The New USERRA Regulations
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1 Returning from Military Service The New USERRA Regulations By Brian L. Champion Regs explain and clarify rights and benefits of veterans. According to the U.S. Department of Defense, approximately 1.8 million men and women are currently on active duty in the United States Military. An additional 860,000 National Guard and Reservists have been called to duty due to the recent escalations of activity in the Middle East, including the war in Iraq. Yet, many employers simply do not know that the Uniformed Services Employment and Reemployment Rights Act (USERRA) exists, or worse yet, do not understand the complexities of the Act. In order to assist employers, and employees, in understanding their USERRA rights, the U.S. Department of Labor, has recently issued its first-ever USERRA Regulations. This article will provide a generalized overview of the new regulations. It is a wise attorney, however, who will take some time and read through the new regulations before he or she is called upon by a client to answer a simple question about an employee who is disembarking on military leave. USERRA: A Brief Overview The Uniformed Services Employment and Reemployment Rights Act (USERRA) is the federal statute that governs the reemployment rights of employees who are called to n Brian L. Champion is counsel at Verrill Dana, LLP, in Portland, Maine, and Boston, where his practice focuses on labor and employment law and civil litigation. Mr. Champion is a co-editor for the DRI Employment Law Committee s newsletter, The Job Description, and is a USAF veteran DRI. All rights reserved. duty in the military service. It is codified at 38 U.S.C Like most employment statutes, USERRA covers all employees, regardless if they are part-time or full-time. Unlike many other employmentrelated federal laws, however, USERRA applies to all employers, regardless of size, as well as all state and federal governmental agencies. 38 U.S.C. 4303(3), (4)(A). The Act, which covers all branches of military service, specifically defines uniformed services as: Armed Forces, Air and Army National Guard, Reserve units of each, commissioned Corps of Public Health Service, or any other category dispatched by the President of the United States, in times of war or national emergency. 38 U.S.C. 4303(16). An employee is covered by the rights set forth in the Act if he or she is absent from work because of active duty, active duty for training, inactive duty for training, full time National Guard duty, absences for physical examinations, and funeral honors performed by National Guard or Reserve members. 38 U.S.C With only a few narrow exceptions, the Act requires employers to release an employee from his or her work duties to fulfill a military obligation, and then reemploy the employee upon return from military For The Defense n October 2006 n 31
2 service. Employers must also make certain options available regarding the continuation of benefits for employees who are away on military duty. Failure to comply with the Act s requirements can subject an employer to a USERRA claim. To establish a prima facie case of discrimination and retaliation under USERRA, the employee has a fairly low burden of proof, having only to establish that the employer took an adverse employment action against the employee based in part on the employee s connection with the military. 38 U.S.C. 4311(c). This low burden of proof is dangerous to the employer as it potentially allows employees to establish a prima facie case with less evidence than required under other employment discrimination statutes. Equally dangerous is the Act s provision that if the employer s actions are deemed to be willful, then the employee, by statute, is entitled to liquidated damages in the same amount and in addition to any lost wages and benefits suffered because of the unlawful acts in effect, double damages. 38 U.S.C. 4323(d)(1)(C). Even more troubling, USERRA has no statute of limitations, and no state statutes of limitation may be used by analogy. Congressional House Report (4/28/93); Senate Report (10/18/93). Although this article addresses the new USERRA Regulations, another piece of important legislation has occurred regarding the posting requirement under USERRA. The Veterans Benefits Improvement Act of 2004 ( VBIA ), P. L , was signed into law on December 10, 2004, with an effective date of March 10, This Act essentially performed two functions regarding veterans. First, it amended the right of continuation of health care coverage under USERRA from 18 months to 24 months. Second, employers are now required to inform employees of their rights and benefits under USERRA through the use of a new poster Your Rights Under USERRA. The poster must be placed in an area commonly visited by employees. It informs employees of their benefits, rights and protections with respect to military leave. The United States Department of Labor has provided a poster which may be downloaded for free by visiting the Department of Labor s website at 32 n For The Defense n October 2006 The Department of Labor for the First Time Provides Guidance through the Issuance of Its Final USERRA Regulations Employers have been challenged for over 10 years by attempting to comply with the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended [ ], without the guidance of any Department of Labor regulations. On September 20, 2004, the Department of Labor issued its first-ever proposed rules interpreting USERRA. The proposed regulations were set forth at 20 