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1 This Webcast Will Begin Shortly If you have any technical problems with the Webcast or the streaming audio, please contact us via at: Thank You! An Employer s s Guide To Military Leaves of Absence & Reemployment Rights Under USERRA June 14, 2006 Presented by ACC s Employment & Labor Law Committee and Ogletree Deakins 1

2 USERRA Uniformed Services Employment and Reemployment Rights Act of U.S.C et seq. Panel Rocco J. Maffei General Counsel, Lockheed Martin MS2-Akron Hal Coxson Shareholder Ogletree Deakins 2

3 USERRA Regulations 29 CFR Part 1002 (effective 1/18/06) Purpose of USERRA (38 U.S.C. 4301) Encourage non-career service in the uniformed services by eliminating or minimizing the disadvantages to civilian employment which can result from such service Provide for the prompt reemployment of persons returning to civilian jobs from military service Minimize the disruption of their lives as well as those of their employers, fellow employees and communities Prohibit discrimination against persons because of their service in the uniformed services 3

4 Military Service Leave Coverage And Leave Requirements Covered Military Service Army, Navy, Marine Corps, Air Force, or Coast Guard Army Reserve, Naval Reserve, Marine Corps Reserve, Air Force Reserve, or Coast Guard Reserve Army National Guard or Air National Guard Commissioned Corps of the Public Health Service National Disaster Medical System (NDMS) - Federally activated for interim disaster response Any other category of persons designated by the President in time of war or emergency Uniformed Services means the performance of military duty ( service and training) on a voluntary or involuntary basis in National Guard and Reserves, including active components of the Armed Forces. 4

5 Covered Employers All employers, including state and federal government employers Any person, institution, organization, or other entity that pays salary or wages for work performed or that has control over employment opportunities. Successors in interest covered Covered Employees Any person employed by an employer Foreign nationals citizen or national/permanent resident employed by U.S. employer in a foreign country Independent contractors not covered 5

6 Covered Employees Temporary, part-time, probationary, or seasonal employees covered, except reemployment rights where employment was for brief, nonrecurrent period and there is no reasonable expectation that employment would have continued indefinitely or for a significant period Employees on layoff (w/ recall rights), strike, or leave of absence covered. I. NON-DISCRIMINATION An individual s past, present or future uniformed service duty or obligation must not be a negative factor in any hiring or other employment-related decision Proof of discrimination: military service was a motivating factor in the employer s action does not have to be sole reason 6

7 NON-DISCRIMINATION Applies to: Initial employment Retention in employment Promotion Any benefit of employment Applies to: NON-DISCRIMINATION All covered employees, including applicants. All covered employers. All employment positions (including those for brief, nonrecurrent period for which there is no reasonable expectation that position will continue indefinitely or for a significant period ) 7

8 II. Eligibility for Reemployment Rights Under USERRA, an employee is entitled to reemployment rights and maintenance of employment benefits only if the person returning from military service meets five eligibility criteria. To qualify: The person must have held a civilian job with the employer The person must have given advance notice to the employer that he or she was leaving the job for service in the uniformed services Overview of Reemployment Rights The period of military service must not have exceeded five (5) years (there are numerous types of duty that do not count against this 5-year limit) The person must not be released from service under less than honorable conditions The person must have reported back to the civilian job in a timely manner or have submitted a timely application for reemployment 8

9 Notice of Leave By Departing Employees Advance Notice (undefined) to employer, written or verbal By employee or appropriate military officer Unless impossible, unreasonable, or precluded by military necessity Employer may not demand commitment to return, and employee not bound by statements waiving reinstatement to pre-service employment following military service. Employee may not waive USERRA rights III. Benefits/Compensation Rights During Leave Employee on furlough or leave of absence. Entitled to non-seniority rights and benefits provided to other employees with similar seniority, status, and pay. Entitled to rights and benefits in effect at time of employment and those that become effective during service 9

10 Leave Most favorable treatment accorded to any comparable form of leave (duration most significant factor). Accrual of vacation leave generally nonseniority benefit that must be provided only if provided to similarly situated employees on comparable leaves of absence FMLA leave credit for hours-of-service that would have been performed but for period of military service. Employee may use accumulated paid leave while in military service. Employer cannot require its use 10

11 Benefits/Compensation During Leave Health Benefits- Continuation Coverage More than 30 days service, employee may elect to continue employer sponsored health plan for up to 24 months (may be required to pay up to 102 percent of the full premium) Less than 31 days, health care coverage is provided as if service member had remained employed Issues addressed in USERRA regs concerning: Employee notice of election Employee payment of premium Benefits/Compensation During Leave Pension Plans Defined benefit, defined contribution, profit-sharing plans that are retirement plans single employer and multiemployer plans Under USERRA, the employer s pension plan must credit employees on military leave with continuous service with an employer No break in service for participation, vesting, and benefit accrual purposes 11

