Uniformed Services Employment and Reemployment Rights Act of
1994, As Amended
[12/19/2005]
Volume 70, Number 242, Page 75245-75313
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Part II
Department of Labor
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Veterans' Employment and Training Service
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20 CFR Part 1002
Uniformed Services Employment and Reemployment Rights Act of 1994;
Final Rules
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DEPARTMENT OF LABOR
Veterans' Employment and Training Service
20 CFR Part 1002
[Docket No. VETS-U-04]
RIN 1293-AA09
Uniformed Services Employment and Reemployment Rights Act of
1994, As Amended
AGENCY: Veterans' Employment and Training Service, Department of Labor.
ACTION: Final rules.
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SUMMARY: The Veterans' Employment and Training Service (``VETS'' or
``the Agency'') issued proposed rules implementing the Uniformed
Services Employment and Reemployment Rights Act of 1994, as amended
(USERRA). This document sets forth the Agency's review of and response
to comments on the proposal and any changes made in response to those
comments.
Congress enacted USERRA to protect the rights of persons who
voluntarily or involuntarily leave employment positions to undertake
military service. USERRA authorizes the Secretary of Labor (in
consultation with the Secretary of Defense) to prescribe rules
implementing the law as it applies to States, local governments, and
private employers. VETS proposed rules under that authority in order to
provide guidance to employers and employees concerning their rights and
obligations under USERRA. The Agency invited written comments on these
proposed rules, and any specific issues related to the proposal, from
members of the public.
DATES: Effective Date: This rule will be effective on January 18, 2006.
FOR FURTHER INFORMATION CONTACT: Robert Wilson, Chief, Investigations
and Compliance Division, Veterans' Employment and Training Service,
U.S. Department of Labor, 200 Constitution Avenue, NW., Room S-1312,
Washington, DC 20210, Wilson.Robert@dol.gov, (202) 693-4719 (this is
not a toll-free number).
For press inquiries, contact Michael Biddle, Office of Public
Affairs, U.S. Department of Labor, 200 Constitution Avenue, NW., Room
S-1032, Washington, DC 20210, Biddle.Michael@dol.gov, (202) 693-5051
(this is not a toll-free number).
SUPPLEMENTARY INFORMATION:
I. Background
On September 20, 2004, the Department of Labor (``the Department'')
issued proposed regulations to implement the Uniformed Services
Employment and Reemployment Rights Act of 1994, as amended (USERRA), 38
U.S.C. 4301-4334. The Department invited written comments on the
proposed regulations from interested parties. The Department also
invited public comment on specific issues. The written comment period
closed on November 19, 2004, and the Department has considered all
timely comments received in response to the proposed regulations.
The Department received 80 timely comments from a wide variety of
sources. Commenters included: a member of Congress; service members and
veterans; organizations representing human resource professionals and
employee benefits providers; law firms; individual employers and
employer associations; individual employees and employee
representatives; and members of the interested public. The comments
were composed of well over 300 individual queries or concerns addressed
to approximately 200 specific topics set out in the Department's notice
of proposed rulemaking. While a few of the comments were generalized
plaudits or individualized complaints, the great majority of comments
specifically addressed issues contained in the Department's proposed
rule. The Department recognizes and appreciates the value of comments,
ideas, and suggestions from members of the uniformed services,
employers, industry associations, labor organizations and other parties
who have an interest in uniformed service members' and veterans'
employment and reemployment rights and benefits.
Following the publication of the NPRM, the Department issued an
interim final rule, Notice of Rights and Duties Under the Uniformed
Services Employment and Reemployment Act, 70 FR 12106 (March 10, 2005),
to comply with an amendment made to USERRA by the Veterans Benefits
Improvement Act of 2004 (VBIA), Public Law 108-454 (Dec. 10, 2004). In
part, the VBIA imposed a new requirement that ``Each employer shall
provide to persons entitled to rights and benefits under [USERRA] a
notice of the rights, benefits, and obligations of such persons and
such employers under [USERRA].'' 38 U.S.C. 4334(a). The VBIA required
the Secretary of Labor to make available to employers the text of the
required notice, 38 U.S.C. 4334(b), and the Department's publication of
the interim final rule set forth such text as an appendix to these
USERRA regulations.
II. Statutory Authority
Section 4331 of USERRA authorizes the Secretary of Labor (in
consultation with the Secretary of Defense) to prescribe regulations
implementing the law as it applies to States, local governments, and
private employers. 38 U.S.C. 4331(a). The Department has consulted with
the Department of Defense, and issues these regulations under that
authority in order to provide guidance to employers and employees
concerning the rights and obligations of both under USERRA.
III. Prior Laws and Interpretation
USERRA was enacted in part to clarify prior laws relating to the
reemployment rights of service members, rights that were first
contained in the Selective Training and Service Act of 1940, 54 Stat.
885, 50 U.S.C. 301, et seq. USERRA's immediate predecessor was the
Vietnam Era Veterans' Readjustment Assistance Act of 1974, 38 U.S.C.
2021-2027 (later recodified at 38 U.S.C. 4301-4307 and commonly
referred to as the Veterans' Reemployment Rights Act ``VRRA''), which
was amended and recodified as USERRA.
In construing USERRA and these prior laws, courts have followed the
Supreme Court's admonition that:
This legislation is to be liberally construed for the benefit of
those who left private life to serve their country in its hour of
great need. * * * And no practice of employers or agreements between
employers and unions can cut down the service adjustment benefits
which Congress has secured the veteran under the Act.
See Fishgold v. Sullivan Drydock and Repair Corp., 328 U.S. 275, 285
(1946), cited in Alabama Power Co. v. Davis, 431 U.S. 581, 584-85
(1977); King v. St. Vincent's Hosp., 502 U.S. 215, 221 n.9 (1991). The
Department intends that this interpretive maxim apply with full force
and effect in construing USERRA and these regulations.
This preamble also selectively refers to many other cases decided
under USERRA and its predecessor statutes, to explain and illustrate
the rights and benefits established under the Act. The failure to cite
or refer to a particular court decision in this preamble is not
intended to indicate the Department's approval or disapproval of the
reasoning or holding of that case.
IV. Plain Language
The Department wrote the proposed rule in the more personal style
advocated by the Presidential Memorandum on Plain Language. ``Plain
language'' encourages the use of:
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Personal pronouns (we and you);
Sentences in the active voice; and,
A greater use of headings, lists, and questions.
The Department received three comments regarding its use of
``you,'' ``I,'' and ``my'' to refer to employees, whom the Department
viewed as the primary beneficiaries of USERRA rights and benefits.
These commenters appreciated the use of plain language and the use of
question and answer format, but expressed a preference for the use of
third person pronouns so that both employers and employees are included
as the audience of the rule. In response, the Department has revised
the pronoun usage in the final rule, and has employed third person
pronouns to refer to the rights and obligations of both employers and
employees.
In addition, one of these commenters recommended the Department use
a more formal style when addressing complex topics such as health and
pension plan rights and obligations. In response, the Department has
adopted the use of more technical guidance on these matters without
unduly sacrificing clarity.
V. Section-by-Section Summary of the Final Rule and Discussion of
Comments
This preamble sets out the Department's interpretation of USERRA,
section by section. The preamble generally follows the outline of the
rule, which in turn follows the outline of USERRA. Within each section
of the preamble, the Department has noted and responded to those
comments that are addressed to that particular section of the rule.
Before setting out the section-by-section analysis, however, the
Department will first acknowledge and respond to comments that did not
easily fit into this organizational scheme.
A. General Comments
The Department received a number of general comments from members
of the public expressing gratitude to the Department for the long-
awaited USERRA regulations. In particular, Rep. John Boehner, Chairman
of the U.S. House of Representatives Committee on Education and the
Workforce, commended the Department for ``undertaking this most
important endeavor.''
Conversely, the Department received a few comments from individuals
complaining about their specific USERRA claims. The Department also
received several comments offering assistance with grammar and
punctuation. In all cases--the plaudits, the complaints, and the offers
of assistance-- the Department acknowledges and appreciates the
thorough and thoughtful comments.
The Department also received several comments requesting that
particular text cross-reference other text or make reference to related
text elsewhere in the rule. As a general matter of style, the
Department views such cross-references as cumbersome and ultimately
detrimental to the clarity of the text and, with few exceptions, has
declined to make such revisions.
Finally, the Department received several comments asking about the
application of these regulations to the Federal Government when it is
acting as an employer. The Federal Office of Personnel Management has
issued a separate body of regulations that govern the USERRA rights of
Federal employees. See 5 CFR part 353.
B. Compliance With USERRA and Compliance With the Internal Revenue Code
The Department received a number of comments from individuals and
employers seeking guidance on compliance with USERRA in those cases in
which the commenters perceived a conflict between USERRA's mandates and
the mandates of the Internal Revenue Code (IRC). These comments arose
primarily with regard to the health and pension plan provisions of the
rule, and suggested that in some cases compliance with USERRA may cause
the plan to be out of compliance with the IRC. See Subparts D and E.
The Department can provide guidance only with regard to the
requirements of USERRA. However, the Internal Revenue Service (IRS) and
the Department of the Treasury have indicated that a health or pension
plan will be deemed not to be in conflict with the applicable IRC
requirements merely because of compliance with USERRA or its
regulations.
C. Comments Addressing the National Disaster Medical System
The Department received several comments from an attorney employed
by the Federal Emergency Management Agency (FEMA) regarding the rule's
treatment of the National Disaster Medical System (NDMS). The NDMS is a
section within the U.S. Department of Homeland Security, and supports
Federal agencies in the management and coordination of the Federal
medical response to major emergencies and Federally declared disasters.
The NDMS is composed primarily of teams of professional and para-
professional volunteers, who may be activated for training or in
response to public health emergencies. NDMS volunteers who are
activated are considered to be serving in the uniformed services for
the purposes of USERRA. 42 U.S.C. 300hh-11(e)(3).
The FEMA commenter suggests several instances in which the
Department should clarify the coverage of members of the NDMS under
USERRA. The Department agrees with a number of these suggestions, and
rejects others, as follows:
1. The commenter recommends that section 1002.2, which provides
background and historical information on USERRA, include the statutory
reference, 42 U.S.C. 300hh-11(e)(3), that provides USERRA coverage to
members of the NDMS. The Department declines this suggestion, because
this section of the rule is intended as a general discussion, and
contains no mention of any statutory provisions that have directly or
indirectly amended USERRA. However, the Department will take the
opportunity to highlight the NDMS coverage issues elsewhere in this
final rule.
2. The commenter recommends that the Department include a
description of the NDMS in section 1002.5, which contains a number of
definitions that are considered helpful in understanding USERRA. The
Department has adopted this proposal. See 1002.5(f).
3. The commenter recommends a style change in NPRM section
1002.5(k), which has been incorporated. See 1002.5(l).
4. The commenter suggests that the Department include in NPRM
section 1002.5 that NDMS appointees are considered members of the
uniformed services when Federally activated or attending authorized
training. The Department has revised section 1002.5(o) to reflect that,
pursuant to the statute creating the NDMS, service in the NDMS is
considered to be service in the uniformed services for the purposes of
USERRA, although the appointee is not considered to be a member of the
uniformed services. See 42 U.S.C. 300hh-11(e)(3).
5. The commenter suggests that the Department clarify in section
1002.6 that service in the NDMS is a type of service covered by USERRA.
The Department agrees. See 1002.6.
6. The commenter requests that the Department modify 1002.41 to
include a reference to the intermittent nature of the service of the
NDMS. The Department rejects this suggestion because the section in
question refers to the brief or intermittent nature of civilian
employment, not the service in the uniformed services.
7. The commenter suggests that the Department clarify that, with
regard to section 1002.56, not all NDMS service is
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protected by USERRA, and that the Department remove the phrase ``even
if you are not a member of the uniformed services'' from this section.
While the Department did not adopt these suggestions, the Department
reexamined the question set out in section 1002.56 and concluded it
needed revision to accurately reflect the scope of the coverage of NDMS
service.
8. The commenter properly suggests that the Department modify
section 1002.86 to indicate that the Secretary of Homeland Security
may, in consultation with the Secretary of Defense, make a
determination that giving of notice by intermittent disaster-response
appointees of the National Disaster Medical System is precluded by
``military necessity.'' The revision has been made. See 1002.86.
9. The commenter requests that the Department correct a reference
in section 1002.103(a)(5) and (a)(7), which addresses the types of
service that do not count toward the general five-year limit on service
after which a person is not entitled to reemployment rights. The
correction has been made to follow precisely the corresponding sections
of the statute. See 38 U.S.C. 4312(c)(4)(B) and 4312(c)(4)(D).
10. The commenter requests that the Department include within
section 1002.123 an additional type of document that establishes an
employee's eligibility for reemployment following covered NDMS service.
The Department agrees. See section 1002.123(a)(7).
11. The commenter suggests that the Department modify section
1002.35, which specifies the types of discharge following service that
will cause a person to lose reemployment rights under USERRA. The
commenter sought inclusion on this list the termination of an
intermittent NDMS appointee for misconduct or cause. Because no
statutory or regulatory guidance was provided as a basis for this
suggestion, and the Department is aware of none, the suggestion is not
adopted.
Subpart A--Introduction to the Regulations Under the Uniformed Services
Employment and Reemployment Rights Act of 1994
General Provisions
Sections 1002.1 through 1002.7 describe the regulation's purpose,
scope, and background, as well as the sense of the Congress in enacting
USERRA. Section 1002.1 sets out the purpose of these regulations. See
38 U.S.C. 4301. Sections 1002.2 through 1002.4 provide additional
background on USERRA, its effective date, and its purposes. Section
1002.5 defines the important terms used in the regulation. See 38
U.S.C. 4303. Sections 1002.6 and 1002.7 describe the general coverage
of the rule, its applicability and its relationship to other laws,
contracts, agreements, and workplace policies and practices. See 38
U.S.C. 4302.
The Department received one comment from the Equal Employment
Advisory Council regarding the breadth of USERRA's definition of
``employer.'' The proposed rule adopted, in Section 1002.5(d), USERRA's
definition of ``employer,'' which includes ``any person, institution,
organization or other entity that pays salary of wages for work
performed or that has control over employment opportunities, including
* * * a person, institution, organization, or entity to whom the
employer has delegated the performance of employment-related
responsibilities.'' 38 U.S.C. 4303(4). The EEAC proposed that the
regulatory definition of employer explicitly exclude from liability for
statutory violations individuals, such as managers or supervisors, who
are not directly responsible for paying wages to employees. In support
of this proposal, the EEAC cited case law under various civil rights
statutes holding that individuals cannot be held personally liable for
statutory violations if the individual does not independently meet the
statute's definition of a covered ``employer.'' See, e.g., EEOC v. AIC
Security Investigations, LTD, 55 F.3d 1276, 1281 (7th Cir. 1995), and
cases cited therein. Under the statutory definitions of ``employer'' in
the Americans with Disabilities Act (ADA), 42 U.S.C 12111(5), the Age
Discrimination in Employment Act (ADEA), 29 U.S.C. 630(b), and Title
VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e(b), which are
essentially the same, the weight of authority is that Congress intended
the doctrine of respondeat superior to apply, and to impose liability
upon employers for acts of their agents. Id.
The Department has considered this comment and disagrees with the
conclusion reached by the commenter. In comparison to the ADA, the
ADEA, and Title VII of the Civil Rights Act, USERRA's definition of
``employer'' is quite different and much broader. USERRA imposes
liability for violations upon ``any person * * * [who] * * * has
control over employment opportunities'' including ``a person * * * to
whom the employer has delegated the performance of employment-related
responsibilities.'' 38 U.S.C. 4303(4)(A)(i). At least two courts have
held that, based on this definition, individual supervisors may be
liable under the Act. See Brandasse v. City of Suffolk, 72 F.Supp.2d
608, 617-18 (E.D.Va. 1999) (both a city, as a police officer's direct
employer, and its director of personnel, who had authority over hiring
and firing for the city, were subject to liability as ``employers''
under USERRA); Jones v. Wolf Camera, Inc., 1997 WL 22678 (N.D.Tex.
1997) (at Fed.R.Civ.P. 12(b)(6) stage, individual supervisors may be
liable under USERRA as ``persons'' with control over hiring and firing
and to whom the employer has delegated the performance of employment-
related responsibilities). But see Satterfield v. Borough of Schuykill
Haven, 12 F.Supp.2d 423 (E.D.Pa. 1998) (plaintiff could not bring an
action under USERRA against individual members of a borough council,
alleging that the council terminated him because of his military
status, because such members did not have any individual power over the
plaintiff and the plaintiff was not required to report to them
individually); Brooks v. Fiore, 2001 WL 1218448 (D. Del. 2001)
(supervisor was not covered by USERRA because he did not have the power
to hire and fire the plaintiff).
Thus, courts have construed USERRA's definition of ``employer'' as
including supervisors and managers in appropriate cases. Those courts
that have found no individual liability have done so not because the
language of the statute precludes it, but rather because the facts and
circumstances of the case do not warrant the imposition of individual
liability. Based on these considerations, the Department declines to
adopt the position that individual supervisors and managers should be
excluded from the regulatory definition of ``employer'' under USERRA.
The Department received two additional comments, one from an
association of third-party employee benefit administrators and one from
a trade association of firms providing health insurance products to
employers, regarding the statute's broad definition of ``employer'' and
its implications in the employee benefits area. Each commenter was
concerned that USERRA's definition of ``employer'' was so broad as to
impute liability to third parties to whom employers had delegated only
ministerial responsibilities for employee benefits plans.
Congress intended that the definition of employer be broad enough
to ``apply to insurance companies that administer employers' life,
long-term disability, or health plans, so that such entities cannot
refuse to modify their policies in order for employers to comply with
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requirements under [USERRA].'' S. Rep. No. 158, 103d Cong., 2d Sess. 42
(1993). However, the Department agrees with the commenters that
entities to whom employers or plan sponsors have delegated purely
ministerial functions regarding the administration of employee benefits
plans are not intended to be covered by USERRA's definition of
``employer.'' For instance, firms whose activities are strictly limited
to the preparation and maintenance of plan benefit forms, without
engaging in substantive decisions regarding plan benefits, would not be
considered employers for the purposes of USERRA.
The Department received comments on the rule's definitions
regarding an employer's obligation to make reasonable efforts, without
imposing an undue hardship on the employer, to qualify an employee
returning from military service for reemployment. One commenter
suggested that the definition of ``reasonable efforts'' in section
1002.5(i) should explicitly include an employer's obligation to provide
evaluative testing, assistance with obtaining licensing, and other
similar employer efforts. The Department views the definition of
``reasonable efforts,'' which requires actions by employers ``including
training * * * that do not place undue hardship on the employer,'' as
sufficiently broad so as to include other actions not specified in the
definition. The same commenter requested that the Department delete
from the definition of ``undue hardship'' in section 1002.5(n) any
consideration based on ``the nature and cost of the action needed.''
The ``nature and the cost of the action'' is one of the factors
expressly included in USERRA's definition of ``undue hardship,'' and
the Department views consideration of all factors essential to
evaluation of what constitutes ``undue hardship.'' 38 U.S.C.
4303(15)(A)-(D).
Additionally, another commenter requested that the Department
exclude ``former employees'' from the definition of ``employee'' in
section 1002.5(c). Congress intended ``that the term `employee' would
include former employees of an employer.'' H.R. Rep. No. 65, 103d
Cong., 2d Sess. 21 (1993); S. Rep. No. 103-158, at 41 (1993).
Therefore, the Department will retain ``former employees'' within this
definition.
One comment suggests a revision to section 1002.6, which describes
the various types of service that are covered under USERRA. USERRA's
predecessor, the VRRA, provided reemployment protections that varied
(in many instances) based on the type of service performed. One of the
ways in which USERRA modified the old law was to base many of the
reemployment rights on the length of the service performed rather than
its type. The commenter requests the deletion of the sentence from
section 1002.6 that erroneously indicates that the statute's
reemployment provisions vary only according to the length of service.
The Department agrees, and has made the deletion. See 1002.6.
Finally, the Department received one comment regarding USERRA's
relationship to the Internal Revenue Code. The commenter has requested
the Department clarify how ``differential pay'' should be reported for
tax purposes. The term ``differential pay'' refers to payments by
employers to their employees absent to perform military service, and
this pay is neither required by nor addressed in USERRA. In some cases,
employers provide employees their full civilian pay, but more often
they provide payments that represent the difference between the
employee's military pay and civilian pay. Differential pay is a
generous show of support by employers for their employees who are in
service to the nation.
The commenter correctly points out that USERRA requires that a
person absent from a position of employment on account of service in
the uniformed services is to be considered on a furlough or leave of
absence, a provision that has been incorporated in the reemployment
rights statute since its first enactment in 1940. 38 U.S.C.
4316(b)(1)(A). On the other hand, the commenter notes that the Internal
Revenue Service (IRS) has issued guidance that such person is
considered to be ``terminated'' for certain tax purposes.
The Department reiterates that for the purposes of determining the
rights and obligations set out in USERRA, an employee absent to perform
service in the uniformed services is to be considered as on furlough or
leave of absence. 38 U.S.C. 4316(b). Therefore, for the purposes of
compliance with USERRA, an employee should be treated as on furlough or
leave of absence, and for the purposes of compliance with the Internal
Revenue Code (IRC), the IRS guidance should be followed. See IRS
Revenue Ruling 69-136 (1969).
Subpart B--Anti-Discrimination and Anti-Retaliation
Protection From Employer Discrimination and Retaliation
USERRA prohibits an employer from engaging in acts of
discrimination against past and present members of the uniformed
services, as well as applicants to the uniformed services. 38 U.S.C.
4311(a). The anti-discrimination prohibition applies to both employers
and potential employers. No employer may deny a person initial
employment, reemployment, retention in employment, promotion, or any
benefit of employment based on the person's membership, application for
membership, performance of service, application to perform service, or
obligation for service in the uniformed services. USERRA also protects
any person who participates in an action to protect past, present or
future members of the uniformed services in the exercise of their
rights under the Act. The Act prohibits any employer from
discriminating or taking reprisals against any person who acts to
enforce rights under the Act; testifies in any proceeding or assists a
statutory investigation; or exercises any right under the statute
pertaining to any person. 38 U.S.C. 4311(b). A person is protected
against discrimination and reprisal regardless whether he or she has
served in the military.
