by Jeffrey W. Peters, Esq.

There have been a number of changes to military leave rules in the past few months.  The President’s signing the Veterans Benefits Improvement Act (“VBIA”) on December 10, 2004 immediately amended the Uniformed Services Employment and Reemployment Rights Act (“USERRA”).  DOL also recently published proposed regulations under USERRA earlier in the fall.  We anticipate that the new DOL rules will become effective in the near future.

The VBIA creates two new requirements that will affect administration of military leave programs.  First, employers must now provide USERRA covered employees with notice of their rights, benefits and obligations.  Employers must place this notice where the employer normally posts notices for its employees by March 10, 2005.  Second, VBIA increases the maximum period of employer sponsored health coverage for an employee recalled to active duty from eighteen months to twenty-four months. 

While the VBIA amends USERRA, DOL’s proposed regulations offer DOL’s interpretation of USERRA.  The comment period for the proposed rules has ended, and the regulations should become final in the near future.  These rules will help both employers and employees better comply with the law.  In general terms, an employer that has been complying with USERRA should need to make only minor adjustments to its program.

As we have covered in previous articles, all military members qualify for USERRA protection if they: 1) had a civilian job prior to recall to active duty; 2) gave notice of their being recalled to active duty, if possible; 3) were gone from their job for less than five cumulative years; 4) received an honorable or general discharge upon being released from active duty; and 5) returned to work within the period defined in the statute.  The good news, as indicated above, is that the proposed rules provide guidance that will help employers to interpret and apply these five basic requirements.

DOL drafted its proposed rules to address disagreement in the federal courts on the burden of proof to be applied to discrimination claims and to claims to enforce re-employment rights.  The proposed rules clarify DOL’s position that a person seeking to enforce his or her re-employment rights need not also prove discrimination and that USERRA does in fact apply to temporary positions.  DOL clearly establishes its position that USERRA applies to temporary, part-time, probationary and seasonal employees, and that only those positions “for which the employee has no reasonable expectation of continued employment indefinitely or for a significant period” are exempt from USERRA.  Employers must pay attention to application of USERRA to part-time, temporary, probationary or seasonal positions as the proposed rules suggest that characterization of whether a particular position is subject to USERRA protection will depend on the employee’s understanding of the nature of the job.  The proposed rules also confirm that USERRA covers managerial, professional and executive positions. 

The proposed rules also address whether USERRA requires advance notice of a recall to active duty and the procedure a returning employee must follow when released from active duty.  Notice is not required if the nature of the recall does not provide adequate time to provide advance notice or if security concerns preclude notice.  The proposed rules establish three general components of “adequate notice”:  1)  the sender of the notice – either the employee or an “appropriate officer” can provide the notice; 2)  the type of notice – the notice can be verbal or written; and, 3)  the timing of the notice – the notice should be given prior to recall, but the timeliness of the notice will be determined depending on the particular facts of the case at hand.  The advance notice requirement may be excused by “military necessity.” Employers should be aware that the rules reiterate that the involved uniformed service makes the determination of whether “military necessity” exists and that this determination is not subject to review by a court. 

The proposed rules clarify the procedure a returning employee must follow when returning to work after being released from active duty.  If the employee has been recalled for more than thirty days, the employee must, upon request of the employer, provide documentation to establish that the application for re-employment is timely, that the employee has not exceeded the time limit for entitlement to re-employment, and that the employee received either an honorable or general discharge. 

DOL also provides guidance on application of statutory defenses to USERRA claims.  The rules state that the changed circumstances defense is to be narrowly construed and that the employer bears the burden of proof on this affirmative defense to a failure to rehire claim.  Evidence that there is no opening available when the returning employee requests re-employment or that another person has been hired to fill the position does not establish this defense, even if rehiring the service member would require terminating the replacement employee.  The proposed rules obligate the employer to prove that it experienced actual, significant changed circumstances that occurred while the employee was on active duty that make it impossible or unreasonable to re-employ the returning employee. 

The proposed rules also provide helpful guidance on how USERRA applies to benefits the employee should receive while on active duty and after the employee returns from active duty.  For example, the rules grant health plan administrators the latitude to develop reasonable requirements for employees to elect continued health coverage, and also clarify that an employer can provide more benefits than those prescribed in the statute.  The rules will be an excellent resource for benefits coordinators to help them better understand how to administer benefits for military employees who have been recalled to active duty.

Finally, the proposed rules address the issue of whether USERRA claims are subject to a statute of limitations.  DOL addresses some recent court cases in which courts applied statutes of limitation to USERRA claims.  DOL makes a clear statement in these regulations that no statute of limitation defense applies to USERRA claims, and that laches is the only time-related defense that may be raised in a USERRA case.   

The DOL intends its proposed rules to clarify USERRA’s requirements without imposing any new legal obligations.  The proposed rules explain the obligations USERRA imposes on both employees and employers.  While these rules are not yet final, it is likely that the final rules will be very similar to the proposed rules.  At this time, employers should not amend policies specifically to comply with DOL’s proposed rules.  However, employers should amend their policies to comply with the notice requirement and benefits change established by the VBIA.  Employers should revise their policies to comply with the new VBIA requirements and review their policies to identify any areas that may need revision to comply with the proposed DOL rules.