New Uniformed Services Employment and Reemployment Rights Act (USERRA) Regulations Clarify Employer Obligations to Employees Who Leave Employment to Undertake Military Service

Employers wondering exactly what their legal obligations are with respect to employees departing for or returning from military service now have some additional guidance on these issues from the federal Department of Labor. New regulations issued by the Department of Labor on December 19, 2005 to implement the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) clarify the employment and reemployment rights of service members and the related obligations of their employers. These regulations became effective on January 18, 2006.

Although USERRA was passed by Congress in 1994 to protect the jobs and benefits of employees who need temporary leave for military service, the Department of Labor had not previously issued implementing regulations, leaving a number of issues in the Act open to interpretation. The new regulations principally clarify existing obligations under USERRA rather than create new duties for employers. USERRA imposes significant obligations on employers with respect to job-protected leave for military personnel, reemployment rights, and benefit entitlements during a military leave of absence. In addition, USERRA prohibits discrimination and retaliation against any employee or applicant for employment because of the individual’s membership, application for membership, performance of service, or obligation for service in the military.

Highlights of the USERRA Regulations

The new regulations seek to be as comprehensive as possible, covering all aspects of military leave. A number of key highlights from the regulations follow. We strongly recommend consulting legal counsel and reviewing the full regulations when revising employment policies or determining an employer’s obligations with respect to a particular employee.

• • Employer Coverage and Individual Liability. The new regulations define “employer” much more broadly than the ADA, the ADEA, and Title VII. USERRA’s coverage extends to all public and private employers in the United States regardless of size — even an employer with only one employee is covered by the Act. Also, USERRA and the new regulations provide that individual supervisors and other individuals may be liable under the Act if they are a person “to whom the employer has delegated the performance of employment-related responsibilities” (e.g., authority to hire, fire and discipline).

• • Employee Coverage. Virtually all employees, including temporary, part-time, probationary, and seasonal employees, are protected by USERRA. Although USERRA does not provide protections for independent contractors, employers are cautioned to make sure that “independent contractors” fall within the statute’s rigorous test.

• • Non-Discrimination Based on Military Status. In addition to providing for military leave, USERRA also protects employees from discrimination and retaliation based on their actual or potential service in the military. The regulations prohibit employers from denying initial employment, promotion, retention, or any benefit of employment based on an individual’s membership, application for membership, performance of service, or obligation for service in the military. Likewise, an employer may not retaliate by taking adverse employment action against an individual because he or she has exercised a right provided for under USERRA.

• • Eligibility for Reemployment. To establish eligibility for reemployment, a service member must satisfy the following five criteria: (1) Be absent from a civilian employment position due to uniformed service; (2) Give his or her employer advance notice of the service; (3) Have five years or less of cumulative uniformed service with respect to a particular employer; (4) Return to work or apply for reemployment in a timely manner after conclusion of service; and (5) Be discharged from the uniformed service under honorable conditions.

• • Notice of Leave. An employee or representative of the military service must generally provide advance notice of an employee’s need for military leave. The notice may be verbal or in writing, and need not follow any particular format. Although the regulations strongly recommend that employees notify their employer at least thirty days prior to departure for uniformed service, the regulations do not specify a mandatory time period for notice. Importantly, the employee is not required to obtain the employer’s consent before departing for uniformed service in order to protect his or her reemployment rights, even if the service is voluntary.

• • Reemployment Rights Cannot Be Waived. An employee cannot waive his or her USERRA reemployment rights in advance of release from military service, as the right to reemployment has not yet matured. Thus, even if an employee informs the employer that he or she does not intend to seek reemployment following service, the right to reemployment is not forfeited.

• • Continuation of Health Care Benefits. Under USERRA, employees who leave work for military service have the right to continue their existing employer-based health plan coverage for a maximum of 24 months while engaged in military service. Employees who serve for less than 31 days shall pay no more for coverage than they would have had they remained employed. Employees who serve for at least 31 days may be required to pay up to 102 percent of the full premium under their health care plan. In addition, a returning employee and his or her dependents must be reinstated in an employer-provided health plan without any waiting period upon return from service.

• • Reemployment Obligations. USERRA provides that eligible employees must be reinstated to the position the employee would have held if continuous employment had not been interrupted by military service. The position to which the employee should be restored is commonly referred to as the “escalator position.” This principle applies even where it requires an employer to terminate a replacement employee to accommodate the returning veteran. The returning employee is also entitled to the seniority, rate of pay, and seniority-based rights and benefits that the employee would have attained if continuously employed. As a general rule, employers must reinstate returning service members within two weeks after they apply for reemployment.

• • Employees with Disabilities. Returning employees who incurred or aggravated a disability during military service possess the same reemployment rights as other returning veterans. The regulations require that the employer make “reasonable efforts” to help the employee become qualified to perform the duties of his or her reemployment position, and take ADA reasonable accommodation measures. “Reasonable efforts” is defined by the regulations as “actions, including training, provided by an employer that do not place an undue hardship on the employer.” If reasonable efforts to accommodate the disability and qualify the employee for the reemployment position are unsuccessful, efforts must be made to qualify the employee for an equivalent “escalator position” or the best position for which the employee is qualified.

• • Dismissal Protection. Depending on a returning employee’s length of military service, he or she may be terminated only for cause upon reemployment for a period of six months (if service was more than 30 but less than 181 days) or 12 months (if service was more than 180 days). If an employee is discharged for cause, the employer bears the burden of demonstrating good cause based on the employee’s conduct or the application of other legitimate nondiscriminatory reasons (e.g., job elimination, layoff).

• Posting Requirements. Employers are required to give employees notice of the rights, benefits and obligations of employees entering military service covered by USERRA and employer obligations under USERRA. The Department of Labor’s new USERRA poster, which may be downloaded from the DOL website, should be displayed where your company posts other employee notices and required postings, and should replace any earlier versions of the USERRA poster.

Conclusion

In light of these new USERRA regulations and the significant deployments of military reservists and National Guard members in recent years, we advise employers to review and, if necessary, update their military leave policies and benefits plans to ensure compliance with USERRA. Given the risk of individual liability for non-compliance with USERRA, employers should also seriously consider incorporating USERRA material into their training programs for managers. Finally, we recommend that employers consult legal counsel on a case-by-case basis regarding specific legal obligations to returning veterans.