Proposed sections 1002.18, 1002.19 and 1002.20 implement the
protections of section 4311(a) and (b). Proposed section 1002.21 makes
clear that the prohibition on discrimination applies to any employment
position, regardless of its duration, including a position of
employment that is for a brief, non-recurrent period, and for which
there is no reasonable expectation that the employment position will
continue indefinitely or for a significant period.
The Department received two comments on proposed section 1002.21.
The first commenter suggests that the application of USERRA's anti-
discrimination and anti-retaliation provisions to brief, non-recurrent
positions is ``unduly burdensome for employers and contains unnecessary
verbiage.'' Because the statute explicitly requires the application of
the anti-discrimination and anti-retaliation provisions to such
employment positions, see 38 U.S.C. 4311(d), the Department will retain
the provision unchanged. A second commenter requests that 1002.21
include a cross-reference to section 1002.41 to reflect that persons
employed in brief, non-recurrent employment positions enjoy the
protections of USERRA's anti-
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discrimination and anti-retaliation provisions, while persons employed
in temporary and seasonal employment positions are not protected by
USERRA's reemployment provisions. The commenter mistakenly equates the
terms ``brief, non-recurrent'' with ``temporary'' and ``seasonal'' when
referring to employment positions. Some employment positions, such as a
life guard at a swimming pool or a football coach, are temporary,
seasonal positions, and such positions enjoy both the anti-
discrimination/anti-retaliation and the reemployment protections
afforded under USERRA. See 38 U.S.C. 4311(d) and 4312(d)(1)(C); S. Rep.
No. 103-158, at 46 (1993). By contrast, some, but not all, temporary,
seasonal employment positions are brief and non-recurrent, and provide
the employee no reasonable expectation of continued employment, such as
an employment contract that covers a one-time-only, three-month-long
position. Such brief, non-recurrent positions enjoy the protections
afforded by USERRA's anti-discrimination/anti-retaliation provisions,
but are not protected by the statute's reemployment provisions. See 38
U.S.C. 4312(d)(1)(C); S. Rep. No. 103-158, at 46 (1993).
Proposed section 1002.22 explains who has the burden of proving
that a certain action violates the statute. Proposed section 1002.23
sets out the evidentiary elements of a claimant's and an employer's
case under USERRA. The Department received several comments regarding
these two provisions. Two commenters, including the National Employment
Lawyers Association (NELA), criticized the provisions for failing to
state explicitly in the text of the rule that once an employee has met
his or her burden to prove that the employee's USERRA-protected status
or activity was a reason for an employer's adverse action against the
employee, that the employer's rebuttal case is an affirmative defense,
which places the burden of proof on the employer to show by a
preponderance of evidence that it would have taken the adverse action
in the absence of the protected status or activity. In addition, two
commenters, including NELA, criticized the provisions for erroneously
stating that the burden of proof shifts back to the employee if the
employer successfully prevails on its affirmative defense.
The Department agrees that the structures of proof set forth in
proposed sections 1002.22 and 1002.23 are susceptible to confusion and
should be clarified. Congress intended that the evidentiary scheme set
forth by the United States Supreme Court in NLRB v. Transportation
Management Corp., 462 U.S. 393, 401 (1983), apply to the analysis of
violations under USERRA. See S. Rep. No. 103-158, at 45 (1993), and
H.R. Rep. No. 103-65, Pt. I, at 18, 24 (1993). See also Gummo v.
Village of Depew, NY, 75 F.3d 98, 106 (2d Cir. 1996) (citing USERRA's
legislative history); Sheehan v. Dept. of the Navy, 240 F.3d 1009,
1013-1014 (Fed. Cir. 2001) (same).
Under this structure, in order to establish a case of employer
discrimination, the person's membership, application for membership,
performance of service, application for service, or obligation for
service in the uniformed services must be a ``motivating factor'' in
the employer's actions or conduct. 38 U.S.C. 4311(c)(1). The initial
burden of proving discrimination or retaliation rests with the person
alleging discrimination (the claimant). A person alleging
discrimination under USERRA must first establish that his or her
protected activities or status as a past, present or future service
member was a motivating factor in the adverse employment action. See
Robinson v. Morris Moore Chevrolet-Buick, Inc., 974 F.Supp. 571 (E.D.
Tex. 1997). The claimant alleging discrimination must prove the
elements of a violation--i.e., membership in a protected class (such as
past, present or future affiliation with the uniformed services); an
adverse employment action by the employer or prospective employer; and
a causal relationship between the claimant's protected status and the
adverse employment action (the ``motivating factor''). To meet this
burden, a claimant need not show that his or her protected activities
or status was the sole cause of the employment action; the person's
activities or status need be only one of the factors that ``a truthful
employer would list if asked for the reasons for its decision.'' Kelley
v. Maine Eye Care Associates, P.A, 37 F. Supp.2d 47, 54 (D. Me. 1999);
see Robinson, 974 F. Supp. at 575 (citing Price Waterhouse v. Hopkins,
490 U.S. 228, 250 (1989) (addressing Title VII gender discrimination
claim and related defense)). ``Military status is a motivating factor
if the defendant relied on, took into account, considered, or
conditioned its decision on that consideration.'' Fink v. City of New
York, 129 F.Supp.2d 511, 520 (E.D.N.Y. 2001), citing Robinson, 974
F.Supp. at 576. The employee is not required to provide direct proof of
employer animus at this stage of the proceeding; intent to discriminate
or retaliate may be established through circumstantial evidence. See
Desert Palace, Inc. v. Costa, 539 U.S. 90 (2003); United States Postal
Service Bd. of Governors v. Aikens, 460 U.S. 711, 714 (1983); Sheehan,
240 F.3d at 1014.
After the employee establishes the elements of an alleged
violation, the employer may avoid liability by proving by a
preponderance of the evidence that the claimant's military activities
or status was not a motivating factor in the adverse employment action.
See Gummo, 75 F.3d at 106. At this stage, the employer carries the
burden to prove as an affirmative defense that it would have taken the
action anyway, without regard to the employee's protected status or
activity. Sheehan, 240 F.3d at 1014. Because the employer's defenses
are affirmative under USERRA, if the employer fails to counter the
employee's evidence, the claimant's proof establishes that the adverse
employment action was more likely than not motivated by unlawful
reasons. This framework is set forth in sections 1002.22 and 1002.23,
which have been revised in response to the comments noted above and to
accurately reflect the nature of the evidentiary structure intended by
Congress.
Section 4311(c)(2) provides the same evidentiary framework for
adjudicating allegations of reprisal against any person (including
individuals unaffiliated with the military) for engaging in activities
to enforce a protected right; providing testimony or statements in a
USERRA proceeding; assisting or participating in a USERRA
investigation; or exercising a right provided by the statute. 38 U.S.C.
4311(c)(2). Section 1002.19 addresses the elements of a case of
retaliation. One commenter highlighted an ambiguity in the question
posed in section 1002.19, and the Department has narrowed the question
to clarify that the section applies only to employer retaliation.
The Department received responses to its request for comment on the
application of the anti-discrimination provisions of the Act to
potential employers. Because this issue is also addressed in section
1002.40, which explains in some detail the obligations of potential
employers, the Department will respond to those comments in its summary
of Subpart C, below.
The Department received one comment requesting clarification in the
text of the final rule that USERRA protects not just a service member's
activities, but also protects a service member's status in the
uniformed services. For example, an employer may not discriminate
against a person because of his or her status as a military veteran or
member of a uniformed
[[Page 75251]]
service, regardless of whether that status results in the performance
of military activities. The Department agrees with the comment, and has
revised sections 1002.18, 1002.22 and 1002.23 to reflect that USERRA
protects both military status and activities.
The Department received numerous additional comments regarding this
part of the rule. One comment criticized the rule for failing to state
that the evidentiary scheme set forth in sections 1002.22 and 1002.23
applies only to court proceedings and does not apply to the earlier
administrative stage during which VETS investigates an employee's
USERRA claim. While the evidentiary structure in the rule certainly
pertains to the litigation of USERRA claims in court, the Department
regards the analysis as one that should be taken into account during
the investigative stage, so that adequate assessments can be made
regarding the claims of any party to a USERRA dispute. An additional
comment criticized the proposed rule for failing to explicitly state
that an employee need only show that his or her protected status or
activity was one of the factors motivating the adverse employment
action. Section 1002.22 states that the employee's burden is to prove
that the protected activity or status was ``one of the factors for the
employer's adverse action,'' and therefore no revision is necessary.
Another commenter faulted the proposed rule for failing to state that
the employee's initial burden of proof includes showing by a
preponderance of evidence that the protected activity or status was a
``substantial and motivating'' factor. The Department has concluded
that under Transportation Management, an employee must show that the
protected status or activity was a ``substantial or motivating''
factor. 462 U.S. at 401. One commenter suggested the addition of the
phrase ``or more'' to the first sentence of Section 1002.23(b) so that
it states, ``If you prove that the employer's action against you was
based on one or more of the prohibited motives listed in paragraph (a)
of this Section * * *.'' The Department regards this suggestion as
unnecessary to clarify the meaning of the provision. Finally, the
Department received one comment suggesting that in a reinstatement case
in which the employer has failed to reemploy a service member in a
position of like pay, status and seniority, the burden of proof should
be on the employer to show that its failure was not a result of
protected activity or service, and that the burden should be on the
employee only after reinstatement. Because the comment is ambiguous and
does not offer clarification of any provision of the regulation, no
revision has been made to respond to the comment.
Subpart C--Eligibility for Reemployment
General Eligibility Requirements for Reemployment
USERRA requires that the service member meet five general criteria
in order to establish eligibility for reemployment:
(1) That the service member be absent from a position of civilian
employment by reason of service in the uniformed services;
(2) That the service member's employer be given advance notice of
the service;
(3) That the service member have five years or less of cumulative
service in the uniformed services with respect to a position of
employment with a particular employer;
(4) That the service member return to work or apply for
reemployment in a timely manner after conclusion of service; and
(5) That the service member not have been separated from service
with a disqualifying discharge or under other than honorable
conditions.
Section 1002.32 sets out these general eligibility requirements.
Sections 1002.34-.74 explain the ``absent from a position of civilian
service'' requirement, sections 1002.85-.88 explain the ``advance
notice'' requirement, sections 1002.99-.104 explain the ``five years or
less of cumulative service'' requirement, sections 1002.115-.123
explain the ``return to work or apply for reemployment'' requirement,
and sections 1002.134-.138 explain the ``no disqualifying discharge''
requirement.
A person who meets these eligibility criteria, which are contained
in 38 U.S.C. 4312(a)-(c) and 4304, is entitled to be reemployed in the
position described in 38 U.S.C. 4313, unless the employer can establish
one of the three affirmative defenses contained in 38 U.S.C. 4312(d).
The Department received two comments on the general eligibility
criteria set out in proposed section 1002.32. The first commenter
recommended that the phrase ``in the uniformed services'' be inserted
after the word ``service'' in section 1002.32(a)(2) so that the
sentence more accurately states, ``You have five years or less of
cumulative service in the uniformed services with respect to your
position of employment.'' The Department agrees that this amendment
improves the clarity of the text, and has made the revision. See
1002.32(a)(2). The second commenter also requested a clarification to
the same sentence. In order to reflect that the five-year service limit
applies to an employee's entire employment relationship with a
particular employer, including any changes in employment position with
that particular employer, the Department has revised this sentence
accordingly. See 1002.32(a)(2).
There has been some disagreement in the courts over the appropriate
burden of proof in cases brought under 38 U.S.C. 4312, the provision in
USERRA establishing the reemployment rights of persons who serve in the
uniformed services. One court has interpreted that provision to be ``a
subsection of section 4311 [the anti-discrimination and anti-
retaliation provision].'' Curby v. Archon, 216 F.3d 549, 556 (6th Cir.
2000). Other courts have interpreted section 4312 to establish a
statutory protection distinct from section 4311, creating an
entitlement to re-employment for qualifying service members rather than
a protection against discrimination. Wrigglesworth v. Brumbaugh, 121 F.
Supp.2d 1126, 1134 (W.D. Mich. 2000) (stating that requirements of
section 4311 do not apply to section 4312). Brumbaugh relies in part on
legislative history and the Department's interpretation of USERRA. Id.
at 1137. Another district court supports the Brumbaugh decision and
characterizes the contrary view in Curby as dicta. Jordan v. Air
Products and Chem., 225 F. Supp.2d 1206, 1209 (C.D. Ca. 2002).
In the proposed rule, the Department agreed with the district court
decisions in Brumbaugh and Jordan that sections 4311 and 4312 of USERRA
are separate and distinct. Accordingly, proposed section 1002.33
provided that a person seeking relief under section 4312 need not meet
the additional burden of proof requirements for discrimination cases
brought under section 4311. The Department disagreed with the decision
in Curby v. Archon discussed above, insofar as it interprets USERRA to
the contrary, and the Department invited comment regarding the proper
interpretation of the statute regarding the burden of proof for relief
under section 4312.
The Department received four comments regarding this issue, and all
four agreed with the Department's interpretation that a person alleging
a violation of section 4312 of USERRA need not prove the elements of an
alleged violation of section 4311. In the absence of any negative
comment to consider, the Department will incorporate this provision of
the
[[Page 75252]]
proposed rule in the final rule. In addition, one of the four
commenters on this topic requested that section 1002.33 contain much
more detail about VETS' administrative procedures that follow the
filing of a complaint stating a claim under section 4312. The
Department declines this request, as it suggests the insertion of
material that is covered below in Subpart F of this rule, Compliance
Assistance, Enforcement and Remedies.
Coverage of Employers and Positions
Sections 1002.34 through 1002.44 of the final rule list the
employers and employment positions that are covered by USERRA. Section
1002.34 provides that the Act's coverage extends to virtually all
employers in the United States; the statute contains no threshold or
minimum size to limit its reach. The Department received two comments
regarding this coverage provision. First, the Department was asked
whether USERRA applies to Native American tribes when they act as
employers. Section 1002.34(a) reiterates USERRA's broad applicability
to all employers, explicitly including the Federal government and the
States. 38 U.S.C. 4303(4). While the face of the statute does not
explicitly cover Native American tribal employers, USERRA's legislative
history reflects the Act was intended to apply to ``Native American
tribes and their business enterprises.'' S. Rep. No. 103-158, at 42
(1993). Thus, although the Department concludes that USERRA likely
applies to Native American tribal employers, the Department recognizes
that there is a difference between the right to demand compliance with
the law and the means to enforce it. Kiowa Tribe of Oklahoma v.
Manufacturing Techs., Inc., 523 U.S. 751, 754 (1998). Native American
tribes, like the States, possess sovereign immunity from suit except
where ``Congress has authorized the suit or the tribe has waived its
immunity.'' Kiowa Tribe of Oklahoma, 523 U.S. at 754. As a result,
judicial enforcement of the Act against an Indian tribe depends on
whether the tribe has waived its immunity, and such a waiver ``cannot
be implied but must be unequivocally expressed.'' Santa Clara Pueblo v.
Martinez, 436 U.S. 49, 58 (1978). Accordingly, the Department
recognizes that the application of USERRA's provisions to Native
American tribal employers is a complicated and heavily fact-dependent
issue that, if raised in a USERRA proceeding, will ultimately be
resolved by the courts on a case-by-case basis. See, e.g., C & L
Enterprises, Inc. v. Citizen Band Potawatomi Tribe of Oklahoma, 532
U.S. 411 (2001) (arbitration provisions in contract amounted to clear
waiver of tribal immunity).
An additional commenter suggests the elimination of section
1002.34(c), which states that USERRA applies to American firms
operating in a foreign country, because it ``attempts to create an
extraterritorial application that is not established under the
statute.'' To the contrary, the text set out in section 1002.34(c) is
based on an unambiguous statutory provision establishing such
applicability. See 38 U.S.C. 4319. Accordingly, the Department has
retained this provision in the final rule. See 1002.34.
Other provisions in this section address various aspects of the
employment relationship subject to the Act. Section 1002.35 defines the
term ``successor in interest,'' and section 1002.36 further addresses
the issue. Section 1002.37 addresses the situation in which more than
one employer may be responsible for one employee. The Department
received two comments on this provision regarding multiple employers.
The first commenter suggested that, as with regulations promulgated
under the Family and Medical Leave Act, see, e.g. 29 CFR 825.106, the
provision should allocate statutory responsibilities and liability
between ``primary'' and ``secondary'' employers. Similarly, an
additional commenter submitted that the statute's reemployment
provisions should apply only to the ``primary'' employer and not the
``secondary'' employer.
In response to these two comments, the Department again notes
USERRA's broad definition of ``employer'' as an entity ``that has
control over employment opportunities.'' 38 U.S.C. 4303(4). In
addition, USERRA's legislative history instructs that the term
``employer'' is intended to be broadly construed to cover situations
where more than one entity exercises control over different aspects of
the employment relationship. S. Rep. No. 103-158, at 41 (1993); H.R.
Rep. 103-65, Pt. I, at 21(1993), citing, e.g., Magnuson v. Peak
Technical Services, Inc., 808 F.Supp. 500, 507-511 (E.D. Va. 1992) (the
legal issue is whether one or more of the entities exercise requisite
control over significant aspects of employment relationship so as to be
deemed an ``employer'' under the statute). Thus, in cases in which more
than one entity employs an individual, the entity's status,
responsibility and liability as an employer under USERRA is assessed by
determining whether the entity controls the employee's employment
opportunities, not by reference to shorthand labels such as ``primary
employer'' and ``secondary employer.'' Indeed, under this analytical
framework, employers may share or co-determine certain aspects of the
employment relationship, and in those cases there will not be a
``primary'' and ``secondary'' employer. Accordingly, the Department
will retain the provision unmodified. See 1002.37.
The Department received a comment from the Building and
Construction Trades Department of the AFL-CIO (``BCTD'') regarding the
Department of Labor's treatment of hiring halls in proposed section
1002.38, which provides that a hiring hall is an ``employer'' if ``the
hiring and job assignment functions have been delegated by an employer
to the hiring hall.'' The BCTD recommends that this provision be
eliminated, arguing that hiring halls in the unionized construction
industry represent an ``arrangement'' between the union and local
employers to facilitate referral of available union members for work.
According to the BCTD, hiring halls do not perform any hiring or
assignment functions beyond referring the number and types of workers
requested by the employer. The BCTD suggests that the multi-employer
group using the hiring hall to obtain workers should be the
``employer'' rather than the hiring hall. In order to effectuate this
suggestion, the BCTD proposes, in addition to eliminating section
1002.38, that the Department modify the regulatory definition of
``employer'' (section 1002.5(d)) to state, ``In industries in which
exclusive hiring halls are utilized, all employers who are required to
obtain applicants through a given hiring hall arrangement, may
constitute a single employer under the Act.''
The Department's response to the BCTD's proposal lies again in the
breadth of the statutory definition of ``employer,'' and in Congress's
unambiguous intent that this definition be read broadly to include
entities, such as hiring halls, to whom job referral responsibilities
have been delegated. See S. Rep. No. 103-158, at 42 (1993); H.R. Rep.
103-65, Pt. I, at 21(1993). In addition, the BCTD's proposed amendment
to the definition of employer in section 1002.5, which seeks the
permanent application of a ``single employer'' framework to multiple
hiring hall employers, is misplaced. The term ``single employer''
applies to firms that operate as an integrated enterprise and ``exert [
] significant control over'' the employees in question. G. Heileman
Brewing Co. v. NLRB, 879 F.2d 1526, 1530 (7th Cir. 1989). To determine
whether firms are sufficiently integrated to constitute a single
employer, courts
[[Page 75253]]
look to (1) common management; (2) centralized control of labor
relations; (3) interrelation of operations; and (4) common ownership or
financial control. See Radio and Television Broadcast Technicians Local
Union 1264 v. Broadcast Service of Mobile, Inc., 380 U.S. 255, 256, 85
S. Ct. 876, 13 L. Ed. 2d 789 (1965); see also Naperville Ready Mix,
Inc. v. NLRB, 242 F.3d 744, 752 (7th Cir. 2001), cert. denied, 534 U.S.
1040 (2001). While one or more employers utilizing the same hiring hall
may or may not operate as an integrated enterprise so that they meet
the criteria of the ``single employer'' test, such criteria are not
essential to determine whether the entity is an employer for the
purposes of USERRA. Accordingly, the Department rejects the BCTD's
suggestions, and will retain the provision regarding hiring halls in
unchanged form. See 1002.38.
Proposed section 1002.39 covers States and other political
subdivisions of the United States as employers, and the Department
received one comment regarding this provision. The commenter noted
USERRA's specific treatment for reemployment of employees of the
Federal legislative and judicial branches and, seeing no similar
provision for employees of State legislative and judicial branches,
asked whether USERRA's protections applied to the latter group. In
response, the Department again notes USERRA's broad applicability to
all employers, explicitly including the States, 38 U.S.C. 4303(4),
without regard to whether the State employer is the State's judicial or
legislative branch.
The Department received three favorable comments in response to
proposed section 1002.40, which confirms that USERRA makes it unlawful
for any employer to deny employment to a prospective employee on the
basis of his or her membership, application for membership, performance
of service, application to perform service, or obligation for service
in the uniformed services, or on the basis of his or her exercise of
any right guaranteed under the Act. In addition to these favorable
comments, the Department received two comments regarding the
application of this principle in specific circumstances. The first
commenter submits a hypothetical in which a person is on extended
active duty and cannot interview for a job or be present for the job's
start date because of service in the uniformed services. In the
scenario presented, the job advertisement states clearly that the
``most qualified'' applicants must be interviewed and the selectee is
desired to start work immediately upon selection. The person on active
duty can do neither, but does apply for the job by mail and is among
the most qualified based on the application. The employer eliminates
all applicants who cannot for whatever reason appear for an interview
or start work immediately upon selection. The commenter requests that
the Department determine that such conduct on the part of an employer
would not constitute a violation of USERRA. The second commenter
suggests a scenario in which a prospective employer withdraws an offer
of employment because of a person's military service or obligations,
and urges the Department to state in the final rule that while such a
withdrawal may constitute discrimination under USERRA, the prospective
employee is not entitled to reemployment rights under section 4312 of
the statute.