12 Benefits/Compensation During Leave Accrual of Future Benefits & Compensation Employees in military service accrue credited service/eligibility time for benefits and compensation adjustment upon return to work Compensation not required for military service Pay Differential or Make Up Pay Employer not required to compensate employees on military leave (i.e., paid military leave not required by USERRA), but Many employers voluntarily make up difference between civilian pay and military pay 12

13 Tax Treatment of Civilian Make Up Pay: IRS Revenue Ruling termination (IRS) vs furlough or leave of absence (USERRA) salary or wages vs taxable income withholding for federal income tax, social security, and Medicare individual still required to report payments to IRS and pay taxes on them IV. Reemployment Rights Timely Application for Reemployment Depends upon length of service: Service less than 31 days must report back not later than first full regularlyscheduled work period on first full calendar day following completion of service (plus 8-hours for safe transportation from place of service) 13

14 More than 30 days but less than 181 days must submit application for reemployment (written or verbal) not later than 14 days after completing service More than 180 days application not later than 90 days after completing service Disabled employees- extended application for reemployment Reemployment by- Successor in Interest [29 CFR ] Coffman v. Chugach Support Services, Inc., 411 F. 3d 1231 (11 th Cir., 2005) not a successor because no merger or transfer of assets substantial continuity in operations, facilities, and workforce from the former employer as determined on a case-bycase basis 14

15 Exceptions to Reemployment When an Employer Is Not Required to Reinstate Returning Service Member Changed Circumstances -Impossible or Unreasonable -Undue Hardship -Prior Employment was for a Brief Non-recurrent Period Determining Reinstatement Position Prompt reemployment (generally two weeks) Reinstatement to Escalator Position Fishgold v. Sullivan Drydock and Repair Corp., 328 U.S. 275, (1946) A returning service member does not step back on the seniority escalator at the point he stepped off. He steps back on at the precise point he would have occupied had he kept his position continuously during [military service]. 15

16 Reinstatement Positions: depends on length of service Less than 91 days service escalator position, preservice position More than 90 days service same as above or another comparable position ( like seniority, status, and pay ) for which employee is qualified Employer has obligation to help qualify. If unable to qualify for escalator or comparable position, despite reasonable efforts, employee still entitled to next best position ( nearest approximation to escalator position) Post-Reinstatement Job Protection If period of service for more than 30 days, no termination except for cause For 180 days after reinstatement if service more than 30 days but less than 181 days, or For 1 year after reinstatement, if service more than 180 days. Limitation on At Will Doctrine 16

17 Compensation & Benefits on Reinstatement Rate of Pay Escalator Principle Any pay increases, differentials, step increases, merit increases, or periodic increases (discretionary and nondiscretionary bonuses), that returning service member would have earned with reasonable certainty Compensation & Benefits on Reinstatement Health Plan Coverage Reinstatement of coverage upon reemployment Pension Benefits Defined benefit, defined contribution, profitsharing plans that are retirement plans single employer and multiemployer plans No break in service for purpose of participation, vesting, and accrual of benefits 17

18 Pension Funding on Reinstatement 401(k) Plans Employee right to make up any elective and after-tax contributions to a 401(k) plan that would have been made but for military leave Employer matching contributions must be made no later than 90 days after reemployment (or when plan contributions normally due for year of employee s military service, whichever is later). Otherwise as soon as practicable. Employee contributions and repayment of missed contributions or elective deferrals can be made up over 3x the length of service capped at 5 years. Reemployment-Disabled Employees Disabled Returning Veterans entitled to broad reasonable accommodations Disabled not defined. Extended application for reemployment 2 years from completion of military service (may be extended further) due to necessary recuperation and recovery from injury or illness [29CFR ] Reinstatement Position escalator position; employer required to make reasonable efforts to accommodate the employee s disability and to help employee become qualified to perform duties of (1) escalator position, (2) position of equivalent seniority, status, and pay, or (3) nearest approximation to equivalent position 18

19 V. Non-Retaliation Broad-based non-retaliation provisions, whether or not individual has performed military service All employment positions, including those for brief, non-recurrent periods Employer may not retaliate because individual has: - taken action to enforce USERRA rights afforded any person, - testified or made a statement in a proceeding to enforce USERRA rights, - assisted or participated in an investigation, or - exercised a right provided by USERRA Relationship to Other Laws & Private Contracts All 50 states have laws on military leaves of absence may establish greater, but not lesser, rights and protections under USERRA USERRA preempts any state/local laws, contracts, agreements, policies that limit, reduce, or eliminate in any manner any right or benefit under USERRA (including any additional prerequisites to exercising USERRA rights) Mandatory arbitration policies. Other federal laws: FMLA, ADA, ERISA, COBRA, HIPPA 19

20 Enforcement/Penalties No statute of limitations instead laches Private right of action in federal court Assistance of U.S. Attorney Damages -Reinstatement -Back pay and benefits -Attorney s fees and costs -Double damages for willful violations DOL/VETS U. S. Department of Labor/VETS Administers and also Enforces USERRA Investigations/Referrals Technical Assistance/Outreach -Partnership with Dept. of Defense (ESGR) 20

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