WITH THE initial number of National Guard and reserve members called up in support of Operation Enduring Freedom reaching almost 25,000 n1 and the current number expected to reach up to 50,000, n2 we thought it appropriate to revisit the issue of leaves of absence from employment for military duty, a topic we first examined in this space seven years ago. n3
The governing statute in this area is the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). n4 USERRA is a comprehensive statute that significantly strengthened and expanded protections available to persons returning to their jobs after service in the "uniformed services."
USERRA extends three basic protections to employees with military service obligations. First, USERRA prohibits discrimination against such employees, regardless of whether the employee's obligations are current, completed or prospective. Second, USERRA provides a right to re-employment for all employees not present at work due to military obligations. Finally, USERRA protects the benefits of employees absent from work due to military service obligations.
A recent case in the Eastern District of New York reinforces the potential for significant legal exposure in failing to comply with USERRA by assessing liquidated damages against an employer for recklessly disregarding the statute. n5 Accordingly, in this month's column, the first of a two-part guide to employee rights and employer responsibilities under USERRA, we examine USERRA's historical development, coverage, nondiscrimination requirement, effect on the provision of health care and its enforcement scheme.
In our next column, we will explore the process of re-employment, the rights afforded to returning employees, limitations upon such rights and the effect of analogous state laws.
Beginning with the first peacetime draft law passed in 1940, veterans returning to civilian employment after active duty in the military have enjoyed a statutory right to reinstatement to a position that was of "like seniority, status, and pay" as the one they held before entering the military. n6 Congress reaffirmed this right in 1951 n7 and thereafter extended re-employment rights to reservists (1955) n8 and National Guard members (1960). n9 In 1967 and 1968, Congress further expanded protection to reservists and National Guard members to cover job discrimination on account of their military obligations. n10 Congress has amended the law several times since then, each time largely recodifying prior law. n11
USERRA is the most recent development in the evolution of employment rights for military personnel. Enacted by Congress in 1994 and amended in both 1996 and 1998, n12 USERRA serves a tripartite purpose. First, it is meant to encourage non-career service in the armed forces by limiting or removing those disadvantages that may accrue from such service. Second, by providing for prompt re-employment, USERRA is intended to minimize the disruption to the lives of those called to duty, their employers and their communities. Finally, USERRA was enacted to prohibit discrimination against persons because of their service in the armed forces. n13
USERRA protects all common-law employees n14 absent from work because of "service in the uniformed services," whether voluntary or involuntary. n15 "Uniformed service" encompasses not only the Armed Forces, the National Guard and the Air National Guard, but also the commissioned corps of the Public Health Service and "any category of persons" the President designates "in time of war or national emergency." "Service" is broadly defined to include active or training duties of any kind, National Guard duty, and even absence for an examination to determine fitness for duty. n16
The statute provides that an "employer" includes both a person or entity that pays salary or wages for work or one that "has control over employment opportunities," including a person or entity "to whom the employer has delegated the performance of employment-related responsibilities." n17 Moreover, unlike other federal statutes that require a threshold number of employees for the employer to be obligated, USERRA applies to all employers regardless of size.
The definition of "employer" also includes "any successor in interest" to such person or entity. n18 The legislative history to USERRA suggests that there is no requirement that a successor in interest have had notice of its predecessor's responsibilities to employees who are absent due to military service. n19 A purchaser of the assets of a business, nonetheless, may wish to take a more conservative approach and inquire whether the seller has any obligations under USERRA and negotiate with the seller regarding the proper allocation of any potential liabilities thereunder, even though successor liability in an asset sale is not specifically contemplated by the statute.