The Department declines to include either of these hypothetical
scenarios or their suggested outcomes in the final rule. Each
individual case involving an issue under USERRA must be decided based
on the specific facts of that case, with all the attendant and
potentially influential details, together with the appropriate and
applicable legal standards.
In addition, the Department received three comments regarding
whether employer inquiries about military service or obligations during
the hiring process are permissible under USERRA. The Department
concludes that it is not unlawful in itself for a prospective employer
to ask an applicant about military service or obligations. Indeed, in
many instances a prospective employee's military experience may enhance
his or her potential value to the employer. However, if information
elicited in response to such questions forms the basis of the
employer's decision not to hire the applicant, or to take other adverse
action against the person once hired, the inquiries may constitute
evidence of unlawful discrimination.
As stated earlier, temporary, part-time, probationary, and seasonal
employment positions are also covered by USERRA. The Department
received one comment on proposed section 1002.41, which establishes
that an employer does not have reemployment obligations under USERRA if
the temporary or seasonal position is for a brief, non-recurrent period
and the employee has no reasonable expectation of continued employment
indefinitely or for a significant period. The commenter submits that
the Department should state in the final rule that in such cases, an
employer need not provide employment benefits during the absence from
employment due to military service.
Section 4312(d)(1)(C) of USERRA clearly provides that an employer
does not possess any reemployment obligations if an employee departing
for military service is in a brief, non-recurrent position and has no
reasonable expectation that such employment will continue indefinitely
or for a significant period. However, an employee in a brief, non-
recurrent position may be entitled to non-seniority benefits under
certain situations. Because section 4316(b)(1)(B) requiring employers
to provide non-seniority benefits to employees is not limited by an
exception regarding employees occupying brief, nonrecurrent employment
positions, the Department interprets the mandate of section
4316(b)(1)(B) to apply to all employees, including those in brief,
nonrecurrent positions of employment. However, as discussed below in
Subpart D and in section 1002.150 of this rule, the employer is
obligated to provide non-seniority benefits to employees on military
leave only to the extent that the employer provides such benefits to
similarly situated employees on comparable non-military furlough or
leave of absence. As a result, if an employer provides non-seniority
benefits to similarly situated employees in brief, nonrecurrent
employment positions on comparable, non-military leave, those benefits
must also be provided to employees in brief, nonrecurrent employment
positions on military leave.
Section 1002.42 explains that USERRA covers employees on strike,
layoff, or leave of absence, and section 1002.43 makes clear that
persons occupying professional, executive and managerial positions also
are entitled to USERRA rights and benefits. The Department received two
comments on proposed section 1002.44, which addresses the distinction
between an independent contractor and an employee under USERRA. This
section provides that USERRA does not apply to individuals who act as
independent contractors rather than as employees of an employer, and
outlines six factors that must be considered in deciding whether a
person is an independent contractor. One commenter suggested the
Department eliminate as too limiting the word ``managerial'' from one
of the six factors that addresses a ``person's opportunity for profit
or loss that depends on his or her managerial skill.''
The second commenter disputed the six-factor test entirely, and
stated the appropriate legal standard for determining whether a person
is an
[[Page 75254]]
employee or an independent contractor is found in Nationwide Mutual
Insurance Co. v. Darden, 503 U.S. 318 (1992), a case decided under the
Employee Retirement Income Security Act (ERISA). In Darden, the Supreme
Court set forth a common-law-based ``degree of control'' test that
focuses primarily on ``the hiring party's right to control the manner
and means by which the product is accomplished.'' Id. The commenter
sought the elimination of three of the six factors set out in 1002.44
as inconsistent with the common law test and because ``they do not help
to inform the decision.''
The independent contractor provision in this rule is based on
Congress's intent that USERRA's definition of ``employee'' be
interpreted in the same expansive manner as the term is defined under
the Fair Labor Standards Act (FLSA). H.R. Rep. No. 103-65, Pt. I, at 29
(1993) (citing Brock v. Mr. W. Fireworks, Inc., 814 F.2d 1042 (5th
Cir.), cert. denied, 484 U.S. 924 (1987)); S. Rep. No. 103-58, at 40
(1993). In determining whether a person is a statutory employee or an
independent contractor under the FLSA, the ``economic reality'' test is
employed. See, e.g., Mr. W. Fireworks, 814 F.2d at 1043; see also Debra
T. Landis, Determination of ``Independent Contractor'' and ``Employee''
Status for Purposes of the FLSA, 51 A.L.R. Fed. 702 (2005). The focal
point of the test is whether the individual is economically dependent
on the business to which he or she renders service or is, as a matter
of economic fact, in business for him- or herself. Bartels v.
Birmingham, 332 U.S. 126, 130 (1947). In applying the test, courts
generally examine five or six factors. Landis, supra, section 2. No one
of the factors is determinative. Rutherford Food Corp. v. McComb, 331
U.S. 722 (1947). Moreover, the factors are ``simply analytical tools,''
thus, ``their weight, number and composition are variable.'' Dole v.
Snell, 875 F.2d 802, 805 n. 2 (10th Cir. 1989). In Mr. W. Fireworks,
the court examined five factors to use in determining independent
contractor status: ``(1) The degree of control exercised by the alleged
employer; (2) the extent of the relative investments of the putative
employee and employer; (3) the degree to which the `employee's'
opportunity for profit and loss is determined by the employer; (4) the
skill and initiative required in performing the job; and (5) the
permanency of the relationship.'' Id. (citing United States v. Silk,
331 U.S. 704 (1947)). Many courts also examine a sixth factor: Whether
the service rendered is an integral part of the employer's business.
See, e.g., Henderson v. Interchem Coal Co., 41 F.3d 567, 570 (10th Cir.
1994); Real v. Driscoll Strawberry Associates, Inc., 603 F.2d 748 (9th
Cir. 1979).
Consistent with USERRA's legislative history, the proposed section
essentially restates the test used under the FLSA to determine
independent contractor status. In addition, in FLSA cases, ``the courts
have generally indicated that the common law degree of control test is
not controlling.'' See Landis, supra, section 2. Indeed, even in
Darden, the Supreme Court indicated that the common law test is
inappropriate in FLSA cases. 503 U.S. at 326 (``While the FLSA, like
ERISA, defines an `employee' to include `any individual employed by an
employer,' it defines the verb `employ' expansively to mean `suffer or
permit to work.' This latter definition [* * *] stretches the meaning
of `employee' to cover some parties who might not qualify as such under
a strict application of traditional agency law principles.'' (internal
citations omitted)). USERRA's legislative history shows that Congress
made a clear choice between the test employed under the FLSA and the
degree-of-control test, and explicitly chose the former. In addition,
with respect to the proposal to delete the word managerial from the
second factor of the test set out in section 1002.44(b), the Department
notes that most courts use that term when applying the test. See, e.g.,
Imars v. Contractors Manufacturing Services, Inc., 165 F.3d 27 (6th
Cir. 1998). As a result, the Department will retain the test for
independent contractor as set forth in section 1002.44.
Coverage of Service in the Uniformed Service
Sections 1002.54 through 1002.62 explain the term ``service in the
uniformed services,'' list the various types of uniformed services, and
clarify that both voluntary and involuntary duty are covered under
USERRA. Section 1002.54 provides that ``service in the uniformed
services'' includes a period for which a person is absent from a
position of employment for the purpose of an examination to determine
his or her fitness to perform duty in the uniformed services. Sections
1002.55 and 1002.56 provide that service under certain authorities for
funeral honors duty or as a disaster-response appointee also constitute
service in the uniformed services. Section 1002.57 clarifies when
service in the National Guard is covered by USERRA, and section 1002.58
addresses service in the commissioned corps of the Public Health
Service, a division of the Department of Health and Human Services.
Section 1002.59 recognizes coverage for persons designated by the
President in time of war or national emergency.
Sections 1002.60, 1002.61, and 1002.62 address the coverage of a
cadet or midshipman attending a service academy, and members of the
Reserve Officers Training Corps, Commissioned Corps of the National
Oceanic and Atmospheric Administration, Civil Air Patrol, and Coast
Guard Auxiliary. The Department received one comment regarding the
provision in section 1002.61, which states that training performed by
members of ROTC is not considered ``service in the uniformed services''
under USERRA's definition of that term, except in very limited
circumstances. In particular, section 1002.61 explains that, on
occasion, Reserve and National Guard units will enroll enlisted unit
members in a local college's ROTC program in order to train them to
become officers. In such cases, the ROTC member may perform ROTC
training while in a duty status with the National Guard or Reserve
unit, either active duty training or inactive duty training. Under
these circumstances, the ROTC duty would be considered ``service in the
uniformed services'' for USERRA purposes, and the ROTC member would be
entitled to reemployment rights following such service. 38 U.S.C.
4303(13).
The commenter has requested that the Department modify section
1002.61 to establish broader USERRA protection for ROTC members.
Specifically, the commenter points out that where an ROTC member has a
contractual obligation to complete the ROTC course of training, he or
she should have USERRA protection against discrimination. An ROTC
member generally signs an agreement that specifies he or she will
complete the ROTC program and accept a commission upon graduation, or
serve as an enlisted member of the service if he or she fails to
successfully complete ROTC training. The Department agrees with the
commenter and, following consultation with the Department of Defense,
has made the necessary revision by adding subsection (b) to 1002.61.
The Department's consultation with the Department of Defense also
resulted in technical modifications to section 1002.61(a). See section
1002.61.
Absence From a Position of Employment Necessitated by Reason of Service
in the Uniformed Services
The Department received four comments regarding proposed section
1002.73, which addresses the issue of
[[Page 75255]]
the employee's reason for leaving employment as it bears on his or her
reemployment rights. Section 4312(a) of the Act states that ``any
person whose absence from a position of employment is necessitated by
reason of service in the uniformed services'' is entitled to the
reemployment rights and benefits of USERRA, assuming the Act's
eligibility requirements are met. Military service need not be the only
reason the employee leaves, provided such service is at least one of
the reasons. See H.R. Rep. No. 103-65, Pt. I, at 25 (1993).
All four commenters expressed unease about the apparent latitude
given employees in this section. The first commenter, concerned about
an employee's opportunity to seek other employment during absence for
military leave, suggested that the Department permit employers to
evaluate whether it was reasonable that an employee's absence included
a particular purpose other than the actual time engaged in service
itself. Similarly, a second commenter suggested that the Department
indicate in this provision that a neutral observer must be able to
conclude that the absence is related to performing military service.
Although the commenters did not say so explicitly, the presumed result
of imposing such requirements on an employee's non-military activities
would be to permit employers to deny reemployment if the employer
concludes that the employee's absence included a purpose that was
unreasonable or inappropriate. The effect of these suggestions would be
to impose an additional requirement for reemployment eligibility based
on an employee's conduct during absence from employment for military
service beyond the requirements contained in the statute. Consequently,
the Department will not include the proposed addition.
The third commenter requests that the Department state in section
1002.73 that an employee cannot extend the USERRA-protected period of
absence for non-military purposes. Because section 1002.73 clearly
provides that the period of absence from employment must be
necessitated by military service, there is no need for modification on
this point. The final commenter on this provision requests that the
Department require an employee to return to work within a prescribed
period of time if the employee's mobilization orders are cancelled. The
Department will not prescribe a set period of time within which an
employee must report back to work following the cancellation of
mobilization orders, because the facts and circumstances of each case
will differ. However, in the event that a mobilization is cancelled, an
employee on military leave of absence should report back to his or her
employer as soon as practicable.
USERRA does not impose a limit on the amount of time that may
elapse between the date the employee leaves his or her position and the
date he or she actually enters the service. Proposed section 1002.74
recognized that no such limit is warranted. A person entering military
service generally needs a period of time to organize his or her
personal affairs, travel safely to the site where the service is to be
performed, and arrive fit to perform service. The amount of time needed
for these preparations will vary from case to case. Moreover, the
actual commencement of the period of service may be delayed for reasons
beyond the employee's control. If an unusual delay occurs between the
time the person leaves civilian employment and the commencement of the
uniformed service, the circumstances causing the delay may be relevant
to establish that the person's absence from civilian employment was
``necessitated by reason of service in the uniformed services.'' See
Lapine v. Town of Wellesley, 304 F.3d 90, 100 (1st Cir. 2002).
The Department received two comments suggesting this provision
could be subject to abuse. One commenter suggested that the Department
should restrict the time off to prepare for military service solely to
travel or to a prescribed time period. The second commenter requested
that the Department state that USERRA permits time off from employment
to put one's affairs in order only immediately and seamlessly before
the military service itself and not on an intermittent or periodic
basis during the weeks prior to military service. The final commenter
was more concerned that employees facing an extended period of military
service are ensured an adequate period of time to prepare for service,
so requested that the rule provide that an employee is entitled to a
minimum of one week off from employment prior to service.
The Department is averse to placing in this provision the
limitations or specific time frames suggested by these commenters. The
amount of time that an employee may need to prepare for military
service will vary, and will depend on the facts of each case. In
addition, employees may need intermittent time off from work prior to
military service for brief but repeated periods to put their affairs in
order, and such periods may be necessary to, for example, interview
child care providers, go to meetings with bank officers regarding
financial matters, or seek assistance for elderly parents. Although the
Department is disinclined to include the commenter's limitations in
section 1002.74, the Department has revised the text of the provision
to reflect that the duration of the military service, the amount of
notice supplied to an employee called to military service, and the
location of the service are all factors that influence the amount of
time an employee may need in order to rest and/or put his or her
affairs in order.
Requirement of Advance Notice
Section 1002.85 explains one of the basic obligations imposed on
the service member by USERRA as a prerequisite to reemployment rights:
the requirement to notify the employer in advance about impending
military service. 38 U.S.C. 4312(a)(1). Section 4312(a)(1) of USERRA
contains three general components of adequate notice: (i) The sender of
the notice; (ii) the type of notice; and (iii) the timing of notice.
First, the employee must notify his or her employer that the employee
will be absent from the employment position due to service in the
uniformed services. An ``appropriate officer'' from the employee's
service branch, rather than the employee, may also provide the notice
to the employer on behalf of the employee. Second, the notice may be
either verbal or in writing. See 38 U.S.C. 4303(8) (defining ``notice''
to include both written and verbal notification) and 38 U.S.C.
4312(a)(1). Although written notice by the employee provides evidence
that can help establish the fact that notice was given, the sufficiency
of verbal notice recognizes the ``informality and current practice of
many employment relationships[.]'' S. Rep. No. 103-158, at 47 (1993).
The act of notification is therefore more important than its particular
form. Third, the notice should be given in advance of the employee's
departure. USERRA does not establish any bright-line rule for the
timeliness of advance notice, i.e., a minimum amount of time before
departure by which the employee must inform the employer of his or her
forthcoming service. Instead, timeliness of notice must be determined
by the facts in any particular case, although the employee should make
every effort to give notice of impending military service as far in
advance as is reasonable under the circumstances. See H.R. Rep. No.
103-65, Pt. 1, at 26 (1993).
The Department received several comments concerning the general
requirement of notice. One commenter suggested the regulations address
situations in which an employee is
[[Page 75256]]
employed by more than one employer, for instance, in cases in which an
employee is referred by a hiring hall to various employers in a common
industry, or cases in which an employment agency assigns an employee to
a particular job site. The commenter suggests that the rule provide
that where an employee is employed by one or more employers, the
employee must provide the required notice to each employer. The
Department agrees with the submission, and has modified section 1002.85
accordingly. See section 1002.85(a).
Four commenters requested the regulations adopt a general
requirement that notice be given 30 days in advance of impending
service. Another commenter requested the Department employ stronger
language with respect to an employee's obligation to give timely
notice, suggesting the final rule state the employee should ``make
every effort'' to give advance notice ``as promptly as possible.'' The
Department does not intend that these regulations impose any new
requirements, either explicit or implied, upon the exercise of the
rights granted to protected persons by the statute. Therefore, the
Department did not adopt these suggestions concerning the timeliness of
notice. However, the Department has revised Section 1002.85 to note
that the Department of Defense, in their USERRA regulations, ``strongly
recommends that advance notice to civilian employers be provided at
least 30 days prior to departure for uniformed service when it is
feasible to do so.'' See 32 CFR 104.6(a)(2)(i)(B). While this provision
does not establish an inflexible 30-day requirement for the provision
of advance notice, it does serve to demonstrate that the Department of
Defense expects that service members exercise care when providing
notice to their employers of impending service in the uniformed
services.
The Department received seven comments related to the provision in
section 1002.85 that advance notice may be either written or verbal.
One commenter requested the final rule contain a ``recommendation''
that notice be in writing. Another commenter requested the regulation
provide that an employee use the employer's established procedure for
requesting other types of leave (i.e., written), except in cases where
written notice is precluded pursuant to USERRA. Five commenters
requested the final rule require the employee to provide, either before
or shortly after the commencement of the uniformed service, some form
of documentation, either a written notice or a copy of military orders
or similar documentation of the service. As noted above, both the
statutory language and the legislative history make clear Congress's
intent that advance notice may be either verbal or written. However,
the Department again notes that the Department of Defense regulations
under USERRA provide guidance to service members that ``strongly
recommends'' that advance notice be given in writing, while
acknowledging that verbal notice is sufficient. See 32 CFR
104.6(a)(2)(i)(B). The Department of Defense regulations also make
clear that the military services must consider and, where military
requirements permit, accommodate legitimate concerns of civilian
employers concerning the military service or obligations of their
employees. See 32 CFR 104.4(c) and (d); 104.5(b)(6); and 104.6(n), (o).
Section 1002.86 implements the statutory exceptions to the
requirement of advance notice of entry into the uniformed services. The
statute recognizes that in rare cases it may be very difficult or
impossible for an employee to give advance notice to his or her
employer. To accommodate these cases, the advance notice requirement
may be excused by reason of ``military necessity'' or circumstances
that make notice to the employer ``otherwise impossible or
unreasonable.'' 38 U.S.C. 4312(b). Section 4312(b) also provides that
the uniformed services make the determination whether military
necessity excuses an individual from notifying his or her employer
about forthcoming military service. Any such determination is to be
made according to regulations issued by the Secretary of Defense. See
32 CFR part 104. Finally, section 4312(b) states that the ``military
necessity'' determination is not subject to judicial review. The same
finality and exemption from review, however, do not apply if the
employee fails to provide notice to his or her employer because the
particular circumstances allegedly make notification ``impossible or
unreasonable.'' Whether the circumstances of the case support the
employee's failure to provide advance notice of service are questions
to be decided by the appropriate fact-finder. See S. Rep. No. 103-158,
at 47 (1993).
One commenter requested the Department note in section 1002.86 that
situations in which the provision of advance notice is precluded
because it is ``impossible or unreasonable'' will be rare, especially
in light of the access to telephones, e-mail and other readily
available sources by which contact with an employer may be made. The
commenter also requested the section provide that in such rare cases,
the employee must give the employer notice at the employee's earliest
opportunity. The Department views the current language in subsection
1002.86(b) as sufficient to address the notice requirement in
``impossible or unreasonable'' circumstances, and therefore has not
adopted the commenter's suggested revision.
Proposed section 1002.87 makes explicit that the employee is not
required to obtain the employer's permission before departing for
uniformed service in order to protect his or her reemployment rights.
Imposing a prior consent requirement would improperly grant the
employer veto authority over the employee's ability to perform service
in the uniformed services by forcing the employee to choose between
service and potential loss of his or her employment position, if
consent were withheld.
Section 1002.88 implements the long-standing legal principle that
an employee departing for service is not required to decide at that
time whether he or she intends to return to the pre-service employer
upon completion of the tour of duty. Rather, the employee may defer the
decision until after he or she concludes the period of service, and the
employer may not press the employee for any assurances about his or her
plans. See H.R. Rep. No. 103-65, Pt. I, at 26 (1993) (``One of the
basic purposes of the reemployment statute is to maintain the service
member's civilian job as an `unburned' bridge.'') and S. Rep. No. 103-
158, at 47 (1993), both of which cite Fishgold v. Sullivan Drydock and
Repair Corp., 328 U.S. 275, 284 (1946).
Section 1002.88 also provides that an employee cannot waive the
right to reemployment by informing the employer that he or she does not
intend to seek reemployment following the service. This general
principle that an employee cannot waive USERRA's right to reemployment
until it has matured, i.e., until the period of service is completed,
is reiterated in the discussion of USERRA's ``Furlough and Leave of
Absence'' provisions. See section 1002.152.
The Department received three comments regarding section 1002.88,
all of which contested the Department's conclusion that a person cannot
waive the right to reemployment by notifying the employer prior to or
during the period of military service that he or she does not intend to
seek reemployment upon completion of the service. Commenters included
the Equal Employment Advisory Council, the U.S.
[[Page 75257]]
Chamber of Commerce, and a law firm. The Department's conclusion is
based on both the USERRA's broad prohibition against waivers of
statutory rights, and the statute's legislative history on this point.
Section 4302(b) of USERRA states that the statute supersedes ``any * *
* contract, agreement, policy, plan, practice, or other matter that
reduces, limits, or eliminates in any manner any right or benefit
provided by [the Act].'' 38 U.S.C. 4302(b). This provision against
waivers has been interpreted expansively; for instance, it includes a
prohibition against the waiver in an arbitration agreement of an
employee's right to bring a USERRA suit in Federal court. See, e.g.,
Garrett v. Circuit City Stores, Inc., 338 F.Supp.2d 717, 721-22
(N.D.Tex. 2004). USERRA's legislative history underscores that this
provision is intended to prohibit ``employer practices and agreements,
which provide fewer rights or otherwise limit rights provided under
amended chapter 43 or put additional conditions on those rights * *
*.'' H. Rep. No. 103-65, Pt. I, at 20 (1993). This provision, coupled
with the mandate to courts to liberally construe USERRA to the benefit
of the service member, supports the Department's determination
regarding waivers of reemployment rights made before or during service.
However, in light of the comments received on this point, the
Department has revised section 1002.88 to clarify that a person cannot
waive his or her reemployment rights prior to or during a period of
service in the uniformed services. See section 1002.88.
