Employers with military reservists who may be called to duty in the wake of the Sept. 11 terrorist attacks face several legal requirements regarding their workers' pensions and health benefit. Under the main federal law covering military reservists, the Uniformed Services Employment and Reemployment Rights Act of 1994 (38 U.S.C., Chapter 43), reservists also have reinstatement rights.

Congress designed USERRA to encourage noncareer service in the uniformed services by eliminating or minimizing the disadvantages to civilian employment.

Leave of Absence Treatment

Military service is treated as a leave of absence, requiring returning individuals to be granted the same rights and benefits not related to seniority that employers give to other employees on leaves of absence.

Individuals who are members or who apply to be members of the uniformed services cannot be denied initial employment, re-employment, retention in employment, promotion, or any benefit of employment by an employer on the basis of that membership or performance of service. An employer is considered to have violated this prohibition if service is a motivating factor in the denial, unless it can be proved that the action would have been taken in the absence of the membership or service.

Health Benefit Issues

Continued coverage of any health plan may be elected for individuals and their dependents, for the lesser of the 18-month period beginning on the date the absence begins or for the period ending on the day after the date on which the individuals fail to apply for or return to employment.

Continued coverage of any health plan may be elected for individuals and their dependents, for the lesser of the 18-month period beginning on the date the absence begins or for the period ending on the day after the date on which the individuals fail to apply for or return to employment.

Those who elect the coverage similar to that offered under the Congressional Omnibus Budget Reconciliation Act (COBRA) must pay 102 percent of the premium. However, those individuals whose military service is for a period shorter than 31 days may not be required to pay more than the employee share for such coverage.

Pension Plan Issues

Pension plan accrual and vesting must continue as though no break in service occurred. Service in the uniformed services is deemed to be service with the employer for pension purposes, requiring continued funding and allocation for pension plans. Upon reemployment, individuals must make contributions or pay amounts they would have elected to defer under contributory plans or deferred compensation plans.

Pension plans making USERRA contributions for employees returning from military service will retain their qualification if they follow the requirements of Internal Revenue Code Section 414(u), which was added by the Small Business Job Protection Act of 1996.

Additionally, under the Economic Growth and Tax Relief Reconciliation Act of 2001, DOL may waive the 60-day rollover period if the failure to waive the requirement would be against equity or good conscience. The waiver applies to cases of casualty or disaster due to military service in a combat zone or during a presidentially declared disaster. The EGTRRA provisions apply to distributions made after Dec. 31, 2001.

USERRA 'Has Some Teeth,' Expert Warns

Protections under USERRA last as long as five years, said David S. Fortney. "If someone is called to duty within the next five to six months, we may be talking the year 2005, 2006, depending on how long they're out, and they still will have reinstatement rights," Fortney, an attorney with the Washington, D.C., firm of Ogletree, Deakins, Nash, Smoak & Stewart and a former acting solicitor of labor, told attendees to the annual labor and employment law conference sponsored by Stetson University College of Law.

Reservists who return after more than 180 days of active duty also are protected from termination for a year, he said; adding that employers that fail to adhere to the law face significant legal and other risks. "I promise you it is vigorously enforced. It's a law that has some teeth, not to mention the public embarrassment, frankly, of being caught on the wrong side as an employer in dealing with the rights of reservists."

State Laws Also Should Be Considered

In addition to federal legislation granting job protection and mandating leave for military service, states also have laws and regulations that apply when employees are called up or volunteer for military duty. Some state laws cover only state and local government employees; others apply to private sector employees as well. [In Hawai'i, for example, HRS §121-43 and HRS 378, Part I (see HRS §378-2, number 4) make unlawful any actions taken or not taken because of or in relation to National Guard participation in addition to other protected classes.]

Some state laws apply only to service in the National Guard; other state rules cover state and local government employees serving in any sector of the military. Where state and federal laws overlap in their coverage, the provisions providing the greatest benefit to the employee control.

Changes Possible

In the wake of the President's call up or reservists, federal and state legislators are likely to review the laws governing military leave and reemployment, many of which were passed during the Gulf War. [CLEAR Source: Employers RespondTo Disaster, a BNA Special Report ©2001, pp. 11-12]