At its core, USERRA protects employees from discrimination on the basis of the employee's military service obligations. The statute provides that employers may not deny their employees "any benefit of employment" because of membership in, application to join, or performance of any duty for the uniformed services. n20 "Benefit of employment" is defined to include "any advantage, profit, privilege, gain, status, account, or interest" that accrues by reason of
employment. n21 The limited case law under USERRA confirms this expansive definition including, for example, employer training and evaluation, clothing allowances and a regular work schedule within the definition of "benefit of employment." n22
Employers must grant leave to those employees with military service obligations on terms at least as generous as USERRA provides, regardless of whether the employer otherwise maintains a military leave policy. However, if an employer provides leave for other purposes, employees on military leave are entitled to the benefits available to employees on other types of leaves. n23 Indeed, according to USERRA's legislative history, employees on military leave are entitled to the most favorable benefits available. n24 Moreover, while employers are not required to provide paid military leave, employers must, upon request, allow veterans to use accrued vacation time or other paid leave. Employers may not require, however, that such paid time be used. n25
On its face, USERRA does not charge employers with an affirmative duty to provide notice to employees of their rights and obligations under the act and there is no case law that indicates such a requirement. Employees nevertheless should be on notice of these rights because it is Department of Defense policy to keep present and former service members informed of their rights and because the Secretaries of the Military Departments and the Commandant of the Coast Guard are required to inform all applicants as well as active members of these rights. n26
USERRA requires employers to offer up to 18 months of continuous health coverage to veterans and their dependents regardless of how they treat other employees on leaves of absence or whether the employer is covered by COBRA. For uniformed service lasting less than 31 days, employers cannot require the employee to pay more than he or she paid for such coverage before the military leave commenced. By contrast, for uniformed service beyond 31 days, employers may require, in a manner similar to COBRA, that the employee pay up to 102 percent of the full premium. This coverage may end sooner, however, where the employee's military obligations do not last more than 18 months and where the employee fails to properly request reinstatement. In the case of a health plan that is a multiemployer plan, liability for employer contributions to the plan shall be allocated either by the plan as the plan sponsor shall provide or, if the sponsor does not so provide, to the employee's most recent employer. n27
Members of the reserve and National Guard who are called to active duty, as well as their beneficiaries may also become eligible for health benefits under TRICARE, the military's health benefits program for active duty service members. TRICARE serves an important role either as a supplement to employer plans or, for those who cannot afford or do not want to maintain private coverage, a complete alternative. A service member's TRICARE eligibility begins on the effective date of his or her orders. By contrast, families of activated service members only become eligible if the service member's orders are for a period of more than 30 consecutive days or for an indefinite period. Eligible families, however, may choose to maintain their civilian coverage and, due to continuing relationships with civilian doctors, may not wish to seek health care services from TRICARE plan doctors. Accordingly, it is important for civilian employers to note that TRICARE is a secondary payer and will only pay after other health insurance plans have made their payments for health care services. The only time that TRICARE is not a second payer is when Medicaid is involved, or if TRICARE is designated as a supplemental policy by the patient's health care insurance policy. n28
USERRA charges the Department of Labor with primary enforcement responsibility. The DOL is not merely to render aid to claimants, but rather must "provide assistance" and investigate "each complaint." The DOL also is invested with subpoena power to compel attendance and testimony of witnesses and document production. If the Secretary of Labor determines that a complaint is valid, the Secretary must make reasonable efforts to obtain compliance. If the Secretary is unsuccessful in obtaining compliance, the Secretary must report the investigation results to the complainant and inform that person of his or her enforcement rights. The person can then either pursue an action on his or her own or request that the Secretary refer the complaint to the Attorney General, who, if "reasonably satisfied" that the complaint is valid, may appear on the person's behalf. Individuals who use private counsel and who prevail on USERRA claims are entitled to costs and attorney's fees. In no event may a court charge a complainant fees or court costs in a USERRA action. n29
USERRA grants to district courts the authority to require not only employer compliance but also monetary compensation. Typically, courts will apply a "substantial or motivating factor" test, similar to the standard applied to unfair labor practice discharges under the National Labor Relations Act, to determine whether an employer's adverse employment action was caused by the employee's reserve status. n30 Moreover, if the court determines the violation was "willful," it may require the employer to pay the employee an amount equal to the employee's loss suffered by reason of the violation as "liquidated damages" in addition to any other rights or benefits owed. n31 Courts are also instructed to use their full equity powers in facilitating appropriate relief.
