Continued Health Coverage
Compensation Issues
Re-employment
Position upon Reinstatement
Benefits upon Reinstatement
Termination Following Re-employment
Comment
Recent events are a reminder of the obligations employers have with respect to employees engaged in any aspect of military service. Every employee (other than a temporary employee) of every employer - regardless of size - is covered by the Uniformed Services Employment and Reemployment Rights Act. This act sets out the rights that employees have when called to training, reserve duty or military service.
Under the act, employers are required to grant leave to employees to attend to voluntary or compulsory military obligations. To the extent feasible, employees are required to give advance written or oral notice to their employers of the need for such leave, but no notice is required if prior notice is impossible or impractical. Generally, the act provides for the continuation of certain benefits during the period of leave and re-employment rights upon termination of the employee's military service.
The act provides for the continuation of group health coverage for up to 18 months during a military leave. If the leave is for 30 days or less, the employee may not be required to pay more for coverage than the employee's normal share, if any, of the cost of coverage under the group health plan. However, if the period of leave extends beyond 30 days, the employee may be required to pay up to 102% of the full premium (an amount similar to the fee that may be charged in connection with COBRA (Consolidated Omnibus Budget Reconciliation Act) continuation of group health insurance).
While the employer need not compensate the employee during the military leave period, employees absent for military service must be treated no worse than other employees who take leaves of absence, and must be permitted to use any vacation and other accrued paid time off during the period of military leave.
Following a military leave, an employee has a right to become re-employed as long as:
- the length of military service did not exceed five years;
- he or she was released from service pursuant to an honourable discharge or other conditions not deemed to be 'not honourable'; and
- he or she reported back to work or applied for re-employment within certain specified time periods.
As regards the final point above, if the period of military service was less than 31 days, the employee must report for work no later than the first full regularly scheduled work day following completion of that service, plus an eight-hour transition period. If the military service is greater than 30 days but less than 181 days, the employee must report to work no later than 14 days following the completion of military service in order to preserve the right to re-employment. If the leave exceeds 180 days, the right to re-employment applies if the employee returns to work within 90 days of completing military service. Additionally, employees who are unable to report to work during the required time periods due to hospitalization or recovery from illness or injury incurred during or aggravated by military service are entitled to a time extension during the medically necessary recovery period, to a maximum of two years. Failure to reapply during the required time periods does not automatically extinguish the right to re-employment - rather, the employee will be subject to the employer's general policies concerning unauthorized absences.
Unlike other laws governing return to work, the act provides not only that the employee must be returned to the same position, but also that the employee must be employed in the position he or she would have attained but for the military leave of absence. Moreover, if the employee requires training in order to be properly qualified for that higher position, the employer must make "reasonable efforts" to provide such training. If, following such reasonable efforts, the employee is not qualified for such position, the employee must be returned to the position held prior to the military leave or to a position of similar seniority, status and pay that the employee is qualified to perform.
An employee who returns after military leave must be eligible for coverage under the employer's group health plan without any exclusion or waiting period that the employee would not have been subject to if his or her coverage had not been terminated as a result of the military leave. In addition, for pension purposes, a re-employed employee must be treated as not having incurred a break in service. The period of military service is counted for purposes of determining the amount of any accrued benefit under a pension plan, as well as the employee's vested interest in that benefit. If the employee participated in a defined contribution plan, the employer is required upon reinstatement to make up any employer contributions that would have been required during the military leave, had the employee been working. If the employee participated in a 401(k) plan, the act gives the employee the right to make contributions to the plan (and requires the employer to make matching contributions to the extent they would have been available but for the leave), provided that the employee makes such contributions during a period following the military leave not to exceed three times the length of the leave, up to a five-year maximum.
Termination Following Re-employment
Returning employees may not be terminated except 'for cause' for a specified period following the end of the military leave. For a military leave greater than 30 but less than 181 days, the 'for cause' period is six months; for longer leaves, the protected period is one year. Nonetheless, certain state laws (which may provide greater, but not lesser, benefits than those available under the act) extend the 'for cause' period to a full year regardless of the length of military service. (See, for example, NY Military Law Section 317 (2001); NJ Stat Ann Section 38:23C-20 (2001)).
Employers are well advised to review their policy manuals and ensure that supervisors and appropriate human resources personnel are familiar with the requirements of the Uniformed Services Employment and Reemployment Rights Act. Taking these steps will help to ensure that the law is properly complied with in the event that any employee requires a leave of absence for military service. Particular attention must be given to the peculiar re-employment rights provided under the act for an employee who returns to work after a military leave.
For further information on this topic please contact Kevin B Leblang or Robert N Holtzman at Kramer Levin Naftalis & Frankel LLP by telephone (+1 212 715 9100) or by fax (+1 212 715 8000) or by email ([email protected] or [email protected]).