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Uniformed Services Employment and Reemployment Rights Act of 1994

Subsequent to the events of September 11, 2001, the Department of Defense has been authorized to call up to 50,000 military reservists. The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) governs the reemployment and benefit rights of employees returning from military leave. Generally, USERRA:

• Prohibits employment discrimination against employees who take leave for military service and guarantees reemployment to those returning from military leave.

• Provides up to 18 months of continuing health care coverage for employees who are called away for military duty and for their family members.
• Allows employees to make up "missed" contributions to defined contribution plans, and requires that employers make up "missed" matching contributions.

Reemployment Rights for Employees Returning from Military Leave

In general, an employee returning from military leave is guaranteed reemployment and other rights as long as he or she complies with certain notification and other requirements. Employees are protected by USERRA if:

• The employee (or an appropriate officer in the uniformed service in which the employee's military service is performed) gave advance written or verbal notice of his or her military duty,
• The cumulative length of all periods of military service with the employer do not exceed 5 years, and
• The employee reports to work when required after the period of military service ends.

The timeframe under which a returning employee must report to work varies depending on the length of the military leave. An employee who was on military leave for less than 31 days must generally report on the first full, regularly scheduled working day after he or she returns from military service. Employees whose leave is between 31 and 181 days generally have 14 days to submit an application for reemployment. Employees who have been gone for more than 180 days will have 90 days to submit an application for reemployment. Exceptions are provided for employees who are recovering from illness or injury when their military duty expires, and certain other circumstances.

Upon returning from military leave, employees must be reemployed in the position they would have held if they had remained continuously employed (or, if the military service exceeds 90 days, a position of like seniority, status and pay). If the employee is not qualified for that position, he or she must be returned to the position held when the military leave commenced (or, if the military service exceeds 90 days, a position of like seniority, status and pay). Special rules apply for employees who are no longer qualified for their positions due to disability or other factors. Employees returning from military service shall have the seniority (and other rights and benefits determined by seniority) they had when their military service commenced, plus the additional seniority, rights, and benefits they would have attained if they had been continuously employed.

Employers do not have to reemploy returning employees if the employer's circumstances have changed so much that reemployment is impossible or unreasonable, reemployment would impose an undue hardship on the employer, or any accommodation, training or effort required for reemployment would impose an undue hardship on the employer. Employees would not be entitled to reemployment if his or her position was for a brief, nonrecurrent period and there was no reasonable expectation that the employment would continue indefinitely or for a significant period.

Continuing Health Care Coverage Required

Employees who participate in the employer's health plan may continue health care coverage for themselves and their dependents for up to 18 months from the date their military leave begins. Generally, employers may charge up to 102 percent of the full health care premium for this coverage. However, if the employee will be gone 31 days or less, the employee is only required to pay his or her regular share of the premium.

If health care coverage is terminated when the employee leaves for military service, the employer cannot impose waiting periods or preexisting condition exclusions when the employee returns. The employer's health plan will not be required to cover injuries or illness that are attributable to military service - those will be covered by the uniformed service.

Qualified Retirement Plans

Qualified retirement plans must treat returning employees as not having incurred a break in service by reason of military leave. Upon reemployment, each period of military service would be deemed to constitute service with the employer for purposes of vesting and accruals. If accrued benefits are based on employee contributions or elective deferrals, the returning employee is entitled to those benefits only to the extent that he or she makes such contributions or deferrals.

Upon returning to employment, employees who participate in defined contribution plans are permitted to make up "missed" contributions to their plan. Payments may be made over a period up to 3 times the period of military service, up to a maximum of 5 years. Employers must make up any matching contributions that would have been required if the employee's contributions had been made during the period of military service.

Other Provisions

Employees on leave for military service shall be deemed to be on furlough or leave of absence and shall be entitled to any other rights or benefits accorded to similarly situated employees who are on leave of absence. Employees on leave for military service shall be permitted, upon the employee's request, to use any vacation, annual, or similar leave during the period of service.

Employees returning from military service may be not be discharged (except for cause) for 180 days if the employee was on leave for 30-180 days, or for one year if the leave period exceeded 180 days. Under USERRA, it is illegal to deny initial employment, reemployment, retention in employment, promotion, or any other benefit of employment to someone based on his or her membership in the uniformed services. If an employee's membership in the uniformed services is a motivating factor in a personnel decision, employers will be in violation of USERRA unless they can prove that the decision would have been made regardless of the employee's military membership or obligation.

This article was prepared by Rafael E. Fernández-Toledo, Watson Wyatt Worldwide's San Juan office.