C.F.R. Part There were a number of public comments submitted regarding the proposed regulations, all of which were taken into consideration, and many of which are reflected in the final USERRA regulations published in the Federal Register on December 19, 2005, at 70 Fed. Reg (20 C.F.R ). The Federal Register publication of December 19, 2005, contains a very detailed summary of the regulations, and provides a copy of the regulations themselves starting at 70 Fed. Reg The regulations are unique in that the sections are broken down by categories and are set forth in a question and answer format. There are essentially six subparts to the regulations covering: an Introduction; Anti-Discrimination and Anti- Retaliation; Eligibility for Reemployment; Rights, Benefits and Obligations of Persons Absent from Employment Due to Service in the Uniformed Services; Reemployment Rights and Benefits; and Compliance Assistance, Enforcement and Remedies. Subpart A Introduction to the Regulations The introductory section of the new regulations sets forth items like General Provisions, A Brief Overview of USERRA as a Law, and more importantly, it contains a Definitions section for USERRA. One of the more important clarifications of the regulations under the General Provisions section is the definition of employee. An employee is defined extremely broadly as any person employed by an employer. This also includes any person who is a citizen or a national or permanent resident alien of the United States who is employed in a workplace in a foreign country by an employer that is an entity of the United States. Interestingly, employee also includes former employees of an employer ( (c)). Therefore, an individual who has been terminated from his or her position may bring an action under USERRA against his or her former employer if the cause of action arose during the term of employment. Regarding the term employer, the definition of the term found in the regulations is broader than that found in other federal employment statutes, such as the Americans With Disabilities Act, and Title VII of the Civil Rights Act of Under the USERRA regulations, individual supervisors and managers who have control over employees, and over whom the employer has delegated responsibilities, are potentially liable as the employer under the Act ( (d)). Also noteworthy, an employer under the regulations, includes any successor in interest to a person, institution, organization or other entity referred to in the [definition]. Another area that was unclear under the case law, but now is clarified within the regulations, is the definition of service in the uniformed services ( (d)(1)(iv)). The regulations now clarify that individuals who provide service under the Public Health, Security and Bioterrorism Preparedness and Response Act of 2002, P.L , (i.e., provide service as an intermittent disaster-response appointee upon activation of the National Disaster Medical System (NDMS), or serve as a participant in an authorized training program) are now deemed to be in the uniformed services under USERRA (e) (citing 42 U.S.C. 300hh-11(e)(3)). Subpart B Anti-Discrimination and Anti-Retaliation Subpart B covers USERRA s protection of an employee from discrimination or retaliation for exercising his or her rights under USERRA. The new regulations help clarify that the anti-discrimination and anti-retaliation provisions prohibit discrimination against, and apply to, all covered employers, including hiring halls and potential employers such as successors-in-interest, or when an employee has more than one employer. (See and ) The regulations also set forth the burden of proof that an employee must meet in bringing an action under the Act. The regulations make it clear that it is the individual who has the burden of proving that their
3 status or activity is protected by USERRA and that the employer took action against him or her that constitutes an act of discrimination or retaliation in violation of USERRA. In order to succeed in an action under the Act, the regulations state that an employee must show that the employer s action was motivated by one or more of the following: 1) membership or application for membership in a uniformed service; 2) performance of service, application for service, or obligation for service in a uniformed service; 3) action taken to enforce a protection afforded any person under USERRA; 4) testimony or statement made in or in connection with a USERRA proceeding; 5) assistance or participation in a USERRA investigation; or 6) exercise of a right provided for by USERRA. If the employee proves that any of the employer s actions were based on one of the prohibited motives listed in this section, then the burden shifts to the employer to prove an affirmative defense that the adverse action against the employee would have been taken anyway, absent the USERRAprotected status or activity ( ). Subpart C Eligibility for Reemployment Arguably, the greatest protection of USERRA for veterans is the right of reemployment upon returning from active duty. Not surprisingly, Subpart C, Eligibility for Reemployment, is the largest section of the new regulations ( ). One of the clarifications set out in the new regulations is that a returning service member who meets the eligibility requirements for reemployment, must be promptly reemployed, which means as soon as practicable, but, at a minimum within two weeks of the employee s application for reemployment ( ). The new regulations also discuss the unique escalator provision of the Act. The regulations state that an employee is