USERRA: Handling pay, benefits for returning service members

October 31, 2011
in Employment Law

While the U.S. combat forces are now out of Iraq, the ongoing war in Afghanistan continues to rely heavily on “citizen-soldiers” who serve in the military reserves and the National Guard.

The Uniformed Services Employment and Re­em­ploy­­ment Rights Act (USERRA) protects the rights of reservists and National Guard troops who need temporary leave from their civilian jobs to serve in the military.

The law prohibits companies from benefits discrimination based on an employee’s military obligations. All companies, regardless of size, must comply with USERRA.

Retroactive pay raises

Returning service members are entitled to all general across-the-board pay raises that they would have received if they weren’t away on military duty.

When you base pay raises on factors such as increased skill, qualifications or merit, you may have to extend raises to absent reservists on their return, as well. For example, if you’ve consistently awarded “merit” increases to nearly all employees, then the raises would be considered seniority-based, and returning service members would be entitled to the raise as well.

What about health benefits?

On his or her return from service, you must reinstate the employee’s health insurance coverage without any waiting period or exclusions for pre-existing conditions, other than waiting periods or exclusions that would have applied even without absence for uniformed service. This rule does not apply to any military service-related illness or injury.

Effects on pension benefits

Absence for service is not considered a break in em­­ployment for pension pur­­poses. For vesting and benefit computation purposes, employers must treat returning service members as if they had been continuously employed.

Employees who would have become eligible to participate in a pension plan while serving should be placed in the plan retroactive to the initial eligibility date. If an employer contribution is contingent on the employee’s contribution, then the employee must make his or her contribution before the employer is obligated to contribute.

Vacation accrual

Employees who spend three years on active duty don’t return to work with three years of vacation time waiting to be used.

However, they are entitled to begin accruing vacation leave again as if they had never been gone. For example, someone returning from three years of service may have passed a time benchmark where she is entitled to build vacation at an increased rate (e.g., from one week a year to two weeks per year). Thus, she should begin accruing leave at the greater level.

Building FMLA eligibility

When determining FMLA eligibility, count the months and hours that military reservists or National Guard members would have worked if they hadn’t been called for duty. Combine those “would have worked” hours with actual hours worked to see if the employees qualify for FMLA leave.

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