Period of Service
USERRA provides that an individual may serve up to five years in
the uniformed services, in a single period of service or in cumulative
periods totaling five years, and retain the right to reemployment by
his or her pre-service employer. 38 U.S.C. 4312(c). Sections 1002.99
through 1002.104 implement this statutory provision. The Department
received one comment on Section 1002.99, which implements the basic
five-year period established by the statute, requesting that the five-
year period be reduced to two years. Because the time period is
established by statute, the Department has rejected the suggestion. See
section 1002.99.
Section 1002.100 provides that the five-year period includes only
actual uniformed service time. Periods of time preceding or following
actual service are not included even if those periods may involve
absences from the employment position for reasons that are service-
related, for example, travel time to and from the duty station, time to
prepare personal affairs before entering the service, delays in
activation, etc. The Department received one comment regarding this
provision, indicating that employers may have difficulty in
ascertaining which part of the absence from employment is attributable
to actual time in the uniformed service, and which part of the absence
was service-related. As a result, the commenter suggests that employers
either be allowed to assess an employee's entire absence from
employment for the purposes of the five-year limit or, alternatively,
be permitted to request documentation from an employee that will
demonstrate the precise length of the actual military service. Because
the text of the provision comports with the statute and its legislative
history, the Department declines the suggestion to amend the text of
the rule. However, in response to the stated concerns, the Department
advises employers that the Secretaries of the Military Departments and
the Commandant of the Coast Guard are expected to provide assistance to
civilian employers of employees covered by USERRA, 32 CFR 104.5(b)(6).
Such assistance may include support to employers to ascertain which
part of the absence from employment constituted service in the
uniformed services.
Section 1002.101 clarifies that the five-year period pertains only
to the cumulative period of uniformed service by the employee with
respect to one particular employer, and does not include periods of
service during which the individual was employed by a different
employer. Therefore, the employee is entitled to be absent from
employment with a particular employer because of service in the
uniformed services for up to five years and still retain reemployment
rights with respect to that employer; this period starts anew with each
new employer. The regulation derives from section 4312(c)'s language
tying the five-year period ``to the employer relationship for which a
person seeks reemployment[.]'' 38 U.S.C. 4312(c).
One commenter requested guidance on applying the five-year limit to
cases in which an employee is employed by more than one employer. The
Department has revised section 1002.101 to reflect that if an 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. See
section 1002.101.
Section 1002.102 addresses periods of service undertaken prior to
the enactment of USERRA, when the Veterans' Reemployment Rights Act
(VRRA) was in effect. If an individual's service time counted towards
the VRRA's four or five-year periods for reemployment rights, then that
service also counts towards USERRA's five-year period. The regulation
implements section (a)(3) of the rules governing the transition from
the VRRA to USERRA, which appear in a note following 38 U.S.C. 4301.
The Department invited comments as to whether its interpretation in
proposed section 1002.102 best effectuates the purpose of the Act, and
received one comment in response. The commenter indicated that in reply
to the question posed in section 1002.102 regarding whether the five-
year service limit includes periods of service that the employee
performed before USERRA was enacted, the Department should not provide
an unqualified ``yes,'' but instead should indicate that ``it depends''
on whether the individual's service time counted towards the VRRA's
four or five-year periods for reemployment rights. The Department
agrees, and has made the change to the text of this provision. See
1002.102.
Section 4312(c) enumerates eight specific exceptions to the five-
year limit on uniformed service that allow an individual to serve
longer than five years while working for a single employer and retain
reemployment rights under USERRA. 38 U.S.C. 4312(c)(1)-(4)(A)-(E). The
exceptions involve unusual service requirements, circumstances beyond
the individual's control, or service (voluntary or involuntary) under
orders issued pursuant to specific statutory authority or the authority
of the President, Congress or a Service Secretary. Section 1002.103
implements this provision by describing each exception set out in the
statute.
The regulation also recognizes a ninth exception based on equitable
considerations. A service member is expected to mitigate economic
damages suffered as a consequence of an employer's violation of the
Act. See Graham v. Hall-McMillen Co., Inc., 925 F. Supp. 437, 446 (N.D.
Miss. 1996). If an individual remains in (or returns to) the 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 Department sought comment on whether
an exception to the five-year limit based on the service member's
mitigation of economic loss furthers the
[[Page 75258]]
purposes of the statute, and received four comments in support of the
provision.
Section 1002.104 implements section 4312(h), which prohibits the
denial of reemployment rights based on the ``timing, frequency, and
duration'' of the individual's training or service, as well as the
nature of that service or training. 38 U.S.C. 4312(h). A service
member's reemployment rights must be recognized as long as the
individual has complied with the eligibility requirements specified in
the Act. Id. The legislative history of section 4312(h) makes clear the
Congress' intent to codify the holding of the United States Supreme
Court in King v. St. Vincent's Hospital, 502 U.S. 215 (1991). See H.R.
Rep. No. 103-65, Pt. I, at 30 (1993); S. Rep. No. 103-158, at 52
(1993). In King, the court held that no service limit based on a
standard of reasonableness could be implied from the predecessor
version of USERRA. Section 4312(h). Section 1002.104 therefore
prohibits applying a ``reasonableness'' standard in determining whether
the timing, frequency, or duration of the employee's service should
prejudice his or her reemployment rights.
Consistent with views expressed in the House report, Section
1002.104 counsels an employer to contact the appropriate military
authority to discuss its concerns over the timing, frequency, and
duration of an employee's military service. The Department received two
comments regarding this provision. One commenter suggests that section
1002.104 state that employer contacts with a military authority to
discuss concerns regarding timing, frequency, and duration of an
employee's military service should not be considered as evidence of
discrimination in violation of section 4311 of USERRA. The Department
declines the opportunity to make such a categorical statement in the
final rule that would apply in all circumstances. However, the
Department notes that good faith contacts with the military to express
legitimate concerns about timing, frequency, and duration of an
employee's military service do not evidence a discriminatory motive.
The second comment regarding section 1002.104 involves the provision
stating that ``military authorities are required to consider requests
from employers of National Guard and Reserve members to adjust
scheduled absences from civilian employment to perform service.'' The
commenter asks whether this statement subjects the military authority
to suit under the Administrative Procedures Act (APA) in cases in which
it may be alleged that the military authority's response to such
requests is arbitrary and capricious. The Department views this inquiry
as raising an issue beyond the scope of these regulations. However, the
Department notes that this requirement is established by Department of
Defense regulations. See 32 CFR 104.6(o).
Application for Reemployment
In order to protect reemployment rights under USERRA, the returning
service member must make a timely return to, or application for
reinstatement in, his or her employment position after completing the
tour of duty. 38 U.S.C. 4312(a)(3). Sections 4312(e) and (f) establish
the required steps of the reinstatement process. 38 U.S.C. 4312(e),
(f). Section 4312(e) of USERRA establishes varying time periods for
requesting reinstatement, and section 1002.115 explains that the three
statutory time periods for making a request for reinstatement are
dependent on the length of the period of military service, except in
the case of an employee's absence for an examination to determine
fitness to perform service.
The Department received three general comments with regard to the
time periods set out in section 1002.115. Two commenters suggest that
the Department indicate that employees and employers may lawfully agree
to extend the time periods for making a request for reinstatement.
Section 4302(a) of USERRA states that ``[n]othing in this chapter shall
supersede, nullify or diminish any * * * contract, agreement, policy,
plan, practice, or other matter that establishes a right or benefit
that is more beneficial to, or is in addition to, a right or benefit
provided'' under USERRA. The Department concludes that this statutory
provision permits the types of agreements to which the commenters
refer, and finds it unnecessary to add such a provision to the final
rule. A final general comment suggests that the Department indicate
that an employee's separate but proximate periods of service be
accumulated into one period for the purposes of determining the time
period within which to apply for reemployment. The Department disagrees
with the approach offered by the commenter. Under USERRA, an employee
may not add together service days from separate but proximate periods
of military service to create a longer period within which to apply for
reemployment with the employer. Similarly, if an additional period of
military service intervenes in the statutory period within which to
apply for reemployment with the employer, an employee may not bank any
remaining days from that period and add them on to the subsequent
period within which to report back to or apply for reemployment with
the employer.
Section 1002.115 also specifies the actions that must be taken by
the employee. Section 4312(e)(1)(A)(i) of USERRA provides that the
employee reporting back to the employer following a period of service
of less than 31 days must report:
(i) Not later than the beginning of the first full regularly
scheduled work period on the first full calendar day following the
completion of the period of service and the expiration of eight
hours after a period allowing for the safe transportation of the
person from the place of that service to the person's residence * *
*
38 U.S.C. 4312(e)(1)(A)(i).
The Department interprets this provision as requiring the employee
to report at the beginning of the first full shift on the first full
day following the completion of service, provided the employee has a
period of eight hours to rest following safe transportation to the
person's residence. See H.R. Rep. No. 103-65, Pt. I, at 29 (1993). If
it is impossible or unreasonable for the employee to report within this
time period, he or she must report to the employer as soon as possible
after the expiration of the eight-hour period.
The Department invited comment as to whether the interpretations in
section 1002.115(a) best effectuate the statute, and received four
comments in response. Two commenters asserted that the statute requires
that an employee report back to the employer ``by the beginning of the
first full shift on the first calendar day that falls after the eight
hour rest period ends.'' One commenter requested that this provision be
re-drafted to improve its clarity, and one commenter requested that the
Department extend the 8-hour period of rest because it is too brief.
After reviewing these comments, and the arguments in support of a
modification to this provision, the Department views section
1002.115(a), which requires an employee to report back to the employer
no later than the beginning of the first full regularly-scheduled work
period on the first full calendar day following the completion of the
period of service, provided the employee has an 8-hour rest period, as
a proper and accurate interpretation of section 4312(e)(1)(A)(i).
Neither the statute nor the legislative history suggests that an
employee must report back on the first full shift on the day following
the day that includes the period of rest. Nor can the Department
[[Page 75259]]
extend that period of rest beyond eight hours, as is called for in the
statute.
An additional commenter sought guidance on the application of
section 1002.115(a) to a case in which an employee is subject to
rotating shifts. This rule is not intended as an opportunity to resolve
issues arising under individual facts and circumstances. However, the
Department views the text of section 1002.115(a), which requires an
employee to report back ``at the beginning of the first full regularly-
scheduled work period on the first full calendar day following the
completion of the period of service,'' as capable of resolving the
inquiry. Under this provision, an employee need not report back until
the beginning of the first full regularly scheduled work period,
whether the shift is conventional or rotating.
Two final commenters on this provision asked the Department to
clarify the application of USERRA's rules covering reporting back to
work following periods of service for less than 31 days in light of a
recent case from a Federal appeals court, Gordon v. WAWA, Inc., 388
F.3d 78 (3rd Cir. 2004). In Gordon, an employee returning from weekend
duty with the Army Reserve stopped by his workplace to collect his
paycheck and was allegedly ordered by the employer to return to work
before he had an opportunity to return home and rest. The employer
allegedly threatened Gordon with termination if he did not work the
upcoming shift. The employee apparently did not insist on his rest
period, and worked the upcoming (midnight) shift. He was not denied
reemployment. After working his shift, the employee suffered a fatal
automobile accident while driving home.
The court reviewed USERRA's legislative history, which demonstrates
Congressional intent that service members reporting back to their
civilian employment ``be allowed sufficient time to return to their
residence and be rested before they are to perform their work.'' 388
F.3d at 83, citing S. Rep. No. 103-158, at 50 (1993). However, the
court held that the time periods provided by USERRA in which a
returning service member must notify the pre-service employer of his or
her intent to return to work are obligations the service member must
meet to reclaim the pre-service job, not rights that can be enforced
under USERRA in cases where, as here, the person was in fact
reemployed. As a result, the court held that the statute's reporting-
back requirement, 38 U.S.C. 4312(e)(1), ``does not confer a right to
rest'' to a returning service member.
Although Gordon did not interpret USERRA to provide relief to an
employee allegedly injured by the employer's denial of the eight-hour
rest period, the Department's view is that the case does not interfere
with the eight-hour, 14-day, and 90-day rest/notification periods
allowed under USERRA. The facts in Gordon were unusual; the employer
reportedly threatened the employee with termination if he did not work
the upcoming shift, but the employee apparently did not insist on his
rest period, and was not denied reemployment. Consequently, the
employee was not denied his USERRA right to be reemployed.
Gordon also does not change the procedure that a service member
must follow to be entitled to reemployment rights. An employee must
report to the employer or apply for reemployment within the specified
time periods to be eligible for reemployment. If the employee is
required by the employer to report to work, or apply for reemployment,
earlier than is provided by USERRA, the employee should seek assistance
from VETS or seek relief in the courts to prevent the employer from
enforcing such a policy. A service member may not be required by an
employer to forego any portion of the applicable eight-hour, 14-day, or
90-day rest/notification period as a condition of reemployment.
Section 1002.115(b) and (c) set out the other time periods in which
an employee must report back to an employer. If the individual served
between 31 and 180 days, he or she must make an oral or written request
for reemployment no more than 14 days after completing service. If it
is impossible or unreasonable for the employee to apply within 14 days
through no fault of the employee, he or she must submit the application
not later than the ``next full calendar day after it becomes possible
to do so.'' The Department indicated in the proposed rule that it
understands the term ``next'' in the clause ``next first full calendar
day'' in section 4312(e)(1)(C) to be superfluous, and received one
comment agreeing with the position. Finally, if the individual served
more than 180 days, he or she must make an oral or written request for
reemployment no more than 90 days after completing service.
Section 1002.116 addresses the situation in which a service member
is unable to meet the foregoing timeframes due to the individual's
hospitalization for or convalescence from a service-related illness or
injury. Such a person must comply with the notification procedures
determined by the length of service, after the time period required for
the person's recovery. The recovery period may not exceed two years
unless circumstances beyond the individual's control make notification
within the required two-year period impossible or unreasonable.
The Department received two requests for guidance on section
1002.116 from one commenter. The commenter would like to know whether
the two-year period begins on the date of military discharge, on the
date the recovery period ends, or on the date the employee returns to
work, and how to apply the rule in a situation in which the returning
service member has already reported to the employer and a service-
related medical condition arises requiring absence from work. As to the
first issue, section 4312(e)(2)(A) of the statute states that a
``person who is hospitalized for, or convalescing from, an illness or
injury incurred in, or aggravated during, the performance of service in
the uniformed services shall, at the end of the period that is
necessary for the person to recover from such illness or injury, report
to the person's employer * * * or submit an application for
reemployment with such employer * * * [and] such period of recovery may
not exceed two years.'' The Department concludes, based on this
provision of USERRA, that the two-year recuperation period begins on
the date of completion of the service.
This represents a change from USERRA's predecessor law, under which
an employee with a service-related injury or illness could seek
reemployment within 90 days of the conclusion of a period of
hospitalization of not more than one year (a maximum of one year plus
90 days). USERRA's enactment extended the period for recuperation and
recovery from one year to two years, but did not allow any additional
time for application or reporting back after the end of the
recuperation period. USERRA's legislative history supports this reading
by indicating that if time were needed for recuperation and recovery,
the time for application or reporting back would be extended ``by up to
two years.'' See, e.g., S. Rep. No. 103-158, at 51 (1993) (USERRA
``provides for extending reemployment reporting or application dates
for up to two years.''); H.R. Rep. No. 103-65, Pt. I, at 29 (1993)
(USERRA extends the reporting deadlines ``by up to two years.'').
As a result, unless extended to accommodate circumstances beyond
the control of the employee that make
[[Page 75260]]
reporting within such period impossible or unreasonable, the entire
period between the date of completion of service and the date of
reporting to work or applying for reemployment can be no greater than
two years, and there is no longer an additional extension of 14 or 90
days for applying for reemployment at the end of the recuperation
period. However, because the recuperation period is coextensive with
the 14- or 90-day application period under USERRA, the service member
is entitled to whichever period is longer, but not both.
The second request for guidance on section 1002.116 asks whether
the provision of section 1002.116 applies in a situation in which the
returning service member has already reported to the employer and a
service-related medical condition arises, necessitating absence from
work. The Department concludes that the extension of time for
recuperation and recovery applies only to the period in which the
employee has to report back or apply for reemployment, and does not
apply after the person is reemployed. Although this conclusion does not
provide for cases in which service-related injuries or illnesses, such
as post-traumatic stress disorder or exposure to battlefield toxins,
become apparent only following reemployment, it is nevertheless
consistent with the unambiguous statutory language on this issue. The
Department has revised section 1002.116 to reflect this position.
Section 1002.117 covers the situation where the employee fails to
report or to submit a timely application for reemployment. Such failure
does not automatically divest the individual of his or her statutory
reemployment rights. See 38 U.S.C. 4312(e)(3). However, the employer
may subject the employee to the workplace rules, policies and practices
that ordinarily apply to an employee's unexcused absence from work.
Sections 1002.118 through 1002.123 establish procedures for
notifying the employer that the service member intends to return to
work. These sections also address the requirement that the returning
service member provide documentation to the employer in certain
instances. The documentation provides evidence that the service member
meets three of the basic requirements for reemployment: Timely
application for reinstatement, permissible duration of service, and
appropriate type of service discharge. USERRA expressly provides that
the Secretary may prescribe, by regulation, the documentation necessary
to demonstrate that a service member applying for employment or
reemployment meets these requirements.
The Department received two comments on section 1002.119 of the
proposed rule, which indicates to whom an employee must submit an
application for reemployment. The first commenter suggests that the
Department incorporate in this provision a statement that an employee
is ``encouraged, but not required, to notify [the employee's] human
resources officer and * * * supervisors as soon as practicable.'' The
second commenter suggests that the provision include a statement that
if a pre-service employer ``has an established channel for receiving
employment or reemployment applications, [an employee] should follow
that channel.'' The Department views both suggestions as ones that can
be construed as imposing on service members obligations not set forth
in the statute and, as a result, declines the proposals.
The Department received two comments on proposed section 1002.120,
which, as originally drafted, provided unconditionally that the service
member does not forfeit reemployment rights with one employer by
working for another employer after completing his or her military
service, as long as the service member complies with USERRA's
reinstatement procedures. The commenters suggested either deletion of
the provision entirely, or the placement of some limitations on the
right to seek alternative employment during the application period. One
commenter suggests that such limitations are required in cases in which
such alternative employment may violate the pre-service employer's
workplace policies, such as employment with a competitor of the pre-
service employer that violates an employer's policy against non-
competition, or employment that presents a conflict of interest for the
employee. The Department agrees with the comments, and has modified
this provision accordingly. Section 1002.120 now reflects that a
service member's alternative employment during the application period
must not violate the pre-service employer's employment policy to such a
degree that it constitutes just cause for discipline or termination by
the pre-service employer. The Department views this new language as
striking an appropriate balance between protecting the proprietary
interests of pre-service employers and providing flexibility for
employees to explore other post-service employment opportunities. In
addition, the modification comports with USERRA's provision protecting
reemployed service members from discharge for a certain period
following reemployment, except for ``cause.'' 38 U.S.C. 4316(c).
Section 4312(f) of USERRA describes the documentary evidence that
the service member must submit to the employer in order to establish
that the service member meets the statutory requirements for
reinstatement, and the rule implements these documentation requirements
at 1002.121 to .123. Section 1002.121 establishes that an individual
applying for reemployment who served more than 30 days in military
service must provide certain documentation upon the employer's request.
The documentation must establish that the individual's application is
timely; he or she has not exceeded the five-year service limitation;
and the type of separation from service does not disqualify the
individual from reemployment. Section 1002.122 provides that an
employer is required to reemploy a service member even if documentation
establishing the service member's reemployment eligibility does not
exist or is not readily available.
The Department received five comments on sections 1002.121 and
1002.122, each of which addresses a different aspect of the provisions.
One comment urged the Department to include language in section
1002.122 imposing an affirmative obligation on the employee to make a
``reasonable effort'' to secure the documentation, and assist the
employer in obtaining such documentation. Section 4312(f)(1) of USERRA
states that an employee applying for reinstatement ``shall provide to
the person's employer'' the requested documentation (emphasis
supplied). Section 1002.121 follows the directive of the statute and
similarly states that the employee ``must'' provide the documentation.
The Department concludes that adding the ``reasonable effort'' language
to the rule is redundant, and arguably diminishes the mandatory
directive of the statute. Furthermore, Department of Defense
regulations under USERRA obligate the military services to provide
documentation upon request by the service member ``that may be used to
satisfy the Service member's entitlement to statutory reemployment
rights and benefits.'' 32 CFR 104.6(l). The service branch is therefore
ultimately obligated to provide the documentation that the employee
requires in order to satisfy his or her own obligation to the employer.
The Department concludes that a service member seeking reemployment
will realistically make every effort to
[[Page 75261]]
obtain the documentation or assist the employer in doing so. However,
in difficult cases, the military services can assist employers.
Two comments regarding these provisions were very similar in their
suggested solutions to the situation in which documentation is
unavailable in a timely fashion. One comment suggested specific time
frames for the employee to provide the documentation, and both
suggested sanctions for failing to do so in a timely manner. The
suggestions included a three-step proposal that should apply to an
employee who is unable to produce documentation at the time he or she
applies for reemployment: First, the employer may require the employee
to execute an affidavit confirming the dates of service, and the
employer may terminate the employee if the information is later proven
incorrect; second, if the employee does not provide requested
documentation within a specific period (28 business days is suggested),
the employer may place him or her on unpaid leave; and third, if the
employee does not provide the documentation after a specific period of
unpaid leave (28 days is again suggested), the employer may terminate
him or her.
The Department concludes that the proposed change is inconsistent
with the statute and USERRA's general policy of eliminating obstacles
to prompt reemployment. Both section 1002.122 and the legislative
history of USERRA's section 4312(f) clearly establish that the employer
may not deny or delay reemployment if the requested documentation is
nonexistent or not ``readily available.'' H.R. Rep. No. 103-65, Pt. I,
at 29-30 (1993); S. Rep. No. 103-158, at 51 (1993). Requiring an
affidavit in lieu of documentation at the time of reemployment places
an additional condition on reemployment beyond the general obligation
to obtain the documentation. Furthermore, both sections 4312(f)(3)(A)
and 1002.122 permit an employer to terminate an employee only if the
documentation ultimately proves the employee was not eligible for
reemployment. Terminating the employee for failure to provide the
documentation after a prescribed period is inconsistent with the
statute.