In our next column, we will consider a veteran's right to seek re-employment and an employer's subsequent obligation to reinstate employees after the completion of military service, focusing on timing, job placement and restoration of benefits.
n1 See defenselink.mil/news/Oct2001/b10032001_bt482-01.html
n2 See defenselink.mil/news/Sep2001/n09252001_200109251.html.On Sept. 14, President Bush authorized up to 50,000 guard and reservists to be activated for up to two years.
n3 See Jeffrey S. Klein and Nicholas J. Pappas, "Uniformed Services Employment and Reemployment Act of 1994." New York Law Journal, Dec. 5, 1994 at p. 3.
n4 38 U.S.C. @ @ 4301-4333.
n5 See Fink v. City of New York, 129 F.Supp.2d 511 (E.D.N.Y. 2001) (holding that willful includes both actual knowledge of a failure to comply with USERRA as well as a "reckless disregard" of USERRA's terms).
n6 Selective Training and Service Act of 1940, Pub. L. No. 783, sec. 8, 54 Stat. 885 (1940).
n7 Universal Military Training and Service Act, Pub. L. 51, ch. 144, sec. 1(s), 65 Stat. 75, 86-87 (1951).
n8 Reserve Forces Act of 1955, Publ. L. No. 305, sec. 262(f), 69 Stat. 598, 602 (1955).
n9 Universal Military Training and Service Act, amendment 86 Publ. L. No.632, 74 Stat. 647, 648 (1960).
n10 Military Selective Service Act of 1967, Pub. L. No. 90-40, sec. 1(a), 81 Stat. 100 (1967), amended by Publ. L. No. 90-491, sec. 1(B), 82 Stat. 790 (1968).
n11 See Coffy v. Republic Steel Corp., 447 U.S. 191, 194 n.2 (1980).
n12 See P.L. 105-368 (1998); P.L. 104-275 (1996).
n13 U.S.C. @ 4301(c).
n14 The statute defines "employee" as any person employed by an employer. 38 U.S.C. @ 4303(4). This definition is consistent with other federal labor laws, and although no case law presently exists, should be held to exclude independent contractors and employees of independent contractors. See Jeffrey S. Klein and Nicholas J. Pappas, "Worker Classification Under Title VII." New York Law Journal, Feb. 16, 2001 at p. 3.
n15 38 U.S.C. @ 4312(a)-(c).
n16 38 U.S.C. @ 4303(16).
n17 38 U.S.C. @ 4303(4).
n18 38 U.S.C. @ 4303(4).
n19 H.R. Rept. No. 65, 103d Cong., 1st Sess., pt. 1, at 21 (1994).
n20 38 U.S.C. @ 4311(a).
n21 38 U.S.C. @ 4303(2).
n22 See Yates v. Merit System Protections Board, 145 F.3d 1489, 1484 (Fed. Cir. 1998); See Wiggelsworth v. Brumbaugh, 129 F.Supp.2d 1106, 1110 (W.D. Mich. 2001); Hill v. Michelin North America, Inc., 252 F.3d 307, 312 (4th Cir. 2001).
n23 38 U.S.C. @ 4316 (b)(1)(B).
n24 H.R. Rep. 103-65(l), 1994 U.S.C.C.A.N. 2449, 2466.
n25 38 U.S.C. @ 4316(d). See also Graham v. Hall McMillen Co., Inc., 925 F.Supp. 437 (N.D. Miss. 1996) (decided under pre-USERRA law, but sections relied on by the court were incorporated into USERRA).
n26 32 C.F.R. @ 104.5(a); 104.6(a) (7-1-00 Ed.)
n27 38 U.S.C. @ 4317(3). If the most recent employer is no longer in business, responsibility will accrue to the plan to provide the required contribution.
n28 See www.tricare.osd.mil/reserve.
n29 38 U.S.C. @ @ 4321-4323.
n30 See Gummo v. Village of Depew, 75 F.3d 98, 106 (2d Cir. 1996). See also NLRB v. Transportation Management Corp., 462 U.S. 393, 401, 103 S.Ct. 2469, 2474 (1983).
n31 See Fink 129 F.Supp.2d 511.