• DOL Issues Final USERRA Regulations
  • January 5, 2006 | Author: John C. Lowrie
  • Law Firm: Ford & Harrison LLP
  • The Department of Labor (DOL) has issued final regulations interpreting the Uniformed Services Employment and Reemployment Rights Act (USERRA), 38 U.S.C. § 4301-4334. USERRA prohibits employers from discriminating against veterans, members of the military services or applicants for military service and provides for reemployment rights and continuation of benefits for qualifying employees returning from military service.

    The DOL regulations were published in the December 19, 2005, issue of the Federal Register and become effective on January 18, 2006. The regulations do not establish any new legal requirements, but provide guidance regarding USERRA issues on which courts have taken opposing positions and codify the DOL's long-standing position on many issues.

    The DOL issued proposed regulations on September 20, 2004, and the final regulations are similar in many aspects, but clarify several issues with regard to health and pension benefits.

    The regulations are written in "plain English" in a question and answer format similar to the FMLA regulations. The new regulations are designed to be easy to understand. The regulations are divided into five subparts: Subpart A - introduction to the USERRA regulations; Subpart B - description of USERRA's antidiscrimination and antiretaliation provisions; Subpart C - steps service members must take to return to civilian employment; Subpart D - rights, benefits and obligations of persons absent from employment because of service in the uniformed services; Subpart E - rights, benefits and obligations of the returning veteran or service member; and Subpart F - role of the DOL in enforcing USERRA. The preamble to the regulations addresses the comments received in response to the proposed regulations and explains the DOL's reasoning in incorporating or rejecting the comments.

    Some of the provisions of the new regulations are highlighted below:

    • USERRA's definition of employer includes supervisors and managers in certain situations. Thus, unlike under Title VII and the Americans with Disabilities Act, there can be individual liability under USERRA.
    • The regulations provide that even employees in positions that are for a brief, nonrecurrent period, and for which there is no reasonable expectation that the position will continue indefinitely or for a significant period, are protected by USERRA's antidiscrimination and antiretaliation provisions. However, USERRA's reemployment rights and benefits do not apply to such positions.
    • To establish a discrimination claim under USERRA, the individual must show that a status or activity protected by USERRA was "one of the reasons" the employer took action against him or her. Thus, under the regulations, the employee need not show that his or her protected USERRA activity was the sole cause of the employment action.
    • The regulations clarify that the burden of proof for a reinstatement claim under 38 USC § 4312 is separate from a claim under 38 USC § 4311 (the antidiscrimination and antiretaliation provision of the statute). The DOL has followed the interpretation of courts finding § 4312 to create an entitlement to reinstatement rather than a protection against discrimination. Accordingly, a person seeking relief under § 4312 need not meet the additional burden of proof requirements for discrimination cases brought under § 4311.
    • The regulations identify the criteria an employee must meet to be eligible for reemployment under USERRA: (1) the employer had advance notice of the employee's service; (2) the employee has five years or less of cumulative service in the uniformed services in his or her employment relationship with a particular employer (with a number of exceptions that almost swallow the rule, as discussed below); (3) the employee timely returns to work or applies for reemployment; and (4) the employee has not been separated from the service with a disqualifying discharge or removal from the rolls for officers.
    • The regulations address who is considered an employer under USERRA. They also note that USERRA does not apply to independent contractors and set forth a test for determining independent contractor status. The factors to be considered include: (1) the extent of the employer's right to control the manner in which the individual's work is to be performed; (2) the opportunity for profit or loss that depends on the individual's managerial skill; (3) any investment in equipment or materials required for the individual's tasks, or his or her employment of helpers; (4) whether the service the individual performs requires a special skill; (5) the degree of permanence of the individual's working relationship; and (6) whether the service the individual performs is an integral part of the employer's business. This test is similar to the test used by courts under the Fair Labor Standards Act and is broader than the common-law degree of control test. The preamble notes that this test may include as employees some parties who might not qualify under the strict application of agency law principles.
    • The DOL declined to impose a limit on the amount of time that may elapse between the date an employee leaves his or her position and the date he or she actually enters the service, noting that this amount of time will vary from case to case. The regulations provide that factors to be considered in determining how much time off is needed between leaving employment and entering the service and whether intermittent time off is needed include the duration of military service, the amount of notice given to the employee called to military service, and the location of the service.
    • The regulations address notice of the need for leave, which the service member must provide to the employer. This notice may be verbal or written. Although timeliness of the notice of the need for leave varies from case to case, the regulations provide that the employee should give notice of impending military service as far in advance as reasonable under the circumstances. The regulations also note that the Department of Defense strongly recommends that service members give civilian employers at least thirty days of advance notice of the need for military leave, where feasible. The DOL did not, however, adopt a thirty-day notice requirement.
    • Where the employee is employed by more than one employer, the employee should provide notice to each employer.
    • The regulations explicitly state that the employee is not required to obtain the employer's permission before departing for uniformed services in order to protect his or her reemployment rights. However, the service member must give the employer notice of the obligations to the extent practicable.
    • The regulations state that when an employee leaves the employment position for a period of military leave, the employee is not required to tell the civilian employer that he or she intends to seek reemployment after returning from leave. Additionally, according to the preamble to the regulations, an employee cannot waive his or her reemployment rights prior to or during a period of service in the uniformed services.
    • The regulations clarify that the five-year period of service provided by the statute applies to employment with one employer. The five-year period starts anew with each employer; it is not cumulative from employer to employer. If the employee is employed by more than one employer, a separate five-year period runs as to each employer independently, even if those employers share or co-determine the employee's terms and conditions of employment.
    • The regulations implement the provisions of the USERRA statute that identify eight specific exceptions to the five year limit on uniformed service. These exceptions allow an individual to serve longer than five years while working for a single employer and retain reemployment rights under USERRA. The regulations describe each exception set out in the statute. The regulations also recognize a ninth exception based on equitable considerations. This exception provides that if a service member remains in or returns to service in order to mitigate economic losses caused by an employer's unlawful refusal to reemploy that person, the additional service is not counted against the five year limit.
    • The regulations address the time limits for reporting to work or submitting a timely application for reemployment after completion of military leave, as defined by USERRA.
    • The regulations interpret USERRA's provision for a two-year recovery period for injuries or illnesses arising from military service to begin on the date of completion of the service. The regulations also provide that the recovery period applies only to the time the service member has in which to seek reemployment and is not applicable after reemployment. Thus, according to the preamble, the two year recovery period does not apply to injuries or illnesses, such as post-traumatic stress disorder or illnesses resulting from exposure to toxic chemicals, that manifest themselves after the service member returns to work.
    • The regulations provide that a service member does not lose reemployment rights by applying for or obtaining employment with another employer during the period of time in which a reemployment application must be made, as long as the other employment is not of the type that would cause the pre-service employer to discharge the service member (working for a direct competitor in violation of company policy, for example).
    • If an employee receives a retroactive upgrade in character of service discharge (for example, other than honorable to honorable), the employee is entitled to reinstatement if he or she has met the other requirements for reinstatement, but is not entitled to back pay or benefits for the period of time between the discharge and the upgrade.
    • The regulations address the three statutory defenses to USERRA claims: (1) changed circumstances (for example, an intervening reduction in force that would have included the service member); (2) assisting the employee in becoming qualified for employment would constitute an undue hardship; and (3) reemployment is not required if the position the employee vacated was for a brief, nonrecurrent period and there was no reasonable expectation that the employment would continue indefinitely or for a significant period.
    • Employees on military leave are considered to be on furlough or leave of absence status and are entitled to the nonseniority rights and benefits generally provided by the employer to other employees with similar seniority, status, and pay that are on furlough or leave of absence. The preamble to the regulations provides the following example: if the employer offers continued life insurance coverage, holiday pay, bonuses, or other nonseniority benefits to its employees on furlough or leave of absence, the employer must also offer the service member similar benefits during the time he or she is absent from work due to military service. According to the preamble, the accrual of vacation is a nonseniority benefit. The preamble also notes that the use of the term seniority in defining the comparator does not convert the benefit into a seniority benefit for USERRA purposes.
    • If the employer has more than one kind of nonmilitary leave and varies the level and type of benefits provided according to the type of leave used, the comparison should be made with the employer's most generous form of comparable leave.
    • Employers must permit employees with health plan coverage to continue such coverage while on covered military leave for a period of time that is the lesser of: (1) the twenty-four month period beginning on the date on which the employee's absence for the purpose of performing service begins; or (2) the period beginning on the date on which the employee's absence for the purposes of performing service begins, and ending the date on which he or she fails to return from service or apply for a position of employment.
    • If health plan coverage for the employee or a dependent was terminated by reason of service in the uniformed services, that coverage must be reinstated upon reemployment. No waiting period can be imposed on the returning service member.
    • A returning service member must be returned to employment as soon as practicable under the circumstances. The regulations provide that, absent unusual circumstances, reemployment must occur within two weeks of the employee's application for reemployment.
    • The regulations discuss the "escalator position," which requires the employee to be reinstated to the position he or she would have obtained with reasonable certainty if not for the absence due to the uniformed services. The regulations also address how the specific reemployment position is determined and provide that the reemployment position includes the seniority rights, status, and pay that the employee would ordinarily have obtained in that position given his or her job history, including prospects for future earnings and advancement.
    • The regulations provide that if an opportunity for promotion, or eligibility for promotion, that the employee missed during service is based on a skills test or examination, then the employer should give him or her a reasonable amount of time to adjust to the employment position and then give a skills test or examination.
    • The regulations provide that an employer must make reasonable efforts to help a returning service member become qualified to perform the duties of his or her position. An employer is not required to reemploy a returning service member if he or she cannot, after reasonable efforts by the employer, qualify for the reemployment position. Reasonable efforts depend on various factors and can include training or retraining, etc. "Qualified" means the employee can perform the essential tasks of the position. The DOL has adopted the definition of essential tasks found in the Americans with Disabilities Act.
    • A reemployed service member is entitled to the seniority and seniority-based benefits and rights that he or she had on the date the uniformed service began, plus any seniority and seniority-based rights and benefits that the employee would have attained if he or she had remained continuously employed. USERRA protects rights and benefits provided by the employer and required by statute. The preamble to the regulations provides that the entire period of absence from work due to or necessitated by service in the uniformed services, including preparation time and recuperation time, is to be considered service with the employer upon reemployment for computation of seniority and seniority-based rights, including pension entitlements.
    • The regulations provide that an employer is not required to adopt a formal seniority system. In determining whether a right or benefit is seniority based, three factors should be considered: (1) whether the right or benefit is a reward for length of service rather than a form of short-term compensation for work performed; (2) whether it is reasonably certain that the employee would have received the right or benefit if he or she had remained continuously employed during the period of service; and (3) whether it is the employer's actual custom or practice to provide or withhold the right or benefit as a reward for length of service.
    • If a returning employee has a disability incurred in or aggravated during the period of service in the uniformed services, the employer must make reasonable efforts to accommodate that disability and help the employee become qualified to perform the duties of his or her reemployment position.
    • The employee's rate of pay is determined by applying the same escalator principles that are used to determine the reemployment position.
    • On reemployment, the employee is treated as not having a break in service with the employer or employers maintaining a pension plan, for purposes of participation, vesting and accrual of benefits, by reason of the period of absence from employment due to or necessitated by service in the uniformed services.