The fourth comment suggests that 1002.122 be modified to state that
an employer may terminate an employee following reemployment if
documentation received after reemployment indicates that the employee
was not entitled to reemployment, ``unless the employer's policy, plan,
or practice provides otherwise under the circumstances.'' The
Department views the provision permitting an employer to terminate an
employee if documentation fails to support the employee's entitlement
to reemployment as permissive and not a mandatory directive. The
proposed addition neither enhances nor circumscribes the employer's
discretion on this subject, and is therefore unnecessary.
The final comment with respect to these provisions urged the
Department to require the employee to provide the documentation within
a reasonable time. The Department concludes that adoption of this
option imposes an additional obligation on the employee not
contemplated by the statute, particularly in those cases in which
delays in obtaining documentation following return from service may be
caused by the military unit and not by the employee. After considering
all the comments on these provisions, the Department has concluded that
it will retain them in unchanged form. See sections 1002.121 and
1002.122.
Character of Service
USERRA makes entitlement to reemployment benefits dependent on the
characterization of an individual's separation from the uniformed
service, or ``character of service.'' 38 U.S.C. 4304. The general
requirement is that the individual's service separation be under other
than dishonorable conditions. Section 1002.135 lists four grounds for
terminating the individual's reemployment rights based on character of
service: (i) Dishonorable or bad conduct discharge; (ii) ``other than
honorable'' discharge as characterized by the regulations of the
appropriate service Secretary; (iii) dismissal of a commissioned
officer by general court-martial or Presidential order during a war (10
U.S.C. 1161(a)); and, (iv) removal of a commissioned officer from the
rolls because of unauthorized absence from duty or imprisonment by a
civil authority (10 U.S.C. 1161(b)). 38 U.S.C. 4304(1)-(4). The
uniformed services determine the individual's character of service,
which is referenced on Defense Department Form 214. See section
1002.136. For USERRA purposes, Reservists who do not receive character
of service certificates are considered honorably separated; many short-
term tours of duty do not result in an official separation or the
issuance of a Form 214.
Sections 1002.137 and 1002.138 address the consequences of a
subsequent upgrading of an individual's disqualifying discharge.
Upgrades may be either retroactive or prospective in effect. An upgrade
with retroactive effect may reinstate the individual's reemployment
rights provided he or she otherwise meets the Act's eligibility
criteria, including having made timely application for reinstatement.
However, a retroactive upgrade does not restore entitlement to the back
pay and benefits attributable to the time period between the
individual's discharge and the upgrade.
The Department received two comments regarding the character-of-
service provisions. The meaning of the first comment was difficult to
discern, but appeared to be related to an obligation an employer might
have to pay back-wages to an employee who receives a retroactive
upgrade in the characterization of his or her service. Section 1002.137
expressly provides that in such a case an employer is not required to
pay back-wages for the period from the date of completion of service to
the date of the retroactive upgrade. The final commenter requests that
in the event a service member otherwise eligible for reemployment
receives an upgrade to the characterization of his or her service
months or even years later, the employer should enjoy some flexibility
in its obligation to reemploy. Because a person who receives a
retroactive upgrade and meets all other eligibility requirements is
eligible for reemployment, there is no basis for providing flexibility
regarding an employer's obligation to reemploy. However, such employers
may rely on the undue hardship or changed circumstances defenses, if
applicable. After considering all the comments on the character-of-
service provisions, the Department will retain them as originally
proposed. See sections 1002.137 and 1002.138.
Employer Statutory Defenses
USERRA provides three statutory defenses that an employer may
assert against a claim for USERRA benefits. The employer bears the
burden of proving any of these defenses. 38 U.S.C. 4312(d)(2)(A)-(C).
An employer is not required to reemploy a returning service member
if the employer's circumstances have so changed as to make such
reemployment impossible or unreasonable. 38 U.S.C. 4312(d)(1)(A). In
view of USERRA's remedial purposes, this exception must be narrowly
construed. The employer bears the burden of proving that changed
circumstances make it impossible or unreasonable to reemploy the
returning veteran. 38 U.S.C. 4312(d)(2)(A); proposed section 1002.139.
The change must be in the pre-service employer's circumstances,
[[Page 75262]]
as distinguished from the circumstances of its employees. For example,
the defense of changed circumstances is available where reemployment
would require the creation of a ``useless job or mandate reinstatement
where there has been a reduction in the workforce that reasonably would
have included the veteran.'' H.R. Rep. No. 103-65, Pt. I, at 25 (1993),
citing Watkins Motor Lines v. De Galliford, 167 F.2d 274, 275 (5th Cir.
1948); Davis v. Halifax County School System, 508 F. Supp. 966, 969
(E.D. N.C. 1981). However, an employer cannot establish that it is
unreasonable or impossible to reinstate the returning service member
solely by showing that no opening exists at the time of the
reemployment application or that another person was hired to fill the
position vacated by the veteran, even if reemploying the service member
would require terminating the employment of the replacement employee.
See Davis at 968; see also Cole v. Swint, 961 F.2d 58, 60 (5th Cir.
1992); Fitz v. Bd. of Education of Port Huron Area Schools, 662 F.
Supp. 1011, 1015 (E.D. Mich. 1985), aff'd, 802 F.2d 457 (6th Cir.
1986); Anthony v. Basic American Foods, Inc., 600 F. Supp. 352, 357
(N.D. Cal. 1984); Goggin v. Lincoln St. Louis, 702 F.2d 698, 704 (8th
Cir. 1983). Id.
An employer is also not required to reemploy a returning service
member if such reemployment would impose an undue hardship on the
employer. 38 U.S.C. 4312(d)(1)(B). As explained in USERRA's legislative
history, this defense only applies where a person is not qualified for
a position due to disability or other bona fide reason, after
reasonable efforts have been made by the employer to help the person
become qualified. H.R. Rep. No. 103-65, Pt. I, at 25 (1993). USERRA
defines ``undue hardship'' as actions taken by the employer requiring
significant difficulty or expense when considered in light of the
factors set out in 38 U.S.C. 4303(15). USERRA defines ``reasonable
efforts'' as ``actions, including training provided by an employer,
that do not place an undue hardship on the employer.'' 38 U.S.C.
4303(10). USERRA defines ``qualified'' in this context to mean having
the ability to perform the essential tasks of the position. 38 U.S.C.
4303(9). These definitions are set forth in sections 1002.5(n) (``undue
hardship''), 1002.5(i) (``reasonable efforts''), and 1002.5(h)
(``qualified'').
The third statutory defense against reemployment requires the
employer to establish that ``the employment from which the person
leaves to serve in the uniformed services is for a brief, nonrecurrent
period and there is no reasonable expectation that such employment will
continue indefinitely or for a significant period.'' 38 U.S.C.
4312(d)(1)(C), (2)(C). USERRA does not define ``significant period.''
Under both USERRA and its predecessor, the VRRA, a person holding a
seasonal job may have reemployment rights if there was a reasonable
expectation that the job would be available at the next season. See,
e.g., Stevens v. Tennessee Valley Authority, 687 F.2d 158, 161-62 (6th
Cir. 1982), and cases cited therein; S. Rep. No. 103-158, at 46-47
(1993).
The Department received three comments on section 1002.139, which
sets forth the employer's statutory defenses. Two of the comments
request the deletion of one or more of the statutory defenses from the
rule. Because these defenses are expressly provided in the statute, the
Department will retain them in the rule. The final comment requested
that this provision of the rule should express that the statutory
defenses are affirmative ones and that the employer carries the burden
to prove them by a preponderance of the evidence. Section 4312(d)(2)
expressly provides that the employer has the burden to prove its
statutory defenses, and it is appropriate for the rule to include this
statutory provision. Therefore, the rule has been modified accordingly.
See section 1002.139.
Subpart D--Rights, Benefits, and Obligations of Persons Absent From
Employment Due to Service in the Uniformed Services
Furlough or Leave of Absence
Sections 1002.149 and 1002.150 implement section 4316(b) of the
Act, which establishes the employee's general non-seniority based
rights and benefits while he or she is absent from the employment
position due to military service. 38 U.S.C. 4316(b). The employer is
required to treat the employee as if he or she is on furlough or leave
of absence. 38 U.S.C. 4316(b)(1)(A). The employee is entitled to non-
seniority employment rights and benefits that are available to any
other employee ``having similar seniority, status, and pay who [is] on
furlough or leave of absence. * * *'' 38 U.S.C. 4316(b)(1)(B). These
non-seniority rights and benefits may be provided ``under a contract,
agreement, policy, practice, or plan in effect at the commencement of
such service or established while such person performs such service.''
Id. For example, if the employer offers continued life insurance
coverage, holiday pay, bonuses, or other non-seniority 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. If the employer has more than one
kind of non-military 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. See
Waltermyer v. Aluminum Company of America, 804 F.2d 821 (3d Cir. 1986);
H.R. Rep. No. 103-65, Pt. I, at 33-34 (1993); Schmauch v. Honda of
America Manufacturing, Inc., 295 F. Supp. 2d 823 at 836-839 (S.D. Ohio
2003) (employer improperly treated jury duty more favorably than
military leave). The employee is entitled not only to the non-seniority
rights and benefits of workplace agreements, policies, and practices in
effect at the time he or she began the period of military service, but
also to those that came into effect during the period of service.
The Department also interprets section 4316(b) of the Act to mean
that an employee who is absent from a position of employment by reason
of service is not entitled to greater benefits than would be generally
provided to a similarly situated employee on non-military furlough or
leave of absence. See Sen. Rep. No. 103-158, at 58 (1993).
The Department invited comments as to whether its interpretation in
sections 1002.149 and 1002.150 best effectuates the purpose of section
4316(b). In response, the Department received six comments generally
addressing the provisions, and fifteen comments addressing specific
issues contained in the provisions. Of the general comments, three
expressed general support for the Department's interpretation in this
provision. A fourth general comment suggested that employers that are
contractors with the Federal government be required to provide to
employees on military leave any non-seniority rights and benefits
provided to Federal employees. The same commenter suggested that an
employer be required to provide to employees on military leave any non-
seniority rights and benefits provided to other employees under a
collective bargaining agreement. In response to each scenario, the
Department underscores that the statute requires that an employer
provide to employees on military leave those non-seniority employment
rights and benefits that are available to any other employee ``having
similar seniority, status, and pay who [is] on furlough or leave of
absence. * * *'' 38 U.S.C. 4316(b)(1)(B). The statement in the preamble
to the proposed rule that the ``Department also
[[Page 75263]]
does not interpret the second use of the term `seniority' in section
4316(b)(1)(B) as a limiting factor'' is inaccurate: for the purposes of
section 4316(b)(1)(B), the comparator must be employees of the employer
with similar seniority, status, and pay. Although a determination of
whether an employee is ``similarly situated'' under section 1002.150
includes consideration of seniority as well as status and pay, it is
not necessary for the seniority to be determined by a collective
bargaining agreement, nor does consideration of seniority in
determining whether an employee is ``similarly situated'' make the
benefit a seniority benefit for purposes of USERRA. The final general
comment suggested that the rule state that an employer does not violate
USERRA if it characterizes an employee on military leave as
``terminated'' for the purposes of its administrative systems. The
Department agrees that an employer's characterization, or mis-
characterization, of a service member's absence from employment is
unimportant so long as the employer is in full compliance with USERRA's
substantive requirements on this issue, but because the rule is
sufficiently clear on this point, the suggested modification is
unnecessary.
Of the specific comments received regarding these provisions, two
comments expressed agreement with the terms in section 1002.150 and the
remaining comments primarily addressed the mechanics of implementing
the provisions of section 1002.150. Four commenters requested that the
Department indicate whether vacation accrual is a seniority-or non-
seniority-based benefit. Three of the four comments take the position
that vacation accrual is not a seniority-based benefit; the fourth
simply seeks clarification of the issue. The regulations provide that a
particular right or benefit is seniority-based if it accrues with or is
determined by seniority, and depends primarily on whether the benefit
is a reward for length of service. See section 1002.212. Under this
construct, the Supreme Court has held that vacation accrual, rather
than being a perquisite of seniority, is a form of short-term
compensation for work performed. Foster v. Dravo, 420 U.S. 92 (1975).
Accordingly, the Department has long viewed the accrual of vacation
leave as a non-seniority based benefit and, because a significant
number of comments were received on this subject, has amended the text
of the rule to reflect this determination. See section 1002.150(c).
USERRA requires, and section 1002.150 reiterates, that an employee
on military leave must be accorded the non-seniority rights and
benefits generally provided by the employer to other employees with
similar seniority, pay, and status that are on furlough or leave of
absence based on ``employment contract, agreement, policy, practice, or
plan'' in effect at the workplace. 38 U.S.C. 4316(b)(1)(B); section
1002.150. The Department received one question asking whether non-
seniority benefits that are required by law, rather than by
``employment contract, agreement, policy, practice, or plan,'' to be
provided to employees on other types of leaves of absence must be
provided to employees on military leave. For instance, regulations
promulgated by the Department pursuant to the Family and Medical Leave
Act, 29 U.S.C. 2601 et seq. (FMLA), require that covered employers
extend to employees who have taken leave under the FMLA bonuses that do
not require performance by the employee but rather contemplate the
``absence of occurrences'' of some particular event. See 29 CFR
825.215(c)(2). For instance, under this provision, bonuses for perfect
attendance and for safety do not require performance by the employee
but rather contemplate the absence of occurrences, and an employee
absent from employment due to FMLA leave may not be disqualified from
the award of such bonuses because of taking FMLA leave. 29 CFR
825.215(c)(2). The commenter argues that if such bonuses are
contemplated by section 4316(b)(1)(B) of the statute, they may become
the ``most favorable treatment'' to which employees on military leave
are entitled.
USERRA's legislative history gives no unambiguous indication
whether Congress intended that non-seniority benefits required to be
provided by law to employees on other types of leaves of absence must
also be provided to employees on military leave. S. Rep. 103-158, at 58
(1993) (reemployed service member entitled to the ``agreements and
practices in force'' at the time of departure and the ``agreements and
practices which became effective'' during military service); H.R. Rep.
103-65, Pt. I, at 33 (1993) (service member entitled to ``whatever non-
seniority related benefits are accorded other employees on non-military
leaves of absence''). As a result, the Department is averse to
responding to the inquiry in a manner that establishes a rigid rule
regarding the application of non-seniority benefits established by law.
Rather, the Department views the issue as one that must be decided on a
case-by-case basis, and depends on the nature of the leave to which the
benefits apply, whether that leave is comparable, the nature of the
benefit mandated by other law, and the nature of the ``employment
contract, agreement, policy, practice, or plan'' that implements the
non-seniority benefit provisions of the other law.
The Department received seven comments regarding section
1002.150(b), which states that if non-seniority benefits to which
employees on other types of furlough or leave of absence vary according
to the type of leave, the employee on military leave must be given the
most favorable treatment accorded to employees on any comparable leave.
One commenter was in complete agreement with the provision, and a
second commenter requests that the Department designate what factors to
consider when assessing whether two types of leave are comparable. The
third commenter submitted that employees on military leave should be
afforded only those non-seniority-based benefits that are provided to
other employees on unpaid, long-term leaves of absence. Similarly, the
fourth commenter queried whether the voluntary provision of salary to
an employee during military leave altered the treatment of non-
seniority benefits, so that the employer must provide an employee on
military leave those non-seniority benefits provided to employees on
other types of paid leave. Three final commenters stated that section
the requirement in 1002.150(b) that employers provide to employees on
military leave the ``most favorable treatment'' accorded to employees
on comparable leave is confusing, exceeds the scope of the statutory
mandate, or both.
The plain language of the statute mandates that an employee on
military leave be granted non-seniority benefits afforded to
``employees having similar seniority, status, and pay who are on
furlough or leave of absence. * * *'' The requirement that an employee
on military leave must be given the ``most favorable treatment''
accorded to other employees on leave is based on legislative history
requiring that ``to the extent that employer policy or practice varies
among various types of non-military leaves of absence, the most
favorable treatment accorded any particular leave would also be
accorded the military leave. * * *'' H.R. Rep. 103-65, Pt. I, at 33
(1993), citing Waltermyer, 804 F.2d at 825, in which the court held
that the service member's leave for Reserve training was comparable to
other forms of leave to which benefits attached under the collective
bargaining agreement and,
[[Page 75264]]
therefore, the service member could not be afforded less favorable
treatment.
The Waltermyer court held that in providing non-seniority benefits
to employees on military leave, an employer cannot treat those
employees less favorably than other employees on comparable forms of
leave. In comparing types of employee leave, the court first assessed
the purpose of the collective bargaining agreement's provision
rewarding holiday pay to those employees that either worked during the
week of the holiday or were away from work for specified, non-military
reasons. The court found that the purpose of the benefit was to protect
against excessive absenteeism during the holiday week, and that the
collective bargaining agreement's exemption from the policy of certain
types of absence from work served to protect those employees who were
absent involuntarily. Therefore, the court found that because military
leave was similarly involuntary, it was comparable to other types of
involuntary absences from work and should be afforded the holiday pay.
Waltermyer, 804 F.2d at 825.
The Department recognizes that under the proposed rule, employers
may have had some difficulty in assessing whether one or more types of
leave are comparable for the purposes of this provision, and has
accordingly amended section 1002.150(b) to provide further guidance.
The additional text indicates that in determining whether any two types
of leave are comparable, the duration of the leave may be the most
significant factor to compare. For instance, a two-day funeral leave
will not be comparable to an extended military leave. The new language
also states that in addition to comparing the duration of the absences,
other factors such as the purpose of the leave and the ability of the
employee to choose when to take the leave should also be considered.
See section 1002.150(b). Finally, USERRA's legislative history
indicates that Congress intended that for the purposes of implementing
this provision, it is irrelevant whether the non-military leave is paid
or unpaid. See H.R. Rep. 103-65, Pt. I, at 33-34 (1993). Therefore,
contrary to the request of one commenter, the Department has declined
to include as a factor in determining the comparability of leave
whether the non-military leave is paid or unpaid.
The final comment regarding these provisions sought further
guidance on the provision of bonuses, for example, attendance bonuses
or performance bonuses, to employees on military leave. The provision
of employment benefits during military leave depends first on whether
the benefit is a seniority-based or non-seniority based benefit. As
noted above, a particular right or benefit is seniority-based if it
accrues with or is determined by seniority, and depends primarily on
whether the benefit is a reward for length of service. If a bonus is
based on seniority, it must be included in the escalator position and
provided upon reemployment. See sections 1002.191-1002.193. If a bonus
is non-seniority-based and is provided to similarly situated employees
on comparable non-military leave, it must be provided to employees on
military leave. Therefore, after considering all the comments
applicable to sections 1002.149 and 1002.150, the Department has made
revisions only with regard to the issues of leave comparability factors
and accrual of vacation leave. See section 1002.149 and 150.
Section 1002.152 addresses the circumstances under which an
employee waives entitlement to non-seniority based rights and benefits.
Section 4316(b)(2) of the Act provides that an employee who
``knowingly'' states in writing that he or she will not return to the
employment position after a tour of duty will lose certain rights and
benefits that are not determined by seniority. 38 U.S.C. 4316(b)(2).
The Department intends for principles of Federal common law pertaining
to a waiver of interest to apply in determining whether such notice is
effective in any given case. See Melton v. Melton, 324 F.3d 941, 945
(7th Cir. 2003); Smith v. Amedisys, Inc., 298 F.3d 434, 443 (5th Cir.
2002). By contrast, a notice given under 38 U.S.C. 4316(b)(2) does not
waive the employee's reemployment rights or seniority-based rights and
benefits upon reemployment.
The Department invited comments as to whether this interpretation
best effectuates the purpose of this provision, and received four
comments in response. Of these, three commenters requested that the
Department clarify what USERRA rights may be waived by an employee and
what USERRA rights are not susceptible to waiver. The final commenter
requested that the Department include in the text of the rule the legal
elements that must be met in order for a waiver to be effective.
Pursuant to section 4316(b)(2)(A) of USERRA, if an employee
provides to his or her employer a written notice that he or she intends
not to return to employment with the pre-service employer, the employee
has effectively waived any non-seniority based benefits to which he or
she is entitled under section 4316(b)(1) of the statute. Such waiver is
effective only with regard to the employee's non-seniority-based
rights, and will not pertain to the employee's right to reemployment.
For example, if prior to departure for military service, or during
military service, an employee sends his or her employer a letter that
states that the employee will not be returning to his or her pre-
service employment after military service, the employee may have waived
his or her entitlement to non-seniority based benefits, depending on
whether the elements of waiver have been met. However, if the same
employee changes his or her mind after sending the letter, and decides
that he or she will seek reemployment, the employee may do so, despite
having sent the letter. The right to reemployment, with all its
attendant rights, cannot be waived prior to or during military service.
See section 1002.88.
The fourth commenter addressing section 1002.152 requested the
Department include in the text of the rule the legal elements of waiver
of statutory rights. As noted above, whether an employee has
effectively waived a right protected by USERRA is to be determined by
application of Federal common law. The common law test is fact
intensive, and seeks to determine whether the employee's waiver is
explicit, knowing, voluntary, and uncoerced. Melton, 324 F.3d at 945;
Smith, 298 F.3d at 443. The statute provides the additional element
that the waiver must be in writing. 38 U.S.C. 4316(b)(2)(A)(ii).
Because the test is based in common law and is intended to provide a
flexible approach to the analysis of a wide variety of circumstances,
the Department is reluctant to establish the legal elements within the
text of the regulation. After considering all the comments applicable
to section 1002.152, the Department has retained the provision in
unchanged form. See section 1002.152.
Section 1002.153 clarifies that an employer may not require the
employee to use his or her accrued vacation, annual or similar leave to
cover any part of the period during which the employee is absent due to
military service. 38 U.S.C. 4316(d). The employee must be permitted
upon request to use any accrued vacation, annual or similar leave with
pay during the period of service. The employer may require the employee
to request permission to use such accrued leave. The proposed rule
stated that because sick leave is not comparable to vacation, annual or
similar types of leave, and its entitlement is generally conditioned on
the employee (or a family member) suffering an illness or receiving
medical
[[Page 75265]]
care, an employee is not entitled to use accrued sick leave solely to
continue his or her civilian pay during a period of service. The
Department received one comment that disagreed with the restriction on
use of accrued sick leave, arguing that the restriction is overly-
broad, particularly in cases in which an employer may permit the use of
sick leave for non-illness-related or non-injury-related absences. The
Department agrees with the comment, and has revised the provision
accordingly. See section 1002.153.
