DOL Issues First-Ever Regulations On Military Leave Under USERRA

Today, the U.S. Department of Labor’s Veterans Employment and Training Service (“VETS”) issued the long-awaited new rules to implement the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended (USERRA), which were originally proposed for public comment on September 30, 2004.
 
The 268-page final regulations, which are written in a “Question and Answer” format, will be published in the Federal Register on Monday, December 19, 2005, and will become effective 30 days thereafter. In addition to issuing the regulations, VETS also provided a revised notice for employers to inform employees of their USERRA rights.
 
Background

USERRA, which is administered and enforced by the U.S. Department of Labor, and includes a private right of action in federal district courts, is the principal federal law designed to protect the rights to nondiscrimination, employment and reemployment of employees who voluntarily or involuntarily leave employment positions to undertake military service. The law applies to all private sector employers and their employees, as well as employees of state and local governments.
 
These first-ever regulations promulgated under USERRA are intended to implement the statutory requirements, as well as clarify and interpret uncertain areas of the law which have posed problems for employers. In that regard, the Preamble to the new regulations addresses specific concerns raised in the public comment period by employers, associations, unions and others.
 
“Prompt Reemployment”

For example, for the first time the new regulations define “prompt reemployment” of returning service members. The regulations provide that “absent unusual circumstances, reemployment must occur within two weeks of the employee’s application for employment.” The regulations also state, however, that where the employee is returning from weekend National Guard duty, “prompt reemployment” is the next regularly scheduled work day, while “prompt reemployment” after several years of active duty may require more time, because the employer may have to reassign or give notice to another employee who occupied the returning employee’s position.
 
Health Care and Pension Plan Rights

Principal among other employer concerns addressed by the new regulations are health plan coverage and pension plan rights, both during the employee’s period of military service and upon return from service. For example, the regulations implement USERRA’s requirement that employees and eligible dependents must, upon reemployment of the service member, be reinstated in the employer’s health plan without a waiting period or exclusion, and that the employee need not elect to continue health plan coverage during a period of uniformed service to be entitled to reinstatement to the plan upon reemployment.
 
The regulations also implement the specific rights for reemployed service members in their employee pension benefits, and clarify that for determining the amount of contributions or deferrals to a pension plan a reemployed service member must be treated as though the employee had remained continuously employed for pension purposes. The regulations explain the pension benefits that must be provided, as well as the responsibility to make contributions and/or deferrals attributable to a particular period of military service.
 
“Escalator Principle”

Also, the regulations clarify the “escalator position” requirement for reemployment rights upon return from uniformed service, an issue which has been particularly confusing for employers. The regulations define the “escalator position” as “the position the employee would have attained if his or her continuous employment had not been interrupted due to uniformed service.”  The regulations explain that the reemployment position may be: the escalator position; the pre-service position; a position comparable to the escalator or pre-service position; or the nearest approximation to one of those positions.
 
Notwithstanding the escalator principle, the regulations emphasize that USERRA does not require an employer to reinstate a returning service member in an employment position if the returning service member is not qualified to perform the civilian job, although the employer is obligated to make reasonable efforts to assist the returning employee to become qualified for employment.
 
The regulations also clarify the application of the “escalator principle” to “rates of pay.” For example, in response to comments prepared by Ogletree Deakins on behalf of the U.S. Chamber of Commerce, VETS amended its proposed regulations to clarify the “escalator position” as applied to “merit pay” increases the service member would have obtained with “reasonable certainty,” which previously had been undefined. Under the new regulations, employers may now examine the returning employee’s own work history, the employee’s history of merit increases, and the work and pay history of employees in the same or similar position in determining whether the returning employee is entitled to a non-seniority, performance-based “merit pay” increase which might have been earned during the employee’s leave of absence.
 
Protection from Discharge

The regulations clarify, again at the U.S. Chamber’s request, a returning service member’s special protections from discharge except for “just cause.” The regulations now provide that although the “just cause” requirement is an exception to at-will employment, the protection from discharge is not absolute. The regulations provide that “the employer bears the burden of proving either that the discharge was based on the employee’s conduct or it was the result of some other legitimate nondiscriminatory reason that would have affected any other employee in the reemployed service member’s position regardless of his or her protected status or activity.” The regulations list other illustrative examples for discharge to include “elimination of the employee’s position, corporate reorganization or ‘downsizing’ and layoff, provided that those reasons are legitimate, nondiscriminatory, and non-pretextual.”
 
Additional Information

Copies of the new USERRA regulations and notice for employees are available on the U.S. Department of Labor’s web site at www.dol.gov/vets.  In addition, Ogletree Deakins will provide a more extensive analysis of the new regulations in an upcoming issue of the firm’s bimonthly newsletter, The Employment Law Authority.
 
Should you have any questions regarding the new USERRA regulations, contact the Ogletree Deakins attorney with whom you normally work or the Client Services Department via e-mail at clientservices@ogletreedeakins.com or by phone at 866-287-2576.

Note: This article was published in the December 16, 2005 issue of the National eAuthority.