Power of Attorney - April 2004

USERRA Regulations

Helping Troops Return to Work

by Mark Ricciardi , David Dornak

After the Pentagon announced that thousands of National Guard and reserve units would be activated to support homeland defense and to participate in liberating Iraq, many employers had to scramble to learn what actions, and in some cases inactions, they were required to take under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). While most employers knew USERRA required them to reemploy activated service members, some employers had to learn the hard way that USERRA also provided additional protections regarding employee benefits. Indeed, the anti-discrimination provisions of USERRA cover most areas of employment and are applicable to all employers.

As the reservists begin to return to work, however, now is a good time to review your company’s policies and practices regarding all benefits, to ensure you have complied with the requirements of USERRA. Such a review will hopefully allow you to catch and correct any mistakes that could eventually lead to litigation.

Reinstatement

Unless returning employees fit into one of just a few exceptions to USERRA, you must reinstate all covered employees to the job they would have attained if they had not been absent for military service. If applicable, you must also make reasonable training efforts to help returning employees re-qualify for their job, even if the reinstatement would work to the disadvantage of another employee. Moreover, USERRA requires you to reemploy all employees who incurred a disability during military service. Generally, employees who may not qualify for these rights include those whose cumulative military leave totals more than five years, those who receive less than an honorable discharge and those who fail to notify you in a timely manner of their desire to be reinstated.

Retirement Plan and 401(k) Protections

Pursuant to USERRA, you must treat reinstated employees as though they had remained continuously employed. For participants in defined contribution plans, you must make allocations to their accounts just as though the employee had remained at work. You must also make 401(k) matching contributions, provided the employee makes his required contributions. Please be advised, however, that employees have up to three times the length of the military leave, up to a maximum of five years, to make their contributions.

Health Plan Implications

Employees activated for military service are eligible under USERRA for up to 18 months of continued health plan coverage, similar to COBRA. However, unlike COBRA, an employer cannot charge the 102 percent cost of coverage unless the associated military leave exceeds 30 days. Furthermore, this continuation-of-coverage provision applies to small health plans that are exempt from COBRA.

Importantly, health plans cannot impose an exclusion or waiting period for coverage when employees return from military leave if it would not have been imposed if coverage had not ceased because of military service. In short, returning employees generally can immediately reinstate coverage, with the exception that waiting periods or exclusions may apply to an injury or illness incurred or aggravated during the performance of military service.

Vacation Pay

Employees may request to use their accrued vacation, instead of unpaid leave, while activated. Employers, however, cannot require employees to make such an election.

Job Protection

Finally, reinstated employees have additional job protections that would not otherwise be available. If the period of service was 181 days or more, employees may only be fired "for cause" during the year following their reinstatement, even if they had previously been at-will employees. If the period of service was 31 to 180 days, they may only be fired "for cause" within 180 days after reinstatement. Of course, it is always prudent to have a good business reason for terminating any employee – even an at-will employee.

Mark Ricciardi , David Dornak
Mark Ricciardi is the founding partner of the Las Vegas office of FISHER & PHILLIPS LLP, practicing exclusively in labor and employment law representing management. David Dornak is an associate in the office.