The Department received three additional comments on section
1002.153, one of which was generally supportive of the provision. An
additional comment regarding this provision asked that the Department
specify that an employer cannot require an employee to use accrued
annual leave while absent on military leave ``unless the employer's
policy requires use of leave as part of a pay differential program, and
the value of the forfeited leave is less than the value of the pay
provided by the employer.'' The Department must decline to include this
suggestion in the final rule because it does not comport with the
statutory language in section 4316(d), which states without condition
that ``[n]o employer may require any [employee on military leave] to
use vacation, annual, or similar leave during such period of service.''
38 U.S.C. 4316(d).
The final commenter regarding section 1002.153 seeks guidance on a
situation in which an employer switches an employee's days off so that
they coincide with the employee's obligation to participate in a
regular, monthly two-day military drill or similar military obligation.
This may be a hardship to the employee because he or she will lose
leisure time as a result of having to perform service obligations
during the scheduled time off. Because this comment does not concern
the use of accrued leave, it does not require modification of section
1002.153. However, the Department notes that such a scenario may
constitute a violation of USERRA's anti-discrimination provisions if
the employee successfully establishes the elements of a discrimination
case set forth in sections 1002.22 and 1002.23. USERRA prohibits the
denial of any ``benefit of employment'' on the basis of military
service obligations, see section 1002.18, and it bears emphasis in
response to this inquiry that USERRA includes an employee's
``opportunity to select work hours'' as a ``benefit of employment,''
see 38 U.S.C. 4303(2); section 1002.5(b)).
Health Plan Coverage
Section 4317 of USERRA provides that service members who leave work
to perform military service have the right to elect to continue their
existing employer-based health plan coverage for a period of time while
in the military. ``Health plan'' is defined to include an insurance
policy or contract, medical or hospital service agreement, membership
or subscription contract, or other arrangement under which health
services for individuals are provided, or the expenses of such services
are paid. 38 U.S.C. 4303(7); 1002.5(e). USERRA's health plan provisions
are similar but not identical to the continuation of health coverage
provisions added to Federal law by the Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA). As with COBRA, the Act permits the
continuation of employment-based coverage. Unlike COBRA, USERRA's
continuation coverage is available without regard to either the size of
the employer's workforce or to whether the employer is a government
entity. As with every other right and benefit guaranteed by USERRA, the
employer is free to provide continuation health plan coverage that
exceeds that which is required by USERRA.
Section 4317 also requires that the employee and eligible
dependents must, upon the service member's reemployment, be reinstated
in the employer's health plan without a waiting period or exclusion
that would not have been imposed had coverage not been suspended or
terminated due to service in the uniformed services. The employee need
not elect to continue health plan coverage during a period of uniformed
service in order to be entitled to reinstatement in the plan upon
reemployment. Section 4317 of USERRA is the exclusive source in USERRA
of service members' rights with respect to the health plan coverage
they receive in connection with their employment. Section 4317
therefore controls the entitlement of a person to coverage under a
health plan, and supersedes more general provisions of USERRA dealing
with rights and benefits of service members who are absent from
employment. See 38 U.S.C. 4316(b)(5). Sections 1002.163 through
1002.171 of this rule implement USERRA's health plan provisions.
As an initial matter, the Department received several comments
questioning the interaction of USERRA's health plan provisions with
other Federal laws governing health plans. One commenter in particular
requested that the Department provide a general statement in the final
rule that an employee's rights under USERRA are protected and
preserved, and USERRA will not be violated, where a health plan follows
existing plan procedures concerning elections and re-enrollment that
are in compliance with the Internal Revenue Code (IRC), the Employee
Retirement Income Security Act (ERISA, 29 U.S.C. 1001, et. seq.) and
the Health Insurance Portability and Accountability Act (HIPAA, Pub. L.
104-191 (1996)). USERRA contains requirements that may be different
from requirements established under other statutes, and compliance with
those laws does not necessarily indicate full compliance with USERRA.
In addition, providing guidance related directly to the provisions of
the IRC, ERISA and HIPAA is beyond the scope of these regulations.
However, as stated earlier, the Internal Revenue Service (IRS) and the
Department of the Treasury have indicated that a health or pension plan
will be deemed not to be in conflict with the applicable IRC
requirements merely because of compliance with USERRA or its
regulations.
Similarly, the Department received three comments seeking
clarification of the relationship between USERRA and so-called
``cafeteria'' plans established pursuant to section 125 of the IRC. 26
U.S.C. 125. Generally, ``cafeteria'' plans allow employees to pay for
certain benefits, including health benefits, using pre-tax dollars.
With respect to health benefits, an employee may be allowed to pay for
health plan premiums on a pre-tax basis or to pay for health care
expenses not covered by insurance, such as deductibles or co-payments,
through a health flexible spending arrangement (health FSA) using pre-
tax dollars. Such plans qualify as health plans under USERRA because,
as noted in the definition discussed above, they are an ``arrangement
under which * * * expenses of [health] services are paid.'' See 38
U.S.C. 4303(7); section 1002.5(e). Accordingly, these plans must comply
with the statute's continuation and reinstatement provisions. See 38
U.S.C. 4317. In cases in which cafeteria plans provide for health FSAs,
it may be advantageous for an employee who is absent from employment
due to military service to elect continuation coverage until amounts
allocated to the health FSA are used. The IRS and the Department of the
Treasury have indicated that an amount will not be treated as violating
the cafeteria plan rules because a plan provides for a new election
either upon leaving employment for military service or subsequent
reemployment.
[[Page 75266]]
In a final inquiry about USERRA's relationship to other Federal
laws governing health plans, one comment requested clarification of
whether an employee who elected continuation coverage under USERRA but
did not return to the pre-service employer would then be eligible for
COBRA coverage. Because this involves the interpretation of COBRA, not
USERRA, it is beyond the scope of these regulations.
Under USERRA, the term ``employer'' is defined broadly to cover
entities, such as insurance companies or third party plan
administrators, to which employer responsibilities such as
administering employee benefit plans or deciding benefit claims have
been delegated. 38 U.S.C. 4303(4); section 1002.5(d). The Department
received two comments concerning the definition of ``employer'' and
potential liability of third-party health plan administrators under
USERRA. Of these, one commenter requested the final rule specify that
plan administrators that perform employment-related functions on behalf
of the employer be excluded from the definition of ``employer.'' The
other commenter requested the final rule clarify that a plan
administrator or a plan is liable under USERRA only when the delegation
of employment-related responsibilities is made through a written
agreement with the employer. The Department declines to adopt either of
these recommendations. As noted in above in Subpart A, Introduction to
the Regulations Under USERRA, the statute is clear that an entity to
which an employer has delegated employment-related responsibilities is
to be considered an ``employer'' for USERRA purposes and does not
condition this application upon the existence of a written agreement.
See 38 U.S.C. 4303(4)(A)(i). However, the Department has amended the
definition of employer in section 1002.5 to clarify that those third-
party entities that perform purely ministerial functions at the request
of an employer will not be considered ``employers'' for the purpose of
determining USERRA liability. An example of a purely ministerial
function would be maintaining an employer's personnel files. The
examples provided in the revised section are not intended to be an
exclusive list but rather are offered only as illustrations. See
section 1002.5(d)(1)(i).
Because USERRA's continuation coverage and reinstatement provisions
only apply to health plan coverage that is provided in connection with
a position of employment, coverage obtained by an individual through a
professional association, club or other organization would not be
governed by USERRA, nor would health plan coverage obtained under
another family member's policy or separately obtained by an individual.
The Department received two comments concerning the application of
USERRA's continuing coverage and health plan reinstatement provisions
to cases in which the dependent of a person receiving employer-based
health plan coverage leaves to perform service in the uniformed
services and both commenters sought the application of USERRA's right
to continuing coverage for those dependents. In a similar vein, a third
comment contended that retirees covered by their former employer's
health plan who leave to perform military service should not be
entitled to USERRA continuing coverage. USERRA's continuing coverage
and reinstatement provisions are employment-based, and apply only in
cases in which the service member has coverage under a health plan in
connection with the service member's position of employment. 38 U.S.C.
4317(a)(1). As a result, where the service member is a dependent of the
covered employee or the service member is a retiree, USERRA's
continuing coverage and reinstatement provisions would not apply
because the coverage is not in connection with his or her position of
employment. The regulation implements this statutory mandate and, as a
result, no change is mandated in response to the comments. The
Department notes, however, that while dependents and retirees who are
service members are not covered by USERRA's continuing coverage
provisions, such persons may be entitled to reinstatement of health
plan coverage following periods of certain types of military service
under the provisions of the Servicemembers Civil Relief Act (SCRA). See
50 U.S.C. App. 594. The Department does not interpret the SCRA, but
notes that, in general, attorneys or other experts in the military
services may provide technical assistance on its provisions.
The Department also received comments about the application of
USERRA's health plan election provisions to dependents of service
members receiving employment-based health coverage. Two commenters
sought the establishment in the final rule of a separate right for
dependents to elect or waive continuation coverage, arguing that this
is necessary to avoid any sudden termination of civilian health plan
coverage for dependents if the service member declines or fails to
elect continuing coverage. Furthermore, the commenters state, such
termination may be in conflict with a custody or child support
agreement or court order. USERRA provides that individuals who are
absent from employment to perform military service have the right to
elect to continue employer-provided health plan coverage for themselves
and their dependents. 38 U.S.C. 4317(a)(1). There is no provision in
USERRA for a separate election for dependents. As a result, the
Department concludes that such a modification is not compelled by the
statute. However, as discussed below, Section 1002.165 of the rule
provides plan administrators with the flexibility necessary to
establish a comprehensive schedule of notice, election and waiver
procedures, if they choose to do so.
Section 1002.164 of the rule, which addresses the length of time
the service member is entitled to continuing health plan coverage,
reflects a recent amendment to USERRA. Congress amended the statute in
December, 2004, with passage of the Veterans Benefits Improvement Act
(VBIA, Pub. L. 108-454). As a result, 38 U.S.C. 4317(a)(1)(A), and
section 1002.164 now provide that the maximum period of continued
coverage is the lesser of 24 months or the period of military service
(beginning on the date the absence begins and ending on the day after
the service member fails to apply for reemployment).
As noted above, section 1002.165 provides that plan administrators
and fiduciaries may develop reasonable requirements and operating
procedures for the election of continuing coverage, consistent with
USERRA and the terms of the plan. Such procedures must take into
consideration the requirement in USERRA section 4312(b) that where
military necessity prevents the service member from giving the employer
notice that he or she is leaving for military duty, or where giving
such notice would be impossible or unreasonable, plan requirements may
not be imposed to deny the service member continuation coverage. The
Department invited comments as to whether this approach--allowing
health plan administrators latitude to develop reasonable requirements
for employees to elect continuation coverage--best effectuates the
purpose of the statute. As an alternative to this flexibility, the
Department requested comments on whether these regulations should
establish a date certain by which time continuing health plan coverage
must be elected.
The provision in section 1002.165 that health plan administrators
may establish reasonable rules that govern an
[[Page 75267]]
employee's election of continuation coverage, and the alternative
question of whether the final rule should establish specific deadlines
within which such elections must be made, received more comments than
any other health plan issue. Six commenters, including America's Health
Insurance Plans, ORC Worldwide, Equal Employment Advisory Council,
Society for Human Resources, and U.S. Chamber of Commerce, generally
favored the flexibility provided in the proposed rule, while nine
commenters, including the Society of Professional Benefit Advisors,
National Association of Employment Lawyers, WorldatWork, Illinois
Credit Union League, TOC Management Services, National School Boards
Association, and three law firms, requested more regulatory
specificity. Most of the nine comments suggested that the final USERRA
rule contain provisions identical to or substantially the same as those
provided in COBRA, which establishes specific timeframes within which
the employer must notify the employee of his or her COBRA rights,
followed by a specific time within which the person must make an
election to accept or decline continuation coverage. See 26 U.S.C.
4980B(f). One commenter in particular captured the essence of those
comments seeking the imposition of COBRA rules, arguing that the
Department's uniform adoption of COBRA rules and timeframes would avoid
disputes over what constitutes a ``reasonable'' rule. Several
additional commenters suggested that the adoption of COBRA rules and
timeframes would ease a plan's administration of USERRA's requirements.
In response to those comments requesting the imposition of COBRA-
like timeframes for notice and election, the Department notes that it
is generally averse to imposing on employers covered by USERRA
relatively inflexible rules such as those established under COBRA. Such
rules may unduly burden many smaller employers that are covered by
USERRA but are not covered by COBRA. The Department views each
individual plan as best qualified to determine what election rules are
reasonable based on its own unique set of characteristics, and
therefore declines to amend section 1002.165 in this manner. However,
under the USERRA rule, plans themselves are permitted to adopt
reasonable rules, and, depending on a particular plan's circumstances,
these may include COBRA timeframes.
However, the Department has decided to amend the election
provisions in response to comments seeking a revision to those
provisions for other reasons. Several commenters suggested that the
Department should adopt specific rules and timeframes for election of
continuing coverage because establishing a time certain by which an
election must be made would help employers avoid paying premiums for
employees who do not want continuation coverage but have failed to
advise their employer of this fact. In addition, the Department
received five comments regarding the provision in section 1002.165
stating that service members must be provided continuing coverage if
their untimely election was excused because it was impossible or
unreasonable, or precluded by military necessity. These commenters
shared the concern that employers may be required to pay premiums for
employees who do not want continuation coverage but have failed to
advise their employer of this fact.
After considering these comments, the Department has added a new
section 1002.167, and sequentially renumbered the succeeding health
plan provisions,\1\ to permit an employer to cancel the employee's
health insurance if the employee departs work for military service
without electing continuing coverage, with a requirement for
retroactive reinstatement under certain circumstances. See 1002.167.
For instance, new section 1002.167(a) provides that in cases in which
an employee's failure to give advance notice of service was excused
under the statute because it was impossible, unreasonable, or precluded
by military necessity, the employer will be required to retroactively
provide continuing coverage during the period of service if the
employee elects and pays all unpaid amounts due for the coverage, and
the employee must not incur administrative reinstatement costs. Id.
This is consistent with the statute's provision regarding excusal for
failure to provide notice to the employer of service, which states that
an employee is excused from giving advance notice of impending military
service in cases where the giving of notice is precluded by military
necessity or is otherwise impossible or unreasonable under the
circumstances. See 38 U.S.C. 4312(b)(1); section 1002.86.
---------------------------------------------------------------------------
\1\ The insertion of new section 1002.167 requires the
sequential renumbering of proposed sections 1002.167, 1002.168, and
1002.169, resulting in the contents of proposed section 1002.167
being found in final rule section 1002.168, and so on. In discussing
these sections below, the Department will use the new section
numbers to refer to the sections as proposed. As an aid, the initial
reference to provisions 1002.168, 1002.169, and 1002.170 will
include a single reminder that the discussion involves the content
of the provision as it was proposed.
---------------------------------------------------------------------------
New section 1002.167(b) addresses those cases in which an employee
leaves employment for uniformed service in excess of 30 days and
provides advance notice of the military service but does not elect
continuing coverage. In such cases, a plan administrator that has
developed reasonable rules regarding the election of continuing
coverage may cancel the employee's health plan coverage but must
reinstate it upon the employee's election and full payment within the
time periods established by the plan, without the imposition of
administrative reinstatement costs. Alternatively, a plan administrator
that has not developed rules regarding the election of continuing
coverage may cancel the employee's health plan coverage but must
reinstate it upon the employee's election and full payment within the
time periods established under section 1002.164(a), also without the
imposition of administrative reinstatement costs. See section
1002.167(b).
Section 1002.166 implements USERRA section 4317(a)(2), which
provides that a service member who elects to continue employer-provided
health plan coverage may be required to pay no more than 102 percent of
the full premium (the employee's share plus the employer's share) for
such coverage, except that service members who perform service for
fewer than 31 days may not be required to pay more than the employee
share, if any, for such coverage. The legislative history of USERRA
indicates that the purpose of these provisions, and in particular the
requirement that service members pay only the employee share for
coverage during service lasting fewer than 31 days, is to ensure that
there is no gap in health insurance coverage for the service member's
family during a short period of service. Dependents of Reserve
Component members are entitled to participate in the military health
care system, called TRICARE, only if the period of service exceeds 30
days. See H.R. Rep. No. 103-65, Pt. 1, at 34 (1993). USERRA does not
provide specific guidance concerning the timing of payments for
continuation coverage and the termination of coverage for failure to
make payments, and section 1002.166(c) of the proposed rule provided
that plan administrators may develop reasonable procedures for payment,
consistent with the plan's terms.
The Department received four comments concerning section 1002.166.
One commenter queried whether the payment obligation began at the
[[Page 75268]]
beginning of the period of coverage or 31 days after the beginning of
the continuation coverage. The statute states that an employee who
elects continuation coverage may be required to pay no more than the
employee share if the coverage pertains to service of less than 31
days, and may be required to pay no more than 102% of the full premium
under the plan if the coverage pertains to service of 31 days or more.
In either case, the payment obligation begins on the first day of the
continuation coverage.
The three additional comments regarding section 1002.166 sought
more guidance concerning payment for continuation coverage and the
plan's entitlement to cancel coverage for non-election or non-payment.
Of these, one recommended that the final rule adopt COBRA guidelines
for payment and termination for non-payment. Another commenter
suggested that the rule include a provision that the use of COBRA-
compliant forms and procedures is reasonable under USERRA. In addition,
as noted in the discussion of section 1002.165 above, absent any
affirmative provisions in the rule regarding the ability of employers
to cancel employee coverage during military leave, employers and plan
administrators noted that they would have to bear the entire cost of
continuing coverage when the employee leaves employment without
electing continuing coverage.
After considering these comments, the Department has added a
provision to new section 1002.167 that establishes that plans may
develop reasonable rules to permit termination of coverage if an
employee elects but does not pay for continuation coverage. In
addition, new section 1002.167(c) provides that in cases where plans
are covered by COBRA, it may be reasonable to adopt COBRA rules
concerning election and payments so long as the plan complies with all
related provisions of USERRA and these regulations. See section
1002.167(c).
Section 1002.168 (proposed section 1002.167) explains the right of
a reemployed service member to reinstatement of coverage in a health
plan if coverage has been terminated as a result of his or her failure
to elect continuation coverage, or length of service. At the time of
reemployment, no exclusion or waiting period may be imposed where one
would not have been imposed if the coverage of the service member had
not terminated as a result of service in the uniformed services. This
provision also applies to the coverage of any other person who is
covered under the service member's policy, such as a dependent.
Injuries or illnesses determined by the Secretary of Veterans' Affairs
to have been incurred in or aggravated during the performance of
service in the uniformed services are excluded from the ban on
exclusions and waiting periods; however, the service member and any
dependents must be reinstated as to all other medical conditions
covered by the plan.
The Department received eight comments related to section 1002.168.
Of these, three comments concerned issues addressed in relation to
other provisions, and are covered elsewhere in this section of the
preamble. One commenter requested the Department include in the rule a
definition of ``prompt reinstatement'' in connection with this
provision. Section 1002.168 provides for prompt reinstatement upon
reemployment generally without the imposition of any waiting periods or
exclusions, thus making further clarification unnecessary. The same
commenter requested the rule state that the failure to promptly
reinstate the health coverage as required by this section is evidence
of discrimination in violation of section 4311 of USERRA. While the
Department is disinclined to include such a far-reaching generalization
in this context, the Department reiterates that the denial of any
benefit of employment that is motivated by an employee's status or
activity protected by USERRA is a violation of the statute's anti-
discrimination provisions. See 38 U.S.C. 4311(c); sections 1002.18-
1002.23.
Two commenters expressed concern that if an insurance carrier
imposes an exclusion or waiting period upon a returning employee in
violation of section 4317(b) of USERRA, implemented by section
1002.168(a), the employer could be liable for funding health claims
that should have been paid by the insurance carrier. The commenters
suggested that reinstatement be limited to those circumstances in which
coverage is available through the plan's insurance carrier or, in the
alternative, that the employer should not be liable for insurer's
practices that violate USERRA. Section 4317(b) of USERRA requires
reinstatement of employer-provided insurance upon reemployment, and
section 1002.168(a) makes no exceptions to that reinstatement
requirement other than the limited exceptions contained in 4317(b)
itself. The additional exceptions proposed by the commentators are not
appropriate, because they would reduce the protections provided by
USERRA. Employers that utilize third-party insurance plans to provide
health coverage for employees are obliged to negotiate coverage that is
compliant with USERRA to avoid possible liability for failure to
properly reinstate coverage upon reemployment. In this context,
USERRA's legislative history suggests there are circumstances in which
an insurance company could be considered an employer under USERRA and
could not ``refuse to modify their policies in order for employer's
(sic) to comply with [Section 4317 of USERRA].'' S. Rep. No. 103-158,
at 42 (1993).
One commenter recommended that section 1002.168 provide that
reinstatement of health plan coverage must be immediate, even in cases
where the employer is unable to immediately reemploy the returning
employee for reasons permitted under the statute. USERRA requires
prompt, but not necessarily immediate, reemployment. See section
1002.181. The statute requires reinstatement of health plan coverage
``upon reemployment,'' not upon application for reemployment. See 38
U.S.C. 4317(b)(1). Therefore, an employer must reinstate coverage upon
the employee's prompt reemployment, and the Department declines to
adopt the commenter's suggestion.
Section 1002.169 (proposed section 1002.168) provides that where a
returning employee chooses to delay reinstatement of health plan
coverage for a period of time following reemployment, the employer may
allow the delay but is not required by USERRA to do so. The requirement
to reinstate health plan coverage without the imposition of exclusions
or waiting periods (except for service-connected conditions and
exclusions or waiting periods that would have been imposed had coverage
not been terminated as the result of military service) exists only upon
reemployment, not later. The Department also sought comments on whether
the rule should provide that a service member be permitted to delay
electing continuation health plan coverage under some circumstances. In
addition, in a case where health plan coverage was terminated or
suspended by reason of military service, if the employee is permitted
to delay reinstatement to the health plan for a period of time after
the date of reemployment, the Department invited comments as to whether
such delayed reinstatement coverage should be subject to an exclusion
or waiting period. See 38 U.S.C. 4317(b)(1).
