New DOL Regulations Clarify Rights and Obligations Under the USERRA
May 3, 2006
Robert W. Vyverberg- Chicago
In September, 2004, the Department of Labor (DOL) issued proposed regulations to implement the Uniformed Services Employment and Reemployment Rights Act of 1994, 38 U.S.C. §4301, et seq. (USERRA). Final regulations were published in December 2005 and became effective January 18, 2006. 29 C.F.R. §1002.1, et seq. The USERRA provides protections to persons who perform duties in the “uniformed services” – specifically the Army, Navy, Marines, Coast Guard, Air Force and Reserves. The regulations were developed to enforce the underlying purposes of the USERRA – to preserve the rights of, and to prevent discrimination and retaliation against, employees who must leave their employment to fulfill military obligations. The regulations do not alter the requirements of the USERRA, but instead attempt to clarify and explain its provisions in a question and answer format. The regulations cover four major areas, each of which is summarized below: anti-discrimination and retaliation protections; eligibility for reemployment; rights, benefits and obligations of employees on military leave; and compliance assistance, enforcement and remedies.
1. Discrimination and Retaliation
Sections 1002.18-23 of the regulations describe protected activities that are covered by the USERRA and the method by which current and former employees can establish unlawful discrimination or retaliation. Protection from discrimination in hiring, promotion, retention, reemployment or any other benefit of employment, extends to all employment positions, including temporary, part-time, probationary and seasonal positions. Protection from discrimination and retaliation also extends to employees who are not members of the uniformed services, but who provide testimony in a USERRA proceeding or participate in a USERRA investigation.
To establish discrimination or retaliation, an employee must show that (a) she falls within the USERRA’s protections, (b) the employer took adverse employment action against her, and (c) a causal connection exists between the protected status and the adverse action. As outlined in the regulations, military status need only be one motivating factor for the adverse action; it need not be the only motivating factor. After an employee proves that protected status or activity was a motivating factor, the burden shifts to the employer to show that it would have taken the same action anyway.
2. Reemployment Rights
Sections 1002.32-139 address coverage issues and set forth five criteria to activate an employee’s reemployment rights. An employee is generally entitled to reemployment if she: (1) was absent from employment due to qualifying service; (2) provided advance notice of service (notice of an intent to return to work is not required when the leave commences); (3) has five years or less of cumulative military service in her relationship with a particular employer (the regulations recognize nine exceptions to this requirement); (4) returned to work or applied for reemployment within the applicable deadline (time limits for this requirement depend on the length of service); and (5) has not been separated from service with a disqualifying discharge or any status other than an honorable discharge.
The regulations adopt the rationale of a line of court cases holding that the USERRA’s reemployment rights give rise to a cause of action that is separate and distinct from its anti-discrimination and anti-retaliation provisions. Therefore, an employee who claims she was wrongfully denied reemployment need not prove that her employer discriminated against her on the basis of military service. So long as she satisfies the above five criteria, she is entitled to reemployment – unless the employer can establish one of three available affirmative defenses discussed below:
1) An employer is not obligated to reemploy an employee if the employer’s circumstances changed, making reemployment unreasonable or impossible (e.g., a reduction in workforce that would have included the service member). However, the employer may not refuse to reemploy the employee on the basis that another employee was hired to fill the reemployment position during the employee’s absence, even if reemployment might require the termination of that replacement employee.
2) An employer is also not obligated to reemploy an employee if doing so would constitute an undue hardship. Employers must, however, make reasonable efforts to help employees become qualified for the reemployment position.
3) The final affirmative defense to reemployment applies when the employment vacated by the service member was for a brief, nonrecurrent period and there was no reasonable expectation that the employment would continue indefinitely or for a significant period (e.g., employment of certain seasonal employees).
3. Employment Rights, Obligations, Benefits and Compensation
Sections 1002.149-267 cover employment and reemployment rights, benefits, obligations and compensation standards. Several of the regulations that address the USERRA’s rights and benefits provisions are highlighted below.
An employer must generally treat employees on military leave the same as it treats employees on other leaves of absence. If the employer offers “nonseniority benefits” – such as continued life insurance, holiday pay, accrual of vacation pay, or bonuses – to employees on nonmilitary leaves of absence, the employer must offer these same benefits to employees on military leave. If the employer maintains more than one type of nonmilitary leave and the available nonseniority benefits vary depending on the type of leave, the service member must receive the most generous form of treatment. Further, while an employer cannot require an employee to use accrued vacation or other paid leave to cover a military leave of absence, the employer must grant a request to use accrued vacation or paid leave during the leave period. However, an employee may not apply paid sick leave to military service time unless the employer allows employees on comparable leaves of absence to do so or allows employees to use sick leave for any reason.
