than previously held.

Escalator Principle

The escalator principle is clear in strict seniority-based situations (such as Charley's, where a union seniority system exists), but its application to a non-seniority-based system is much more difficult. For example, Doug was the head of a Big Box Electronics division and reported directly to the vice-president of operations. During Doug's military service, his boss retired and Big Box filled the position while Doug was on leave. Upon Doug's return, Big Box must determine 'with reasonable certainty' whether Doug would have attained this position. The company must have careful documentation regarding the hiring process, since Doug was not available to interview for the position. Employers that face these non-seniority situations must be cognizant that an employee on military leave may, months after the fact, assert that he or she is entitled to the position. Employers, therefore, should document and retain detailed records of the hiring and decision-making process in these situations.

The escalator principle also applies in the case of layoffs, reductions in force and business consolidations, and may cause an employee to be reemployed in a lower position, laid-off or even terminated as a result of business conditions. Thus, if Doug's Milwaukee division had been consolidated with a division in Dallas, what would have happened to Doug's employment at that time? Doug may have been chosen to head up the new combined division, demoted to a lesser position or even terminated, all of which are appropriate under USERRA and the proper circumstances. Employers that deal with situations in non-seniority-based settings must properly document and demonstrate their decision-making process.

'Reasonable Efforts'

Employers must take 'reasonable efforts' to help the employee become qualified to perform the duties of the position at issue. For example, if Charley had the seniority to attain the position of printing press operator during his military service, Small Time Printing would be required to offer Charley the printing press position and provide him with reasonable efforts to qualify him for that position. If Charley does not qualify for the position despite his employer's reasonable efforts, he must first be employed in the position he previously held on the date his military service began. If he is not qualified to perform the duties of his prior position after reasonable efforts by Small Time Printing to qualify him, he then must be reemployed in any position that is the nearest approximation to the first escalator position and then to the pre-service position.

Benefits upon Return

When Doug and Charley return from military leave, they are entitled to receive the rate of pay and benefits they would have received had they remained continuously employed during the period of service. Depending upon the circumstances, an employee's rate of pay may increase, remain the same or decrease. Employers must examine what would have happened to the employee had he or she remained employed with the company. With respect to benefits, the time spent in military service is considered continuous time worked by the employee.

Doug was entitled to 3 weeks of vacation prior to military leave; however, during military leave his vacation would have increased to 4 weeks. Thus, he is entitled to 4 weeks of vacation upon reinstatement. The employer also has certain obligations with respect to defined benefit plans or 401(k) plans. Generally speaking, the employer must make contributions to a defined benefit plan or allow an employee to make contributions to a 401(k) plan over a period that equals three times the length of the employee's military service. Additionally, if an employer makes matching contributions under a 401(k) plan, its obligation to make those contributions would commence when the employee reaches the contribution level needed for matching funds.

Finally, USERRA protects employees who return from military leave beyond the date of their reinstatement. For example, for Doug and Charley, their most recent period of service was more than 180 days; thus, they may not be terminated except for 'cause' for 1 year after the date of re-employment. This protection varies according to the length of service.

Conclusion

The breadth and scope of USERRA can be a trap for the unwary employer. Employers need to understand their obligations ' and rights ' under USERRA with respect to employees seeking to take leave, and then reinstatement. The right preparation and consideration will help an employer deal with all aspects of USERRA quickly and proactively.

George Wood is a shareholder with Littler Mendelson, one of the nation's largest employment and labor law firms. Wood is located in the firm's Minneapolis office and can be reached at [email protected].