Employers should know obligations under USERRA

Mary Elizabeth Davis

Employers – know your obligations under the Uniformed Services Employment and Reemployment Rights Act (USERRA)!  The Department of Labor’s (DOL) final regulations for USERRA became effective January 18, 2006.

Employers must be aware of and comply with the DOL’s final USERRA regulations.  The final regulations do not impose any new legal requirements, they explain or clarify existing ones.  Below is a synopsis of the regulations on the issues of leave, seniority, pay, pension plans, and health coverage.

Leave.  The final regulations provide that accrual of vacation leave is a non-seniority-based benefit.  Employees on military leave must be afforded the same non-seniority-based benefits given to those on a comparable form of leave.  The regulations provide guidance on factors to consider in determining whether two types of leave are comparable, including:  the duration of leave; the purpose of the leave; and the ability of the employee to choose when to take the leave.

The final regulations also permit sick leave to be used to continue civilian pay during a period of military service is an employer allows employees to use sick leave for any reason, or if it is allowed for other similarly situated employees on a comparable leave.

Seniority.  The new regulations provide that employees continue to accrue seniority-based rights and benefits during any recovery period for service-related injuries or illnesses.  The entire period of absence from work necessitated by service in the uniformed services, including preparation time and recuperation time, shall be considered service with the employer for computation of seniority-based rights, including pension entitlement.

Pay.  When considering whether merit or performance increases would have been attained with reasonable certainty, an employer may examine the employee’s work history and history of merit increases, and that of employees in the same or similar positions.

Pension Plans.  Employer contributions that are not dependent on employee contributions must be made within 90 days following reemployment or when contributions are normally made for the year in which the military service was performed, whichever is later.  The final rules no longer contain the provision that required a plan to permit a person to continue to make up missed contributions or elective deferrals after leaving employment.  Employees are neither permitted nor required to pay interest when making up missed contributions or elective deferrals.

Health Coverage.  The final regulations permit employers to cancel an employee’s health insurance if the employee fails to elect continuing coverage, but the regulations require retroactive reinstatement under certain circumstances.  The final regulations also clarify that plans may develop reasonable rules to permit termination of coverage if an employee elects, but does not pay for, continuation coverage.  It is reasonable for COBRA-covered plans to adopt COBRA rules, as long as the plan complies with USERRA.

The regulations provide that a bank plan may permit an employee to deplete banked credits during a period of military service in order to continue coverage at no cost to the employee if the plan provides for reinstatement of coverage upon reemployment.  A plan may require the employee to pay the full cost of reinstated coverage until he/she has earned enough credits after reemployment to resume normal coverage.  In addition, if the banked credits are depleted during the applicable eligibility period, the employee must be allowed, at his/her option, to pay for continuation coverage for the balance of the period.  Alternatively, the plan may permit an employee to “freeze” existing credits when leaving for military service, pay for continuation coverage, and then restore those credits intact upon reemployment.  In providing these options to its employees, an employer should explain to employees their options and the consequences of selecting one or the other.

For assistance in reviewing or implementing your company’s USERRA policy or ensuring compliance with the new regulations call Betsy Davis.