The U.S. Labor Department has issued new regulations that spell out employers’ responsibilities when reinstating employees who return from military leave. The new regulations do not impose any new requirements under the Uniformed Services Employment and Reemployment Rights Act (USERRA), but they do clarify existing rules and emphasize that employers apply the law liberally in favor of service members (emphasis added). The DOL regulations became effective on January 18.

USERRA prohibits discrimination against past and present members of the uniformed services and establishes reemployment rights for service members who want to return to the jobs they held prior to service. Compliance with USERRA and state laws affecting military leave has become an increasingly important issue for employers as a growing number of employees have left employment for periods of military service following September 11, 2001.

The new regulations provide valuable guidance to employers on what the DOL’s likely position would be on reinstatement issues. Employers should review their leave policies and health/pension plans to ensure that they fully comply with the USERRA. Keep in mind that if a state law provides additional rights to service members, it will prevail. Below are some important aspects of the new regulations.

The USERRA governs virtually all employers, regardless of size. This includes successors-in-interest and joint employers.

USERRA provides that an employee or appropriate representative of the military service generally must give written or oral notice of the need for military leave unless military necessity prevents it. In the regulations, DOL declines to provide a specific time period, but cites Department of Defense regulations, which state that an employee should give 30 days’ notice of the need for military leave, when feasible.

The regulations make it clear that an employee need not decide before leaving to attend military service whether he/she intends to return to work with the same employer at the end of the service period. In fact, even if an employee tells the employer that he/she does not intend to return, the employee still does not forfeit the right to reemployment under USERRA. Thus, an employer must be prepared to accommodate the employee’s return to the workforce – even if such return is five years later (the maximum cumulative period of service during which USERRA rights are retained).

USERRA requires an employer to "promptly" re-employ an eligible returning veteran. For the first time the new regulations define "prompt reemployment" of returning service members. The regulations provide that "prompt reemployment" means "as soon as practicable under the circumstances" and that, "absent unusual circumstances," a veteran must be reemployed within two weeks of submitting an application for reemployment. If the employee is returning from weekend National Guard duty, "prompt reemployment" is the next regularly scheduled workday.

As a general rule, the employee is entitled to re-employment in the position (including potential promotions) that he or she would have attained with reasonable certainty if not for the absence due to uniformed service. The regulations refer to this position as the escalator position. The escalator position includes the seniority, status and rate of pay (including potential pay increases) that the employee ordinarily would have attained in that position given his or her job history.

Notwithstanding the escalator principle, the regulations emphasize that USERRA does not require an employer to reinstate a returning service member to a position if the returning service member is not qualified to perform the job, although the employer is obligated to make reasonable efforts to assist the returning employee to become qualified for employment.

Employers need to be concerned about how to handle health plan coverage and pension plan rights, both during the employee’s period of military service and upon return from service. USERRA provides that service members who leave work to perform military service may elect to continue their existing employer-based health plan coverage for up to 24 months while in the military, similar to how COBRA operates.

The new regulations provide greater clarity to provisions regarding health care coverage during service and restoration upon return from service, including new guidance on how employees may select and pay for continued coverage during service periods, the permissible cost of such coverage, health plan administrator’s obligations, and the types of health plans covered.

Also, 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, even if the employee did not elect to continue health plan coverage during the period of uniformed service.

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.

A reemployed employee must be permitted to make up any missed employee contributions or elective deferrals (without interest). The regulations provide that any employer contributions required under USERRA must normally be made within 90 days following reemployment, although certain exceptions apply.

The DOL regulations clarify the rules for accommodating veterans returning to the workplace with service connected disabilities. Like the Americans with Disabilities Act (ADA), USERRA requires employers to make reasonable accommodation efforts. But while ADA only requires employment of individuals who are qualified to perform the "essential functions" of a position, USERRA goes further and requires the employer to train or re-train the disabled veteran so that he/she may become qualified for the position or another position of like seniority, status, and pay.

If the disabled veteran cannot be accommodated by the employer’s reasonable efforts, the employer must reemploy the veteran in some other position he/she is qualified to perform (after reasonable training efforts) and which is the "nearest approximation" (in terms of seniority, status, and pay) of the position to which he/she would otherwise be entitled.

USERRA provides a period of time following military service (six months for individuals who served 180 days or less, and twelve months for individuals who served more than 180 days), during which an individual may be terminated only for cause, an exception to the normal "employment-at-will" doctrine. The regulations provide that "cause" may include:

Discharge based on conduct. The employer bears the burden of proving that a discharge is reasonable for the conduct in question and that the employee had notice that the conduct would constitute cause for discharge.

Other legitimate, nondiscriminatory reasons. Reductions in force, job elimination or being placed on layoff status may constitute cause for purposes of USERRA if the employer can show that the same action would have been taken in the absence of military leave.

Employers are required to provide a notice of employee rights, benefits and obligations under USERRA. Employers may provide the notice "Your Rights Under USERRA" by posting it where employee notices are customarily placed or distributing by hand, regular mail or e-mail. A copy of the poster may be downloaded at: http://www.dol.gov/vets/programs/userra/USERRA_Private.pdf