The Department received six comments in response. Of these, one
commenter recommended the final rule provide that where the employee
chooses to delay reinstatement of health plan coverage to a time after
[[Page 75269]]
reemployment, the employer must reinstate the coverage immediately with
no exclusions or waiting periods. Another commenter suggested allowing
a reemployed service member the same amount of time to elect
reinstatement in the health plan as the employer allows newly hired
employees to choose to enroll in the plan, and such period of time
would vary from employer to employer. Another commenter proposed that
if an employee elects to delay reinstatement in the health plan, the
employer should be permitted to impose exclusions or waiting periods.
Two commenters noted that various rules under other statutes such as
HIPAA and the IRC might affect the ability of the employer to
immediately reinstate the coverage for an employee who chooses to wait
until some time after reemployment to request reinstatement of the
coverage. The final commenter suggested the rule provide that an
employer should treat an employee who chooses to delay health plan
reinstatement until some time following reemployment the same as it
treats other similarly situated employees who are returning from a
leave of absence where health plan coverage was interrupted.
After reviewing these comments, the Department maintains its
original position that an employer may, but is not required to,
reinstate an employee's health plan coverage if the employee chooses to
delay reinstatement following his or her reemployment under USERRA.
This interpretation is consistent with the statute's requirement that
reinstatement of health coverage must be made ``upon reemployment,''
and restores a service member to the position he or she would have been
in if there had been no absence from work for military service.
Although the provision does not mandate that an employer permit an
employee to delay reinstatement at the employee's option, the provision
balances the interests of both employers and employees, and provides
sufficient flexibility for both.
Section 1002.170 (proposed section 1002.169) deals with special
rules governing multiemployer health plans. Generally, under USERRA, if
the employer cancels health plan coverage for its employees while the
service member is performing service, or if the employer goes out of
business, the service member's coverage terminates also. USERRA's
treatment of multiemployer health plans provides an exception to this
result. Section 1002.170 requires continued health plan coverage in a
multiemployer plan even when the service member's employer no longer
exists, or no longer participates in the plan. Any liability under the
multiemployer plan for employer contributions and benefits under USERRA
is to be allocated as provided by the sponsor maintaining the plan. If
the sponsor does not provide for an allocation of responsibility, the
liability is allocated to the last employer employing the person before
the period of uniformed service. Where that employer is no longer
functional, the liability is allocated to the plan.
The Department received three comments from the multiemployer plan
community concerning the application of USERRA to those types of health
plans referred to variously as ``credit bank,'' ``dollar bank'' or
``hour bank'' plans. This type of plan (``bank'' plan) is typically
provided by a multiemployer plan, particularly in industries where
employment may be sporadic or seasonal. ``Bank'' plans establish
accounts in which employees save prospective health benefits credits
that may be spent later, and typically use a lag period system for
accumulating credits for eligibility and coverage. For example, work
performed by an employee in January could result in credit to the
employee's health benefits bank account in February that will result in
eligibility to use the credits in March. If under the terms of a
``bank'' plan an employee must work 150 hours to have coverage for a
month and the employee works 200 hours, the 50 hours in excess of the
amount required for coverage is credited to the employee in a ``bank''
for future use. The hours from the ``bank'' can be used by the employee
to provide health plan coverage for months when the employee does not
work.
The comments received concerning ``bank'' plans requested that the
Department provide guidance as to whether an employee should be allowed
to deplete the balance of ``banked'' credits during a period of service
in the uniformed services. The commenters indicated that USERRA's
requirement of immediate reinstatement in a health plan upon
reemployment may require the plan to fund the health coverage of a
person that had depleted the ``banked'' hours during service and
therefore lacked the credits necessary to initiate or resume coverage
upon reemployment. After considering these comments, the Department has
added new section 1002.171 to provide that a ``bank'' plan may permit
an employee to deplete ``banked'' credits in order to continue coverage
at no cost to the employee so long as the plan provides for
reinstatement of the coverage upon reemployment. The plan may require
the employee to pay the full cost of the reinstated coverage until the
employee has earned enough credits after reemployment to resume normal
coverage. In addition, if the ``banked'' credits are depleted during
the applicable eligibility period, the employee must be permitted at
his or her option to pay for continuation coverage for the balance of
the period. Alternatively, the plan may permit an employee to
``freeze'' existing credits when leaving to perform military service,
pay for continuation coverage as provided for in section 1002.166, and
then restore those credits intact upon reemployment. The employer
should counsel the employee about these options and the consequences of
selecting one or the other. See new section 1002.171.
Finally, one commenter expressed concern that the effective dates
for coverage under USERRA and COBRA are different in the case of
``bank'' plans, and recommended that the rule be amended to adopt the
COBRA standard so that the two periods are consistent. The commenter
states that under COBRA, the continuation coverage would not begin
until any ``banked'' credits are depleted, whereas under USERRA the
continuation coverage begins upon the person's departure from
employment to perform military service. The Department declines to
modify the effective date for continuation coverage under USERRA
because it is mandated by statute. See 38 U.S.C. 4317(a)(1).
In addition to the changes made in response to the comments, the
Department made technical corrections to two health plan provisions.
First, subsection (b) of section 1002.168 (proposed section 1002.167),
which referenced reinstatement procedures applicable to multiemployer
plans in proposed section 1002.169, was deleted, and the subsequent
subsection was re-lettered accordingly, because proposed section
1002.169 did not discuss reinstatement procedures. Second, section
1002.170 (proposed section 1002.169) was revised to more closely track
section 4317(a)(3) of the statute.
Subpart E--Reemployment Rights and Benefits
Prompt Reemployment
One of the stated purposes of USERRA is ``to minimize the
disruption to the lives of persons performing service in the uniformed
services * * * by providing for [their] prompt reemployment.'' 38
U.S.C. 4301(a)(2). Section 4313 requires that a returning service
member who meets the eligibility requirements of section 4312 be
``promptly reemployed'' in the
[[Page 75270]]
appropriate position. 38 U.S.C. 4313(a). The circumstances of each
individual case will determine the meaning of ``prompt.'' See H.R. Rep.
No. 103-65, Pt. I, at 32 (1993); S. Rep. No. 103-158, at 54 (1993).
Section 1002.181 provides guidance for the ``prompt'' reinstatement of
returning service members. The regulation states, as a general rule,
that the employer shall reinstate the employee as soon as practicable
under the circumstances. Reinstatement must occur within two weeks
after he or she applies for reemployment ``absent unusual
circumstances.'' The reasonableness of any delay depends on a variety
of factors, including, for example, the length of the service member's
absence or intervening changes in the circumstances of the employer's
business. An employer does not have the right to delay or deny
reemployment because the employer filled the service member's pre-
service position and no comparable position is vacant, or because a
hiring freeze is in effect. Moreover, prompt reemployment should be
required even in cases in which re-training or re-certification is
mandated by law, because the obligation to reemploy in those
circumstances may be met by reemployment to a comparable position while
re-training or re-certification is sought. Finally, if the period of
service is less than 31 days, then the statute requires that the
returning employee simply report back to work; these regulations
require that such a person will be immediately reemployed.
The Department invited comments as to whether allowing the employer
two weeks to reemploy the service member returning from a period of
service of more than 30 days best effectuates the purpose of this
provision of USERRA. In response, the Department received nine
comments, which include three comments that agreed with the two-week
reemployment period, three comments that recommended the Department
enlarge the reemployment period to 30 days, particularly in those cases
following long periods of military service, and two comments seeking
guidance regarding those circumstances in which the two-week period may
be excused. Finally, one commenter, concerned that the regulation can
be misread to permit employer discretion to take up to two weeks to
reemploy an employee absent for a period of service of less than 31
days, seeks inclusion in the text of this provision a mandate requiring
reemployment the next day following the completion of service.
After reviewing these comments, the Department has concluded that
it will retain section 1002.181 as it was proposed. The Department has
considered the advantages and disadvantages associated with altering
the two-week reemployment period, and has concluded that two weeks
represents an equitable balance between the interests of employers, who
may face some challenges in reemploying an employee in the
organizational structure after a lengthy period of absence, and the
interests of employees, who have been making the greatest of sacrifices
in service to their country. In addition, employers unduly burdened by
the two week reemployment period may rely on the ``unusual
circumstances'' exception to reemployment within two weeks, although it
is the Department's view that these exceptions should be narrowly drawn
and will be relatively rare. An example of ``unusual circumstances''
would be where a service member seeks reemployment with his or her
employer, who, apart from the service member, employs only one current
employee. The current employee is near the end of a highly complex,
months-long project, which is due to be completed just four weeks from
the point at which the service member makes an application for
reemployment. The employer is prepared to comply with its obligation to
reemploy the returning service member, and will have work for him or
her following the completion of the current project in four weeks, but
cannot reemploy the returning employee until that time. Under these
unusual circumstances, the employer would not be expected to reemploy
its employee within two weeks. Finally, in response to the comment
above seeking more clarity in the provision regarding prompt
reemployment following brief periods of service, the Department notes
that section 1002.181 already states that ``prompt reemployment''
following brief periods of service ``generally means the next regularly
scheduled work day.'' See section 1002.181.
Reemployment Position
In construing an early precursor statute to USERRA, the Selective
Training and Service Act of 1940, 50 U.S.C. Appendix, 308(b, c), the
Supreme Court recognized a basic principle in the early reemployment
protections provided for veterans, which was to become a bedrock
concept of all subsequent veterans reemployment legislation. Thus, in
Fishgold v. Sullivan Drydock and Repair Corp., 328 U.S. 275, 284-85
(1946), the Supreme Court stated that the returning service member
``does not step back on the seniority escalator at the point he stepped
off. He steps back on at the precise point he would have occupied had
he kept his position continuously during the war.'' Id. Fishgold
principally involved the issue of a veteran's seniority; however, the
principle applies with equal force to all aspects of the service
member's return to the work force. The returning service member
therefore should be restored to ``a position which, on the moving
escalator of terms and conditions affecting that particular [pre-
service] employment, would be comparable to the position which he would
have held if he had remained continuously in his civilian employment.''
Oakley v. Louisville & Nashville R.R., 338 U.S. 278, 283 (1949). The
position to which the returning service member should be restored has
become known as the ``escalator position.'' The requirement that the
service member be reemployed in the escalator position is codified in
section 4313 of USERRA. 38 U.S.C. 4313.
Sections 1002.191 and 1002.192 implement general principles related
to a returning veteran's right to reemployment in this escalator
position. Sections 1002.193, 1002.194 and 1002.195 clarify that
seniority, status, pay, length of service, and service-related
disability may affect the service member's reemployment position.
Sections 1002.196 and 1002.197 explain the employer's obligations to
reemploy the service member based on the duration of the person's
absence from the workplace. Section 1002.198 describes the criteria to
be followed by the employer in making reasonable efforts to enable the
service member to qualify for the reemployment position. Finally,
section 1002.199 provides guidance for employers in determining the
priority of two or more service members who are eligible for the same
employment position.
The Department received several comments from employers and
employer associations inquiring about the application of the escalator
position to six particular circumstances: employers who use bidding
systems for job assignments; the use of promotions based on an
employer's discretion; reductions in force, layoffs, and disciplinary
procedures; bargaining units on strike at time of reemployment;
apprenticeships; and probationary periods. The Department will provide
guidance on each of these cases in turn.
Bidding Systems: Many employers, for example, employers in the
airline and railroad industries, use seniority-based bidding systems to
award jobs and other perquisites of employment to their employees. The
Equal Employment Advisory Council (EEAC) submitted a
[[Page 75271]]
comment asking how the escalator principle should apply to a returning
service member seeking reemployment when the employer has a seniority-
based bidding system in place. The EEAC proposed that the Department
create an exception to the escalator principle, so that service members
returning to a reemployment position in which they have missed an
opportunity to bid on a particular job or other perquisite are not
entitled to recover that missed opportunity: ``The final regulations
should provide a temporary exception for employers that have a
legitimate, bona fide bidding system in place. Where jobs, shifts, and/
or locations are opened to employee bid frequently, e.g. every 120
days, returning employees could be slotted in accordance with the
employer's operational needs (but with full escalator pay and benefits)
until the next regularly occurring bid.''
USERRA's intent is to ensure that returning service members are
accorded the status, pay and benefits to which they are entitled had
they not served in the uniformed services, generally without exception.
In its administrative enforcement of the Act, the Department has long
interpreted the statute and its predecessor to require that a returning
service member should be awarded a job or other perquisite of
employment if it is reasonably certain that the service member would
have received it but for the interruption due to military service. See
Veterans' Reemployment Rights Handbook at 13-4 (1988); sections
1002.191, 1002.193, 1002.213, 1002.214; 1002.236. This approach
comports with the statute and its legislative history governing the
nature of the reemployment position. The Department concludes that, as
a general matter, a reemployed employee should not be required to wait
for the next regularly occurring opportunity to bid in order to seek
promotions and other benefits tied to the ``escalator'' position.
Discretionary Promotions: The EEAC suggests that in the case of
promotions based on employer discretion, section 1002.192 requires
employers ``to speculate whether a returning employee would have (1)
sought the promotion in the first instance and (2) have been chosen
over the successful candidate. * * * Section 1002.192 [should state]
that: Your escalator position would not include a promotion based on
discretionary factors.'' Similarly, a large human resources consulting
firm submitted that ``[b]ecause most employees are promoted based on
demonstrated ability and experience, rather than length of service, the
escalator principle cannot operate even-handedly for all employees. The
escalator principle is appropriate only in workforces where pay
increases and promotions occur automatically (e.g. according to
collective bargaining agreements or tenure tracks,) rather than for
achievement or merit.''
Under the statute and case law, a returning service member is
entitled to a promotion upon reemployment if there is a reasonable
certainty that the employee would have been promoted absent military
service. Coffy v. Republic Steel, 447 U.S. 191, 197-98 (1980); Goggin
v. Lincoln St. Louis, 702 F.2d 698, 701 (8th Cir. 1983). The statute's
legislative history similarly states that returning service members are
entitled to whatever position it is reasonably certain the employee
would have attained but for the military service. H.R. Rep. No. 103-65,
Pt. I, at 39 (1993). However, case law and longstanding Departmental
policy are clear that if the promotion depends ``not simply on
seniority or some other form of automatic progression but on an
exercise of discretion on the part of the employer,'' the returning
service member may not be entitled to the promotion. McKinney v. The
Missouri-Kansas-Texas Railroad Company, 357 U.S. 265 (1958); Veterans'
Reemployment Rights Handbook at 10-2 (``distinction must be made
between those benefits which are largely dependent upon length of
service, and thus are perquisites of seniority, and those benefits
which are largely dependent upon management discretion. * * * A
reemployed veteran claiming a right to a promotion or other benefit
allegedly missed during military service must demonstrate that it was
reasonably certain that he would have received the benefit if he had
remained continuously employed.'')
Sections 1002.191 and 1002.192 advances these principles, and
incorporates the reasonable certainty test as it applies to
discretionary and non-discretionary promotions. In addition, it is
consistent with the case law because it does not rely on the label
associated with particular personnel actions, e.g., ``discretionary
promotions,'' or ``seniority-based promotions,'' and the analysis
instead focuses on whether a personnel action was ``reasonably
certain.'' The final rule promotes the application of a case-by-case
analysis rather than a rule that could result in the unwarranted denial
of promotions to returning service members based on how the promotion
was labeled rather than whether or not it was ``reasonably certain.''
Reductions in Force (RIFs), Layoffs, and Disciplined Employees: An
individual submitted a comment asking that the final rule ``explicitly
address layoffs, RIFs and, most significantly, disciplinary actions
including removal/discharge actions which were interrupted by the
employee's service.'' Regarding reductions-in-force and layoffs,
section 1002.42 establishes that employees that are laid off with
recall rights may be entitled to reemployment upon return if the
employer would have recalled the employee but for the military service.
This section also notes that similar principles apply in other cases in
which an employee may be absent from work at the onset of military
leave or upon return from service, such as in cases in which the
employee is on non-military leave when activated.
In the event that a returning employee was subject to a
disciplinary review at the time of the onset of service, or in the
event that the employer discovers conduct prior to reemployment that
may subject the returning service member to disciplinary review upon
reemployment, the Department concludes that the employer retains the
reemployment obligation in such cases. However, the employer may resume
the disciplinary review upon reemployment at the point at which it was
left at the time of the onset of military service, or may initiate such
review based on conduct discovered prior to reemployment. The
Department has long interpreted the statute to prohibit an employer
from denying reemployment rights on the basis that the employee would
have been discharged had he or she not left for military service.
Veterans' Reemployment Rights Handbook at 8-1 (1988). However, the
Department recognizes that there may be some instances in which the
returning employee may be legitimately subject to an employer's
disciplinary review following reemployment. In these circumstances, the
employer retains the obligation to reemploy the service member, thus
giving rise to USERRA's prohibition of discharge following reemployment
for one year except for just cause in section 4316(c), and serving to
ensure that any post-service discipline or discharge will be
justifiable, legitimate, and not pretextual. See also section 1002.247
and 1002.248.
Employee Bargaining Unit on Strike: The Department received one
comment seeking further clarification on the determination of the
escalator position when the returning service member's bargaining unit
is or has been on strike. As section 1002.42 indicates, an employee in
this situation remains an employee for purposes of reemployment
[[Page 75272]]
rights governed by USERRA. However, employers and employees should be
aware that the employee's reemployment rights may be affected by
Federal labor law under the National Labor Relations Act, 29 U.S.C.
141, et seq. (NLRA), which includes decisional law under the NLRA
governing reinstatement rights of workers engaged in a work stoppage.
Apprenticeships and Probationary Periods: The Building and
Construction Trades Department of the AFL-CIO argues that an employer
should not be required to reemploy a returning service member who was
part of a bona fide apprenticeship program on the escalator position
with an advanced pay rate until the employee takes a test or undergoes
a skills evaluation upon which the advanced rate is contingent.
Similarly, the National School Board Association (NSBA) takes the
position that a teacher's time away on military leave should not be
counted towards a teacher's completion of a probationary period. The
NSBA argues that the probationary period for a teacher is a time for
the employer to observe and evaluate the teacher as well as a time to
train the teacher, and urges the Department to determine that the
probationary period for teachers is akin to a skills test and returning
service members should still be required to complete the probationary
period before attaining a tenured post probationary period.
With regard to apprenticeships and the escalator position, the
Department has long held that if the apprentice position is bona fide
and not merely a time-in-grade requirement, the returning service
member should be restored as an apprentice at a level that reflects
both the experience and training he or she received pre-service. Upon
completion of the apprenticeship post-service, the employee should be
entitled to ``journeyman'' seniority plus any seniority that would have
accrued during military service had the journeyman status been attained
during the period of uniformed service. See Veterans' Reemployment
Rights Handbook at 11-3. Similarly, the Department has long held that
if a probationary period is a bona fide period of observation and
evaluation, the returning service member must complete the remaining
period of probation upon reemployment. See Veteran's Reemployment
Rights Handbook at 3-6, 3-7, 13-11 (1988). Therefore, the Department
concludes that if an employee who left employment for military service
was in the midst of a bona fide apprenticeship program or probationary
period that required actual training and/or observation in the
positions, rather than merely time served in the position, the employee
should be allowed to complete the apprenticeship or probationary period
following reemployment. Once the employee completes the apprenticeship
or probationary period, the employee's pay and seniority should reflect
both the pre- and post-service time in the apprenticeship or
probationary period, plus the time served in the military.
In some workplaces, where opportunities for promotion are
conditioned upon the employee passing a skills test or examination,
determining the escalator position will require administering a makeup
promotional exam. If a reemployed service member was eligible to take
such a promotional exam and missed it while performing military
service, the employer should provide the employee with an opportunity
to take the missed exam after a reasonable period of time to acclimate
to the employment position. See, e.g., Fink v. City of New York, 129
F.Supp.2d 511, 519 (S.D.N.Y. 2001). In some cases, success on a
promotional exam entitles an employee to an immediate promotion, and in
some cases it entitles an employee only to a particular placement on an
eligibility list. If the reemployed employee is successful on the
makeup exam, and there is a reasonable certainty that, given the
results of that exam, the reemployed employee would have been promoted
during the time he or she was in military service, then the reemployed
employee's promotion must be made effective as of the date it would
have occurred had the employment not been interrupted by military
service. Similarly, if the reemployed employee is successful on the
makeup exam, and there is a reasonable certainty that, given the
results of that exam, the reemployed employee would have been placed in
a particular position on an eligibility list during the time he or she
was in military service, then the reemployed employee's placement on
the list must be made effective as of the date it would have occurred
had the employment not been interrupted by military service. This
requirement is similar to the requirement in section 1002.236, that
obliges an employer to give a reemployed employee, after a reasonable
amount of time to adjust to the reemployment position, a missed skills
test or examination that is the basis of a merit pay increase. Section
1002.193 implements these requirements.
The Department invited comment as to whether this interpretation
best effectuates the purpose of this provision, or whether the issue of
promotional exams requires more detailed treatment in these
regulations. The Department received six comments in response, several
of which were generally supportive of the provision. The Society for
Human Resources Management (SHRM) and WorldatWork expressed overall
support for the requirements of the provision. Two commenters, the
National Employment Lawyers Association and ORC Worldwide, a management
consulting firm, seek more guidance on the provision, in particular, on
the length of time that an employer reasonably permits an employee to
adjust to the employment position before administering a makeup exam.
Two commenters, EEAC and one representing a municipal government, argue
that the provision is unworkable because it is impossible to accurately
predict a returning service member's retroactive placement on the
escalator having given him or her a makeup exam.
Section 1002.193 is consistent with the general principles
regarding the application of the escalator provision, which require
that a service member receive a missed promotion upon reemployment if
there is a reasonable certainty that the promotion would have been
granted. McKinney v. Missouri-Kansas-Texas R.R. Co., 357 U.S. 265. 274
(1958); Tilton v. Missouri Pacific R.R. Co., 376 U.S. 169, 177 (1964).
