December 29, 2004

Military Leave: Department Of Labor Drafts New Regulations

Holland & Knight Newsletter
Paul G. Lannon

Employers will soon have more detailed guidance about their obligations to employees on leave for military service. The Department of Labor (DOL) has issued new draft regulations in an easy-to-read question and answer format designed to address the most frequent concerns about military leave. The public comment period closed last month and the final version is expected early in 2005. With tours of duty increasing in length and number, these guidelines come at a critical time for employers and employees.

The DOL regulations implement the Uniformed Services Employment and Reemployment Rights Act (USERRA), the comprehensive federal veterans’ employment rights law enacted in 1994 to modernize its predecessor Vietnam-era legislation. USERRA applies to all employers, regardless of size, and nearly all employees, including part-time, temporary, probationary and seasonal workers. The sole exception is for brief, non-recurrent positions in which employees have no reasonable expectation of continued employment. To claim USERRA protection, employees need only show that they are members of the “uniformed services,” which means the Armed Forces, federal service in the Army and Air National Guards, Coast Guard, the commissioned Public Health Services corps, service academy students, and others as designated by the President. Most states also provide employment protection for uniformed service members; Massachusetts joined these ranks just this year.

USERRA establishes four general guidelines for employers: (1) do not discriminate against employees on the basis of their membership in the uniformed services; (2) do allow service members to maintain insurance coverage and accrue seniority-based benefits while on military leave; (3) do re-employ a returning service member to the position he or she would have attained but for his or her military service, subject to certain notice, length of service and other qualifications; and (4) do not terminate service members, except for cause, for up to one year after they return to work. Courts will liberally construe these safeguards for the benefit of service members.

In many respects the proposed regulations merely restate the language in the federal statute. However, in some areas the regulations impose substantive requirements, amplifying or interpreting the statutory obligations. Employers should pay particular attention to the following highlights.

Discrimination – Consistent with employment discrimination laws generally, the regulations provide that employers can prevail in a discrimination action by proving that they would have taken the same action regardless of the employees’ military service. Discrimination by prospective employers in hiring is not specifically addressed, but the DOL has requested comments on that issue.

Re-employment – Unlike discrimination cases where employees shoulder the initial burden of proof, in re-employment challenges the employers are immediately on the defensive. Service members are automatically entitled to re-employment if they meet the criteria for eligibility. Employers must then prove one of four affirmative defenses. First, employers are not required to re-employ service members whose employment was brief, non-recurrent and for which there was no reasonable expectation of continued employment for a significant period. Second, re-employment is not required if circumstances have changed such that qualifying the service members for re-employment would impose undue hardship. Similarly, the third exception applies when circumstances have changed enough to make re-employment impossible or unreasonable. For example, the regulations describe a situation where an intervening reduction in force would have included particular employees if they had not been on military leave. On the other hand, the need to fill service members’ positions while they are out on military leave is not a defense to re-employing them after they return from duty. Re-employment may require employers to re-assign or terminate replacement employees.

Returning to work – Employees departing for military service may defer their decision to return to work until after their service ends, and employers may not pressure employees for assurances about whether they are returning.

Prompt re-employment – Employers must promptly re-employ eligible service members returning from duty. The regulations propose to define “prompt” as “as soon as practicable under the circumstances.” However, in most cases, re-employment must occur within two weeks of receiving a service member’s application for re-employment, absent unusual circumstances. When employers are reinstating service members who have been on duty for several years, the DOL expects some delays, given that employers may have to reassign or give advance notice to other employees temporarily occupying the positions.

Five-year limit – Employees are generally not entitled to re-employment after more than five years of military leave. However, the regulations propose an exception for employees who rejoin the service to mitigate economic losses caused by their employers’ unlawful refusal to re-employ them.

Military necessity – In the context of service members’ obligations to provide advance notice of military leave, the regulations emphasize that the question of whether employees are acting out of “military necessity” is not subject to judicial review.

Health plans – Health plan administrators and fiduciaries are asked to develop reasonable requirements and operating procedures for service members to elect continuing coverage. The DOL concedes there are many unresolved issues with this provision of USERRA. For example, the statute does not provide specific guidance on how or within what time period employees must elect continuing health coverage. The DOL is considering whether to establish specific deadlines. The statute also fails to describe under what conditions service members should be permitted to delay electing health care continuation, or whether service members should be permitted to delay health plan coverage for a period of time after re-employment. The final regulations may address these points more directly.

Waiver – Federal common law will determine whether employees have waived non-seniority based benefits. Consequently, waivers must be knowing and in writing, and the waiver of one right will not imply the waiver of any other right under USERRA.

When these regulations are finalized in 2005, both service members and their civilian employers should have a much clearer picture of their respective rights and obligations.

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