Let this serve as an hypothetical: The second line manager of our manufacturing facility was called to active military duty over a year ago. Due to the need for a manager, the position was immediately filled by a person who has worked out great. The previous manager recently returned from active duty and notified the company of his intent to return to work. Reinstating him would mean displacing one of the best managers the company has ever had, which would be very disruptive. Are we required to reinstate the returning reservist? If so, can't we just create an assistant manager position for him, with the same rate of pay as the general manager?
What Does the Company Do With the Returning Employee? You must reinstate the returning service member to the second line manager position, the job he would have held if he had remained continuously employed instead of taking military leave. Moreover, federal law protects the reinstated second line manager from discharge, except for cause, for a period of one year after his return.
The Law - The federal Uniformed Services Employment and Reemployment Act, otherwise known as USERRA is designed to minimize the disadvantages to individuals who are absent from civilian employment to serve in the United States uniformed services. USERRA applies to voluntary as well as involuntary service, in peacetime as well as wartime. The law governs virtually all civilian employers, including the federal, state and local governments, and private employers, regardless of size. Many states also have enacted military leave laws, some of which provide more extensive protection for service members than the federal USERRA.
What are the Employer’s Obligations? USERRA prohibits employers from making adverse employment decisions based on an employee's military status. The statute also requires employers to provide certain leave for individuals serving in the uniformed services and creates certain reinstatement rights for those returning from service who wish to resume working at their civilian jobs.
Reinstatement rights under USERRA are not contingent upon the existence of a vacancy. As a result, sometimes it might be necessary to displace (or "bump") another employee in order to reinstate a returning service member. In enacting USERRA, Congress recognized that this law imposes burdens on employers, and that sometimes those burdens can be severe. Congress decided, however, that imposing such burdens on employers is justified by the national defense needs of our nation.
Returning the service person to a reduced position of lesser status (e.g., assistant manager) would violate USERRA, regardless of whether she is paid the same salary as the general manager. USERRA requires employers to place the returning employee in the job she would have attained if she had remained continuously employed or another position of "like seniority, status and pay." In many cases, the position the veteran would have held if the employment had not been interrupted by the period of military service will be the same as the position held when the service began. When there would have been a change, however, USERRA requires employers to apply what is known as the “escalator principle.” This means returning veterans must receive any change in position or benefits to which they would have been entitled if they had remained continuously employed.
For example, the returning employee must be granted seniority for the leave period. Similarly, the veteran must receive all other “perquisites of seniority,” such as seniority-tied increases in vacation and sick-day accrual rates, pay raises based on longevity, and promotions based on longevity or length of service the veteran was reasonably certain to have achieved.
Also, if a veteran is laid off while on military leave and would have received severance pay had he or she been actively employed at the time of the layoff, the service member would be entitled to that severance pay upon return. Moreover, if the veteran was laid off and on a recall list at the time he or she entered military service, then the service member must be returned to the recall list upon completion of service.
A service member must be (or become) qualified to do the job to have reemployment rights, but USERRA requires the employer to make "reasonable efforts" to qualify that person. "Reasonable efforts" are any actions to help the veteran become qualified, including training, that do not cause undue hardship to the employer. If the returning service member cannot become qualified for the escalator position after reasonable efforts by the employer, and if not disabled, the person must be employed in any other position of lesser status and pay that he or she is qualified to perform, with full seniority.
Finally, one of USERRA’s least known provisions appears to alter a returning military employee’s at-will status when he or she has served for more than 30 days. USERRA provides that an employee who has returned from performing at least 180 days of service in the uniformed services cannot be discharged, except for cause, for a period of one year following reemployment. An employee who has returned from performing military service for a period of more than 30 days but less than 181 days, cannot be discharged, except for cause, for a period of 180 days following reemployment.
What about Health Benefits? In addition to reinstatement to his or her job, the returning veteran also is entitled to immediate reinstatement of any employer-provided health plan coverage, including coverage for family members. There must be no waiting period and no exclusion of “pre-existing conditions” (except conditions that the U.S. Department of Veterans Affairs has determined to be service-connected).
What about the Pension Plan? Employers also must make up missed employer contributions to the pension plan, as if the returning reservist had been continuously employed. If your company requires employee contributions to its pension plan (in addition to employer contributions), then to be treated as if he or she were continuously employed for purposes of the plan, the returning service member must make up the contribution payment that would have made if the employee had been continuously employed during the leave period. After reemployment, the veteran must make up the missed contributions within the period that amounts to three times the period of uniformed service, but not more than five years.
What about Family Medical Leave? Yes, the returning employee will be eligible for FMLA leave. Under the FMLA, eligible employees are entitled to 12 workweeks of leave during any 12-month period because of childbirth, adoption or foster care, or a serious health condition of employee or certain family members. The FMLA defines "eligible employees" as those who have worked for the employer for at least 12 months and have worked at least 1250 hours for that employer during the 12-month period immediately preceding the leave. The U.S. Department of Labor's position is that the months and hours an employee would have worked, but for his or her military service, should be combined with the months employed and hours actually worked to meet the 12 months and the 1250 hours of employment required by the FMLA.
Does the Returning Employee Have any Obligations? Yes. Under USERRA, in order to have reemployment rights following a period of service, a military member must satisfy five eligibility criteria: (1) the returning service member must have held a civilian job; (2) the service member must have informed the civilian employer that he or she was leaving for service in the uniformed services; (3) the period of service must not have exceeded five years; (4) the service member must have been released from service under "honorable conditions"; and (5) he or she must have reported back to the civilian employer in a timely manner or submitted a timely application for reemployment.
As a practical matter, when hiring or transferring employees to replace people who are on leave for military service, employers should consider informing the employee taking over that the job may be temporary in nature. Employers also should plan ahead as to what will become of the replacement employee when the service member returns. Should USERRA raise concerns for your business we encourage employers to consult with an experienced labor and employment attorney before taking any action.
Kelli Hill is an associate of Constangy, Brooks & Smith in the Macon office. Constangy, Brooks & Smith limits its practice to labor and employment law counseling to management and has done so, exclusively, since 1946, when it was founded in Atlanta, Georgia. Constangy, Brooks & Smith, now has thirteen offices in nine states and represents management throughout the United States.