New England Biz Law Update
The wars in Iraq and Afghanistan have resulted in what some have termed the largest mobilization of military reservists and National Guard troops since World War II. With any luck, these troops will be returning home quickly and safely.
When they do, however, many employers may be taken by surprise by the requirements of the Uniformed Services Employment Reemployment Act (USERRA), which provides for extensive (and often misunderstood) rights for returning employees.
For one thing, unlike other federal employment statutes, USERRA applies to employers large and small – there is no minimum number of employees required for an employer to be covered by the statute, which covers every employer in the country, public or private, as well as the foreign subsidiaries of U.S. corporations. USERRA is similar to other federal employment statutes, however, in that it provides for the potential for injunctive relief, multiple damages, and attorney’s fees.
In short, the statute has the potential to be troublesome for employers unaware that USERRA turns some of employment law’s most basic tenants (such as employment at will), on their head. And, although it is hard to pare the list down, here are the top ten areas an employer needs to keep in mind to ensure compliance with USERRA.
1. Employment and reemployment. At its most basic, USERRA addresses the rights of active service members to employment and reemployment opportunities. With respect to employing new employees or promoting existing employees, this means that employers may not allow an employee’s (or potential employee’s) active military service, potential active military service, or imminent active military service to enter the decision making process.
With respect to the reemployment of employees who were called away to active duty, the specific details as to notification requirements and the timing of a request for reemployment are somewhat complex. The general rule, however, is straightforward: In general, a returning employee is entitled to reemployment in his or her original position (or a position of like seniority, status and pay) unless the employer’s circumstances have so changed as to make reemployment "impossible" or "unreasonable."
Although it is not entirely clear yet what may qualify as a circumstance sufficiently changed so as to make reemployment impossible or unreasonable, it is clear that the mere hiring of a replacement is insufficient to defeat an employee’s right to reemployment.
2. No Need To Intend To Return. Unlike other statutes, such as the Family Medical Leave Act, which permit companies to condition the grant of certain benefits upon the employee’s stated intention to return to work after his or her period of leave, USERRA contains no such requirement. Indeed, a number of courts – including the 1st U.S. Circuit Court of Appeals – have held that even an employee’s resignation (if for the stated purpose of entering active military service), will not defeat an employee’s right to reemployment upon leaving active service.
3. Escalator – Going Up (or Down). USERRA also applies what is known as an "escalator principle," which generally means that, upon reemployment, the employee is supposed to step back onto the "seniority escalator," not just at the place where they disembarked, but in the position they would have naturally occupied if it had not been for the employee’s military service.
If an employee would have ordinarily received a raise or a promotion during his or her time of service, USERRA requires that the employee receive the raise or promotion upon reemployment. And, if the employee is not qualified for the new position, the employer is required to make "reasonable efforts" to attempt to train or otherwise qualify the employee for the new position.
On the flip side, if an employee’s job has been eliminated – for example as part of a larger reduction in force – and such elimination would have taken place even if the employee had not been in active service, USERRA does not prevent the employer from eliminating the position.
4. USERRA Seniority Trumps. Although USERRA does not specifically mention its impact on a union’s collective bargaining agreement, it does make clear that its provisions trump any contrary "state law, contract, agreement, policy, plan, or practice" which would reduce, limit, or eliminate an employee’s rights under USERRA. Presumably, this language means that a union’s CBA could not dictate a seniority plan that conflicted with the provisions of the statute.
5. Employee At Will No More. Most employment lawyers, in-house counsel, and human resources directors can recite their "employment at will speech" in their sleep. Under USERRA, however, the old rules no longer apply. Upon reemployment, an employee who has been on active duty for more than 30 days becomes (for a period of time) a "for cause" employee, terminable only for good cause. For employees who served for more than six months, the "for cause" period is a year following reemployment; for an employee who served between 30 days and six months, the "for cause" period is six months.
6. Burden of Proof. USERRA also flips the usual burden of proof from the employee to the employer. Under the statute, if an employee (or candidate) claims discrimination on the basis of military service, it is the employer’s burden to prove that it would have taken the same action regardless of the employee’s active service. Similarly, an employer claiming that reemployment is "impossible" or "unreasonable" bears the burden of proving this affirmative defense.
7. Interaction With Other Laws. Another potential pitfall for employers is a failure to appreciate the interaction between USERRA and other employment laws.
For example, take the situation of an employee who has recently returned from an extended military leave and then requests a leave under the FMLA. Although it might initially appear that the employee was not entitled to such leave (because he or she has not worked at least 1,250 hours in the preceding 12 months), the Department of Labor has already issued a memorandum stating that the employee must be granted his or her FMLA leave if they would have worked 1,250 hours within the preceding 12 months but for the employee’s service in the military.
8. Benefits. As with most every other aspect of USERRA, your mantra here should generally be, "gosh, it’s as if you never left."
If an employee retirement plan has a particular vesting schedule, the returning employee must be credited with the time spent in active service towards that schedule. And, if employee contributions are generally required, USERRA provides for a "makeup period" (equal to three times the employee’s length of service, up to a five-year cap), during which the employee can make up missed contributions.
During the makeup period, the employer is required to match employee contributions just as it would have if the employee had made them during his or her period of service. And, although USERRA does not specifically mention how an employee’s stock or stock option vesting schedules are affected by the statute, companies should expect this issue to be vigorously litigated. At a bare minimum, it seems safe to assume that an employee’s military leave should be treated at least as well in this respect as any other approved company leave.
9. Vacation. Somehow in employment law, every issue eventually circles back around to a question concerning vacation days. USERRA is no exception.
Two vacation-day issues arise under USERRA. First, under USERRA an employer may not require an employee to use his or her vacation days, but must allow them to do so at their request. This means that an employee who has not asked to use his or her vacation days to cover his or her time in active duty retains those accrued vacation days upon reemployment.
Second, if your company grants employees a certain number of vacation days based on years of service, the returning employee must be treated as if he or she had been employed continuously during his or her active service.
10. Successor companies. Finally, while returning employees may be surprised to return home only to find that their employer has been acquired, successor corporations may be even more surprised to learn that the returning employee likely retains reemployment rights with the new company (assuming that the employee would have been offered a position with the new company had he or she not been in active service at the time of the transition).
Evan Fray-Witzer represents employers in a wide range of employment-related matters including counseling, litigation, alternative dispute resolution, contract and policy drafting and review, and internal investigations.