entitled to reemployment into the same position that he or she would have attained within reasonable certainty, just as if they had remained employed during their period of uniformed service ( ). The regulations discuss bidding systems and more importantly, strikes. The regulations state that if a returning service member s bargaining unit either has been, or is on strike when he or she returns from his or her uniformed service, he or she is to be considered as an employee for purposes of his or her USERRA reemployment rights. However, the Department of Labor cautions that reemployment rights may be affected by federal labor law ( ). Another important clarification under the reemployment regulations is that if an employee was in a probationary period or in an apprenticeship program at the time that he or she departed for military service, then he or she must be afforded a reasonable amount of time to adjust prior to taking a missed skills-based promotional exam, or to complete his or her probationary period. In other words, the Department of Labor has refused to place a fixed time limit on such a readjustment period and has left it to the discretion of the employer to take into consideration such things as the length of time the employee was away on military service, the level of difficulty of the test, consideration of the time it usually takes to prepare for the test (or conclude the probationary period) and the nature and responsibilities of the service member while he or she was serving in the military. ( ). Another clarification under the new regulations regarding reemployment is that a successor-in-interest will be found liable for any violation by the former company under USERRA, even though it was unaware than an employee of the former company may have claimed, or will claim, reemployment rights when he or she returns from military service ( ). Therefore, whenever an employer undertakes to acquire another company, due diligence now requires a thorough investigation into whether or not any of the employees of the acquired company are away on military service. It would be prudent for the acquiring company, through its due diligence, to assure itself that the acquired company properly handled the employee s USERRA rights, and make its own determination as to the potential eligibility of the returning employee once military service has been completed by the employee. Of further interest in the new regulations is the application of USERRA to multiple employers. The regulations clarify that an employer includes not only the person or entity that pays the employee salary or wages, but also includes a person or entity that has control over his or her employment opportunities, including a person or entity to whom the employer has delegated the performance of employment-related responsibilities ( ). The regulations cite an example that if an employee is a security guard hired by a security company and he or she is assigned to a work site, the employee may report both to the security company and to the site owner. In such an instance, It is the individual who has the burden of proving that their status or activity is protected by USERRA. both employers shall share responsibility for compliance with USERRA ( ) (emphasis added). As mentioned, for occupations such as longshoreman, stage hand, construction workers, etc. their associated hiring halls will now be considered an employer and thus, be jointly liable for compliance with USERRA ( ). Employers need to assure themselves that any possible coemployers are complying with the strict requirements of USERRA. The regulations also clarified that all states, including their political subdivisions, the District of Columbia, the Commonwealth of Puerto Rico, and the United States Territories are all considered employers under USERRA ( ). Often employers question whether or not temporary, part-time or seasonable employment positions are covered by USERRA. The new regulations clarify that all employees are covered by USERRA, whether or not they hold a temporary, part-time, probationary or seasonal employment position ( ). However, where the employee held a position that was known to be for a brief, nonrecurrent period of time, and there was no reasonable expectation that the employment would have continued indefinitely or for a significant period of time, then there is no right to re-employment. ( ). The regulations also state that USERRA rights also apply to executive, managerial, or pro- For The Defense n October 2006 n 33
4 fessional employees ( ). USERRA does not, however, cover an independent contractor ( ). Interestingly, the regulations now define that USERRA covers individuals attending the military service academies, such as: The United States Military Academy (West Point, New York), The United States Naval Academy (Annapolis, Maryland), Employers need to assure themselves that any possible coemployers are complying. The United States Air Force Academy (Colorado Springs, Colorado), and The United States Coast Guard Academy (New London, Connecticut) ( ). Often, employers question whether or not an individual s USERRA leave must begin immediately after leaving his or her employment position with the company. The regulations uniformly state no. In other words, an employee must have enough time after leaving his or her employment position to travel safely to the employee s duty reporting station, and depending upon the specific circumstances, must be allowed additional time to arrange personal affairs and family responsibilities ( ). Other sections of Subpart C in the new