The USERRA’s health insurance provisions are similar to those of COBRA, although coverage extends up to 24 months. Employers need not provide a particular type of health insurance coverage, but must allow employees to continue coverage already obtained, including spousal and dependent coverage. The regulations provide that if a service member’s health insurance is terminated by reason of military service, her coverage must be reinstated upon reemployment. An exclusion or waiting period cannot be imposed in connection with reinstatement of coverage if such an exclusion or waiting period would not have been imposed had the coverage not been terminated because of military service. A service member cannot be required to pay more than 102 percent of the full premium under the applicable health plan to continue coverage if her military service is longer than 31 days. If service is less than 31 days, the service member cannot be required to pay more than any other nonmilitary employee pays for coverage.
In Fishgold v. Sullivan Drydock and Repair Corp., 328 U.S. 275 (1946), a case interpreting the USERRA’s predecessor statute, the U.S. Supreme Court held that a returning service member “does not step back on the seniority escalator at the point he stepped off. He steps back on at the precise point he would have occupied had he kept his position continuously during the war.” While an employer is not required to use a seniority system, the USERRA and the regulations codify the Supreme Court’s edict that if a seniority system is in place, the returning service member should be placed at the proper position on the seniority “escalator” (i.e., reinstated to the position she would have held had she not taken military leave, including any promotion and any reasonably certain pay increases). If a promotion is based upon a skills test, the employee must be given the opportunity to take this test. The employer must also make reasonable efforts to help the employee become qualified for the position assumed at the time of reemployment, which would include providing reasonable accommodations for a disability incurred in, or aggravated during, the service period. However, an employer is not required to reinstate an employee to a position for which she ultimately is not qualified.
Similar to compensation, pension benefits must continue as though no break occurred in the service member’s civilian employment (i.e., “continuous service”). Other statutory rights are also protected. For example, a reemployed service member would be eligible for leave under the Family and Medical Leave Act (FMLA) – if the number of months of actual civilian employment before military service and the number of months that would have accrued during military service total the number of hours needed to satisfy FMLA eligibility requirements (1,250 hours in the preceding 12 months).
The USERRA also provides returning service members with protection from discharge. If an employee’s most recent period of service was more than 30 days but less than 181 days, an employer cannot discharge the employee, except for cause, for 180 days after reemployment. If an employee serves more than 180 days, an employer may not discharge the employee, except for cause, for one year after reemployment. The employee’s conduct or other legitimate nondiscriminatory reasons may provide sufficient “cause” for discharge.
4. Compliance Assistance, Enforcement and Remedies
Sections 1002.277-314 relate to compliance assistance, enforcement of USERRA claims and available remedies for statutory violations. The Secretary of Labor, acting through the Veterans’ Employment and Training Service (VETS), is authorized to assist individuals regarding their rights and benefits under the USERRA. Aggrieved employees may file a complaint with VETS, but they are not required to exhaust this administrative remedy. VETS also retains the authority to issue subpoenas in conjunction with USERRA investigations. If VETS cannot obtain voluntary compliance in response to a complaint, it may refer the complaint to the Attorney General.
An employee may also pursue (without filing fees or court costs) a private enforcement action in state or federal court. If the employee obtains private counsel and prevails, the court may award attorneys’ fees and other costs. While the DOL maintains that there is no conclusive statute of limitations for a USERRA claim, the regulations recognize that an employer may successfully assert a laches defense if an unreasonable delay in filing resulted in prejudice to the employer in its defense of the claim. A court may order compliance with specific provisions of the USERRA, together with lost wages and benefits. Employees may also receive liquidated damages if a willful violation is established. Section 1002.312 specifies in greater detail the potential damages available to a successful employee claim and defines a “willful” violation as one where “the employer either knew or showed reckless disregard for whether its conduct was prohibited by the Act.”
Conclusion
The regulations take into account many of the questions and problems that arose during the USERRA’s first 10 years of existence. The regulations highlighted above have been, and may well continue to be, the subject of most complaints by employees based on their military status. In view of the increasing number of claims filed by service members and the continuing military operations around the world, employers should expect heightened scrutiny by the DOL regarding many of the issues addressed by the regulations and should become well versed in their obligations under the regulations and the USERRA.
For more information, e-mail Robert W. Vyverberg at
robert.vyverberg@hklaw.com or call toll free, 1-888-688-8500.