regulations discuss the notice provisions that are required, if possible, by the employee before taking USERRA leave, and the periods of service that may limit an employee s protection under USERRA ( ). Subpart D Rights, Benefits, and Obligations of Persons Absent from Employment Due to Service in the Uniformed Services Employers often ask what type of nonseniority rights and benefits is an employee entitled to during their period of military service? ( ) The answer is: Employees are entitled to all of the nonseniority rights and benefits to which any other employees are entitled during any 34 n For The Defense n October 2006 other periods of leave or furlough. These rights include those rights and benefits that become effective during the employee s period of service, if they are provided to similarly situated employees on other leaves of absence or furloughs. If the non-seniority benefits that are available to all employees on leaves of absence vary according to the type of leave, the employee on military leave must be afforded the most favorable treatment as to those non-seniority rights and benefits. As noted in the regulations, [A]s a general matter, accrual of vacation leave is considered to be a nonseniority benefit that must be provided by an employer to an employee on a military leave of absence, [but] only if the employer provides that benefit to similarly situated employees on comparable leaves of absence. ( ) (emphasis added). Another common question from employers is what health plan coverage must the employer provide for the employee under USERRA? The answer is: if the employee has coverage under a health plan in connection with his or her employment, then the plan must permit the employee the option of continuing the coverage for a 24-month period of time beginning on the date on which the employee s absence for the performance of military service begins. This coverage ends after 24 months or when the employee applies for reemployment ( ). If the employee is away on military service for fewer than 31 days, then he or she cannot be required to pay more than his or her regular contribution for the health care coverage. If, on the other hand, the employee is on military service in excess of 31 days, then he or she may be required to pay no more than 102 percent of the full premium under the plan, which represents the employer s share, plus the employee s share, plus two percent for administrative costs ( ). The regulations state that USERRA does not specify a particular method of payment for the continuing coverage and that the health plan s administrators may develop a reasonable procedure for payment consistent with the plan ( ). Subpart E Reemployment Rights and Benefits Generally speaking, Subpart E discusses the general rule that an employee is entitled to reemployment in the same job or position that he or she would have attained with reasonable certainty if not for the absence due to his or her military service ( ). It is this section of the new regulations that discusses the escalator principle, which requires the employee to be reemployed in a position that reflects with reasonable certainty the pay, benefits, seniority and other job prerequisites that he or she would have attained if not for the period of service ( ). This regulation section is likely to cause problems upon an employee s return to work. For example, when two or three employees at a similar employment level are up for promotion to the next position that is only available to one person of the group, and one of those employees departs on military leave, the employer must make reasonable efforts to assure itself with reasonable certainty that if the position was given to one of the remaining individuals, that the individual absent on military leave would not have been provided the position because the absent individual was not more qualified. This will be a difficult test for employers to undertake, especially if the military employee has been away on service for a significant amount of time. This subsection of the regulations also discusses the efforts an employer must undertake to assure that the returning employee is qualified, or becomes qualified for the reemployment position ( ). This is especially true for disabled employees ( ). Not only is the employer required to make reasonable efforts to accommodate the employee s disability and to help him or her to become qualified to perform the duties of their prior position, they must also provide a position that is equivalent in seniority, status and pay to the escalator position upon the employee s return; or, to return the employee to a position that is nearest in approximation to the equivalent position that is consistent with the circumstances of the employee s case ( ). Similarly, in determining the rate of pay of the returning military service member, the regulations set forth that the rate of pay is calculated according to the same escalator principles that are used to determine the reemployment position ( ). The regulations in this section also discuss the protection against discharge that
5 is available under USERRA. As set forth in the Act, the regulations state that if an employee s most recent period of service was more than 30 days, but less than 181 days, then the employee can only be discharged for cause during a period of 180 days from their date of reemployment. The employer must keep the returning employee for one year after the date of reemployment if the employee s most recent period of service was more than 180 days (except in the instances of discharge for cause) ( ). The remainder of the subsection discusses pension benefits and is consistent with the benefits as set forth under the Act. In short, upon reemployment the employee is treated, for pension purposes, as not having a break in service with the employer ( ). Subpart F Compliance Assistance, Enforcement and Remedies The initial part of Subsection F discusses the assistance that is available to veterans through the Veterans Employment and Training Service (VETS). This service provides a wide range of compliance assistance and outreach activities regarding USERRA and now, the newly enacted regulations. They provide services such as e-vets/resourceadviser and other webbased materials, which are located at Inquiries can be also be made to the Office of Operations and Programs, Veterans Employment and Training Service (VETS), U.S. Department of Labor, Room S1316, 200 Constitution Avenue, N.W., Washington, D.C , (202) Individuals with hearing or speech impairments may access the above information via TTY, by calling the tollfree Federal Information Relay Service at 1 (800) The regulations parallel the Act in stating how an individual may file a USERRA complaint. An individual claiming entitlements, or a violation of rights or benefits under the Act, may file a complaint with VETS, the Attorney General, or initiate a private legal action in a court of law on their own ( ). It is not necessary for an aggrieved individual to file the complaint with VETS first, nor is it required for them to file a complaint with the Attorney General for available remedies under USERRA ( ). If an action brought under USERRA is brought against a state by an individual person, the action may be brought in a state court of competent jurisdiction according to the laws of that state. If the action is brought against a private employer, or a political subdivision of a state by a person, then the District Courts of the United States have jurisdiction over the action ( ). Unique to USERRA is the standing requirement to bring an action under the Act. The regulations clarify that an action may be brought only by the United States, or by the person or representative of the person, claiming rights or benefits under the Act. An employer, prospective employer, or other similar entity may not bring an action under the Act on behalf of the employee ( ). Also unique to USERRA, which is set forth in the new regulations, is that if an individual who believes that he or she is aggrieved under the Act brings an action and does not prevail, then no fees or court costs may be charged or taxed against an individual if he or she is claiming rights under the Act. If, however, the individual obtains private counsel for any action or proceeding to enforce a provision under the Act, and prevails, then the court may award reasonable attorneys fees, expert witness fees and other litigation expenses against the violating employer ( ). As stated at the beginning of this article, one of the unique features of USERRA is that there is no statute of limitations ( ). As noted in the regulations, only one court has held that a four-year general federal statute of limitations applies to USERRA action. See Rogers v. City of San Antonio, 2003 WL (W. D. Texas), rev d on other grounds, 392 F.3d 758 (5th Cir. 2004) (citing 20 U.S.C. 1650). Thus, the only available defense for an employer regarding a dilatory action brought by an allegedly aggrieved employee, is the equitable affirmative defense of laches ( ). The available remedies to a prevailing employee who proceeds to court to enforce USERRA are: payment for any lost wages or benefits suffered by reason of the employer s failure to comply with the Act. The court may also require the employer to pay the individual an additional amount equal to the amount of lost wages and benefits as liquidated damages, if the court determines that the employer s failure to comply with the Act was willful ( ). A violation will be considered to be willful if the employer either knew or showed reckless disregard for whether the conduct was prohibited by the Act ( ). Along with the stated remedies, there is no limitation upon a court in the new regulations regarding its use of its equitable powers under USERRA, which may include, but are not limited to: the issuance of temporary or permanent injunctions, temporary restraining orders, or contempt orders to vindicate the rights or benefits guaranteed under the Act. Conclusion The good news is that, due to improvements in personal body armor and field hospital medical services, many of our men and women in the military are surviving what were once non-survivable injuries. Unfortunately, once they return home and return to work, many of their employers do not know, or do not understand, the rights and benefits available to their returning employees. Certainly, no employer wishes to purposefully deny USERRA rights and benefits to its returning employees. The new DOL USERRA Regulations offer employers, and their counsel, an easy to read question and answer format that assists them in understanding the Act. The brave men and women serving in our Uniformed Services do so, in part, to protect our rights and freedoms. We owe them the same respect, by providing to them upon their return from service, the protections of their rights and benefits afforded to them under USERRA. The new DOL Regulations provide a great deal of assistance in seeing that these returning veterans receive the welcomed reemployment rights they deserve. For The Defense n October 2006 n 35
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