In addition, recent USERRA case law dealing precisely with the issue of
missed promotional exams also supports this provision of the rule. Fink
v. City of New York, 129 F.Supp.2d 511, 519-20 (E.D.N.Y. 2001). In that
case, the court affirmed the jury award in favor of a fire marshall who
missed a promotional exam because of his military service, holding that
there was enough evidence for the jury to conclude that the plaintiff's
military status was a motivating factor in the decision to deny him a
promptly administered promotional exam upon reemployment. Id. at 520.
As the court stated, ``the employer must sometimes treat [service
members] differently from other employees in order to assure that they
receive the same benefits as their coworkers. Thus, * * * where a
neutral employment policy provides that a promotional exam shall only
be administered on a particular date to all employees, it may
constitute discrimination to refuse to allow veterans away on leave on
the date in question to take a make-up exam upon their return from
service.'' Id. at 519.
[[Page 75273]]
Accordingly, section 1002.193 requires an employer to administer
its otherwise neutral evaluative employment practices in a manner that
affords a returning service member the opportunity, after a reasonable
period of time for adjustment, to participate in or meet the standards
of that practice. As with apprenticeship systems and probationary
periods addressed above, upon successfully meeting the evaluative
standards, the employee's reemployment position should be adjusted
based on the prior date he or she would have completed the process had
he or she not entered military service. Regarding the question of what
amount of time is reasonable to permit an employee to adjust, the
Department has revised section 1002.193 to reflect that no fixed time
will be deemed a reasonable amount of time in all cases. However, in
determining a reasonable time to schedule a makeup exam, employers
should take into account a variety of factors, including but not
limited to, the length of time the returning employee was absent from
work, the level of difficulty of the test itself, the typical time
necessary to prepare or study for the test, the duties and
responsibilities of the reemployment position and the promotional
position, and the nature and responsibilities of the service member
while serving in the uniformed service. See section 1002.193.
The Department received two additional comments regarding
promotions and the escalator position. The first commenter suggests
that the rule require employers to permit employee access to all
personnel records so that returning service members will be fully
informed of missed promotional opportunities. The Department is without
authority in the statute to require such a result. Finally, the
Department declines to adopt the suggestion of one commenter that
suggests the provision should state its applicability to cross-
departmental promotions within an organization because it is ambiguous.
Depending on the circumstances, section 4313 of USERRA either
permits or requires the employer to reemploy a returning service member
in a position with equivalent (or the nearest approximation to
``equivalent'') seniority, status and pay to the escalator or pre-
service position. 38 U.S.C. 4313(a)(2)(A), (B), (3)(A), (B). Although
``seniority'' and ``pay'' are generally well-understood terms, USERRA
does not define ``status'' as it is used in section 4313 of the Act.
Case law interpreting VRRA, a precursor to USERRA, recognized status as
encompassing a broader array of rights than either seniority or pay.
Job status varies from position to position, but generally refers to
the incidents or attributes attached to, and inherent in, a particular
job. The term often includes the rank or responsibility of the
position, its duties, location, working conditions, and the pay and
seniority rights attached to the position. See H.R. Rep. No. 103-65,
Pt. I, at p. 31 (1993); Duarte v. Agilent Technologies, Inc., 366
F.Supp.2d 1039, 1045 (D.Colo. 2005). Examples of status may be the
exclusive right to a sales territory; the opportunity to advance in a
position; eligibility for possible election to a position with the
employee representative organization; greater availability of work
where piece rates apply; the opportunity to work additional hours and
to advance in a job; the opportunity to withdraw from a union; the
opportunity to obtain a license; or, the opportunity to work a
particular shift. The facts and circumstances surrounding the position
determine whether a specific attribute is part of the position's status
for USERRA purposes. Sections 1002.193 and .194 implement these
provisions of the Act.
The Department received one comment regarding proposed section
1002.194, which establishes the principle that the escalator principle
may result in adverse consequences upon reemployment. The proposed
section stated that depending on an employee's circumstances, his or
her ``seniority rank'' may cause reemployment in a higher or lower
position, laid off, or even terminated. The commenter correctly
suggests that there are ``escalator-based'' factors other than
seniority, such as job location, job classification, or shift
assignment, which may affect the reemployment position. The Department
agrees that the first two sentences of the provision are too narrowly
drawn, although the latter portion of the provision accurately captures
the issue. Accordingly, the Department has made the necessary revision.
See section 1002.194.
The statute makes the duration of a returning employee's period of
service a critical factor in determining the reemployment position to
which the employee is entitled upon return from service. After service
of 90 days or less, the person is entitled to reinstatement in the
position of employment in which he or she would have been employed if
not for the interruption in employment due to uniformed service (the
escalator position). 38 U.S.C. 4313(a)(1)(A). The employer must make
reasonable efforts to assist the individual in becoming qualified for
the reemployment position. In the event the returning employee cannot
become qualified for the escalator position despite reasonable efforts
by the employer, the returning employee is entitled to the employment
position in which he or she was employed on the date that the period of
service commenced. 38 U.S.C. 4313(a)(1)(B). These requirements are
implemented in section 1002.196. The Department received one comment on
this provision, requesting that it include the definition of
``escalator position.'' ``Escalator position'' is defined in section
1002.192, and consequently it is not necessary to define it in section
1002.196.
The service member returning from a period of service longer than
90 days is similarly entitled to reemployment in the escalator
position, but, at the employer's option, may also be reinstated in any
position for which the employee is qualified with the same seniority,
status, and pay as the escalator position. 38 U.S.C. 4313(a)(2)(A).
This statutory option is intended to provide the employer with a degree
of flexibility in meeting its reemployment obligations. As with an
employee returning from a shorter period of service, the employer must
first make reasonable efforts to qualify the individual for the
escalator position or for the position of like seniority, status, and
pay. In the event the returning employee cannot become qualified for
one of these positions despite reasonable employer efforts, the person
is entitled to the employment position in which he or she was employed
on the date that the period of service commenced, or a position of like
seniority, status, and pay. 38 U.S.C. 4313(a)(2)(B). These requirements
are implemented in section 1002.197.
In some instances, the service member may not be able to qualify
for either the escalator position or the pre-service position (or a
position similar in seniority, status, and pay to either of these
positions) despite reasonable employer efforts. In such an event, the
employee is entitled to be reemployed in any other position that is the
nearest approximation to the escalator position. If there is no such
position for which the returning service member is qualified, he or she
is entitled to reemployment in any other position that is the nearest
approximation to the pre-service position. In either event, the
returning service member must be reemployed with full seniority. 38
U.S.C. 4313(a)(4). This requirement is implemented by sections
1002.196(c) and .197(c).
The Department received one comment regarding section 1002.197,
which sought an amendment to permit
[[Page 75274]]
employers to reemploy employees in lesser positions temporarily, while
employers ``find a position of appropriate status.'' The Department
declines the suggestion. The priority of positions established in
section 1002.197 is based on priorities set by statute, 38 U.S.C
4313(a)(2). Moreover, such an amendment would conflict with the
statute's requirement that service members must be promptly reemployed,
see section 1002.181, in the escalator position, see section 1002.192.
Section 1002.197 reflects that a position other than the escalator
position may be used only in those cases in which the service member is
not qualified to perform the duties of the escalator position.
Notwithstanding the escalator principle, USERRA does not require an
employer to reinstate a returning service member in an employment
position if he or she is not qualified to perform the civilian job. See
section 1002.198. USERRA defines ``qualified'' as ``having the ability
to perform the essential tasks of the position.'' 38 U.S.C. 4303(9).
The Department understands the statutory term ``qualify'' in 38 U.S.C.
4313 to include the employer's affirmative obligation to make
reasonable efforts to assist the returning employee in acquiring the
ability to perform the essential tasks of the reemployment position.
This understanding is reflected in the language used in the
regulations. The Department requested comments on whether this
interpretation is proper, and received only two comments, both of which
agreed with the interpretation.
An individual's performance qualifications are a function of his or
her ability to perform the ``essential tasks'' of the employment
position. This regulation provides guidelines for determining whether a
given task is essential for proper performance of the position. In
general, whether a task is essential for a position will depend on its
relationship to the actual performance requirements of the position
rather than, for example, the criteria enumerated in a job description.
An employer may not decline to rehire a returning service member simply
because he or she is unable to do some auxiliary, but nonessential,
parts of the job.
The Department invited comments as to whether this interpretation
best effectuates the purpose of this provision, and received seven
comments in response. Four of the seven suggested, for reasons of
consistency, that the USERRA rule adopt the definition of ``essential
functions'' from the regulations promulgated under the Americans with
Disabilities Act (ADA), 42 U.S.C 12101, et seq. See 29 CFR 1630.2(n).
The ADA defines a ``qualified individual with a disability'' as an
individual with a disability who, with or without reasonable
accommodation, can perform the essential functions of the employment
position the individual holds or desires. 42 U.S.C. 12111(8). The ADA
regulations define ``essential functions'' generally as ``the
fundamental job duties of the employment position * * *. The term * * *
does not include the marginal functions of the position.'' 29 CFR
1630.2(n)(1).
The ADA regulation lists a number of factors that could render a
job function ``essential,'' including: (1) The position exists to
perform the function; (2) there are a limited number of employees
available among whom performance of the job function can be
distributed; and/or (3) the function is highly specialized so the
incumbent is hired for his or her expertise or ability to perform the
function. 29 CFR 1630.2(n)(2). The ADA regulation provides examples of
``evidence of whether a particular function is essential,'' including:
(1) The employer's judgment as to which functions are essential; (2)
written job descriptions developed before the hiring process begins;
(3) the amount of time on the job spent performing the function; (4)
the consequences of not requiring the individual to perform the
function; (5) the terms of a collective bargaining agreement; (6) the
work experience of past incumbents in the job; and/or (7) the current
work experience of incumbents in similar jobs. 29 CFR 1630.2(n)(3).
After considering all these comments, the Department has revised
section 1002.198 to adopt the regulatory definition of ``essential
functions'' under the ADA. Many of the ``essential tasks'' listed in
proposed section 1002.198 were similar to those listed in the ADA's
``essential functions'' regulation. USERRA's legislative history does
not address whether ``essential tasks'' is akin to or different from
the ADA's ``essential functions.'' However, a number of ADA cases use
the term ``tasks'' interchangeably with ``functions.'' See Allen v.
Pacific Bell, 348 F.3d 1113, 1114-15 (9th Cir. 2003); Byrne v. Avon
Prods. Inc., 328 F.3d 379, 381 (7th Cir.), cert. denied, 540 U.S. 881
(2003); Kvorjak v. Maine, 259 F.3d 48, 55 (1st Cir. 2001); Reed v. Heil
Co., 206 F.3d 1055, 1057, 1062-63 (11th Cir. 2000). Accordingly, in
order to provide employers and employees with some regulatory
consistency, the Department is making the suggested revision. See
section 1002.198(a)(2).
The remaining commenters on section 1002.198 made a variety of
suggestions: one comment noted that the listing of essential tasks
reads as if it were exhaustive, and suggested that it instead be
revised so that it is non-exhaustive; one comment noted that the use of
the word ``and'' between the penultimate and the last listed items
suggests that all listed items must apply to a particular task in order
for the task to be essential, and recommended using ``and/or'' instead,
as does the ADA essential functions regulation; one comment objected to
the provision's distinction between actual performance requirements and
the criteria enumerated in a job description; one comment objected to
the discussion of the listed items as ``factors'' because it thought
that this suggested that all of the listed terms had to be considered,
and suggested that the list should be written instead in terms of what
would be evidence that a task is essential; the same comment also
stated that the list should include a number of other items, including:
(1) The business consequences of an employee's inability to perform a
task, and not merely the safety consequences; (2) consideration of
written job descriptions prepared before the issue of the employee's
reemployment arose as evidence that the employer considered the task to
be essential; (3) the work experience of other employees in the same or
similar positions because the job may have changed in the employee's
absence; and (4) a statement that performing the job under certain
conditions could be essential, such as interacting with others,
environmental extremes, attendance, etc. After considering these
comments, the Department has revised the list in section 1002.198 to
reflect that it is not exhaustive. These factors and other relevant
circumstances may be employed to ascertain whether a task is essential
to the performance of a particular position. See section
1002.198(a)(2).
Section 1002.198 also describes the employer's obligation to assist
a service member returning for reemployment in becoming qualified for a
civilian position. USERRA requires the employer to make reasonable
efforts to enable the returning service member to qualify for a
position that he or she would be entitled to if qualified. Section
4303(10) defines ``reasonable efforts'' as ``actions, including
training provided by an employer, that do not place an undue hardship
on the employer.'' 38 U.S.C. 4303(10); section 1002.5(i). Section
4303(15) defines ``undue hardship'' as ``actions [taken by an employer]
[[Page 75275]]
requiring significant difficulty or expense, when considered in light
of * * * the overall financial resources of the employer'' and several
other stated factors. 38 U.S.C. 4303(15); section 1002.5(n). Depending
upon an employer's size and resources, a given level of effort might be
an undue hardship for one employer and yet reasonable for another. The
employer has the burden of proving that the training, retraining, or
other efforts to enable the returning employee to qualify would impose
an undue hardship. The rule describes the criteria that apply in
determining whether the steps for aiding the service member in becoming
qualified impose an undue hardship on the employer.
The Department received five comments regarding an employer's
obligation to make reasonable efforts to qualify returning service
members in becoming qualified for the reemployment position. Of these,
one comment generally agreed with the Department's approach. The second
comment suggested that the employer's obligations should be reduced by
placing limits on the training an employer must provide to assist a
returning employee. The Department concludes that section 1002.198
appropriately reflects the statute's intent, and reiterates that
employers that are unduly burdened by this obligation may rely on the
``undue hardship'' defense to reemployment. See section 1002.139(b).
Two comments regarding section 1002.198 were submitted by one
commenter, who requested that the provision be amended to reflect both
that an employer's qualification efforts include any training necessary
to update a returning employee's skills if the employee is no longer
qualified to perform the job due to technological advances, and to
reflect that an employer must permit an employee a sufficient amount of
time to become qualified. The Department concludes that the commenter's
suggestions are covered by section 1002.5(i), which defines an
employer's ``reasonable efforts,'' and includes those actions,
including training provided by an employer, that do not place an undue
hardship on the employer.
The final commenter on section 1002.198 suggested corrections to
references to the regulatory definitions of ``reasonable efforts''
supplied in subsection (b) of the provision, and the Department has
made the corrections.
Section 1002.199 implements USERRA section 4313(b), which governs
the priority of reemploying two (or more) service members who are
entitled to reemployment in the same position. 38 U.S.C. 4313(b). The
individual who first vacated the employment position for military
service has the highest priority for reemployment. 38 U.S.C.
4313(b)(1). If this priority means another returning service member is
denied reemployment in that position, the USERRA rules that give
reemployment options to the employer would govern the reemployment of
the second person. Thus, the second service member is entitled to ``any
other position'' offering status and pay similar to the denied position
according to the statutory rules generally applicable to returning
service members. 38 U.S.C. 4313(b)(2)(A). A disabled service member in
this situation would be entitled to any other position offering status
and pay similar to the denied position according to the rules governing
disabled service members. 38 U.S.C. 4313(b)(2)(B).
Seniority Rights and Benefits
Section 4316(a) provides that a reemployed service member is
entitled to ``the seniority and other rights and benefits determined by
seniority'' that the service member had attained as of the date he or
she entered the service, together with the additional seniority he or
she would have attained if continuously employed during the period of
service. 38 U.S.C. 4316(a). As with the principles governing the
determination of the reemployment position, this provision reflects the
escalator principle. As applied to seniority rights under section
4316(a), the escalator principle entitles the returning service member
to the ``same seniority and other rights and benefits determined by
seniority that [the service member] would have attained if [his or her]
employment had not been interrupted by service in the uniformed
services.'' S. Rep. No. 103-158, at 57 (1993); see also H.R. Rep. No.
103-65, Pt. I, at 33 (1993). Section 1002.210 states the basic
escalator principle as it applies to seniority and seniority-based
rights and benefits. It bears emphasis here that the escalator
principle is outcome-neutral in terms of the effect of restoring the
service member's seniority. For example, the application of the
principle does not offer protection against adverse job consequences
that result from placing the service member in his or her proper
position on the seniority escalator. Finally, this section explains
that the rights and benefits protected by USERRA upon reemployment
include those provided by employers and those required by statute, such
as the right to leave under the Family and Medical Leave Act of 1993,
29 U.S.C. 2601 et seq. (FMLA). Accordingly, a reemployed service member
would be eligible for FMLA leave if the number of months and the number
of hours of work for which the service member was employed by the
civilian employer, together with the number of months and number of
hours of work for which the service member would have been employed by
the civilian employer during the period of military service, meet
FMLA's eligibility requirements.
The Department received two questions regarding the application of
USERRA's seniority provisions to rights under the FMLA. The Equal
Employment Advisory Council contended that allowing time spent on
military leave to count when determining FMLA eligibility contradicts
the definition of ``service'' under the FMLA regulations, and suggested
its deletion or a revision consistent with the FMLA regulations. In
2002, the Department issued guidance from VETS, the Wage and Hour
Division, which administers and enforces the FMLA, and the Solicitor of
Labor, concluding that the time and hours an employee would have worked
but for his or her military service should be combined with the time
employed and the hours actually worked to meet the eligibility criteria
of the FMLA. See Memorandum of July 22, 2002, Protection of Uniformed
Service Member's Rights to Family and Medical Leave at http://www.dol.gov/vets/media/fmlarights.pdf.
The Department determined that:
Under USERRA, a person who is reemployed is entitled to the
rights and benefits he (or she) would have attained if he had
remained continuously employed. [Footnote omitted.] The ``rights and
benefits'' protected by USERRA include those provided by employers
and those required by statute, such as the right to leave under the
FMLA. Accordingly, a returning service member would be entitled to
FMLA leave if the hours that he or she would have worked for the
civilian employer during the period of military service would have
met the FMLA eligibility threshold. Therefore, in determining
whether a veteran meets the FMLA eligibility requirement, the months
employed and the hours that were actually worked for the civilian
employer should be combined with the months and hours that would
have been worked during the twelve months prior to the start of the
leave requested but for the military service.
The Department has read the two statutes in harmony, so that
neither is made ineffective, and so that reemployed service members are
not denied family leave to which they would otherwise be entitled but
for their uniformed service. See, e.g., Pittsburgh & Lake Erie Railroad
Company v.
[[Page 75276]]
Railway Labor Executives' Association, 491 U.S. 490, 510 (1989) (when
two statutes are capable of coexistence, the two should be construed,
absent clearly expressed Congressional intention to the contrary, to
regard each as effective). Therefore, the Department has retained
section 1002.210's inclusion of rights protected under the FMLA, except
that it has clarified that in the event that a service member is denied
FMLA leave for failing to satisfy the FMLA's hours of work requirement
due to absence from employment necessitated by military service, the
service member may have a cause of action under USERRA but not under
the FMLA. See section 1002.210.
The Department received one comment from a human resources firm
requesting further guidance on the computation, for FMLA purposes, of
hours a service member would have worked but for military service.
Because of the variables involved with each employer and each employee,
the Department is unable to provide detailed guidance in this
regulation in response to the inquiry. However, employers should
develop reasonable methods for computation of hours that would have
been worked but for the military service. The guidance provided in
section 1002.267 regarding the computation of pension contributions
during military absence may serve as a model in many cases.
The final comment regarding section 1002.210 resulted in an
additional modification to the text of the rule. The commenter asked
whether an employee continues to accrue seniority and seniority-based
rights and benefits if the employee is not immediately reemployed
following discharge from service due to a service-related illness or
injury. USERRA provides, and this rule reiterates, that an employee may
have up to two years to report to or submit an application for
reemployment to the employer if necessary in order to recover from the
illness or injury incurred in, or aggravated during, the performance of
service. See section 1002.116. Section 1002.210 has been amended to
reflect that an employee continues to accrue seniority-based rights and
benefits during any period required for recovery from service-related
illnesses or injuries. The Department made a corresponding modification
to section 1002.259, which establishes the period of time that must be
considered to determine pension entitlement, in order to respond to an
inquiry whether the time that an employee is absent from work under
section 1002.74 prior to the beginning of a period of military service
should be considered service with the employer for purposes of
determining the employee's USERRA pension entitlements upon
reemployment. Under the revisions to both section 1002.210 and section
1002.259, 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.
Section 1002.211 makes clear that USERRA section 4316(a) is not a
statutory mandate to impose seniority systems on employers. Rather,
USERRA requires only that those employers who provide benefits based on
seniority restore the returning service member to his or her proper
place on the seniority ladder.
Section 1002.212 adopts the basic definition of seniority-based
rights and benefits developed in Supreme Court decisions. This
definition imposes two requirements: First, the benefit must be
provided as a reward for length of service rather than a form of short-
term compensation for services rendered; second, the service member's
receipt of the benefit, but for his or her absence due to service, must
have been reasonably certain. See Coffy v. Republic Steel Corp., 447
U.S. 191, 197-98 (1980); Alabama Power Co. v. Davis, 431 U.S. 581
(1977); see also S. Rep. No.103-158, at 57 (1993), citing with approval
Goggin v. Lincoln, St. Louis, 702 F.2d 698, 701 (8th Cir. 1983)
(summarizing Supreme Court formulation of two-part definition of
``perquisites of seniority''). Section 1002.212(c) adds a third
consideration which derives from another Supreme Court decision,
McKinney v. Missouri-Kansas-Texas R.R. Co., 357 U.S. 265 (1958). In
that case, the Court allowed consideration of the employer's ``actual
practice'' in making advancement an automatic benefit based on
seniority under the collective bargaining agreement. Id. at 274.
Accordingly, section 1002.212(c) adds the requirement that ``actual
custom or practice'' in conferring or withholding a benefit also
determines whether the benefit is a perquisite of seniority.
The Department received a comment requesting additional guidance on
the determination of rights and benefits based on length of service
versus rights and benefits for actual services rendered. Because the
Department anticipates that a bright-line rule would be unworkable in
application to the myriad of factual situations that may arise in the
employment setting, the analysis must revolve around the general
guidelines established in the rule. Finally, the Department received a
comment suggesting that, with regard to an employer's ``actual custom
or practice'' as a consideration in providing or withholding a right or
benefit as a reward for length of service, the word ``actual'' should
be deleted. The commenter argues that the term will breed disputes over
whether a practice is ``actual'' or in flux. The Department views the
inclusion of the word ``actual'' as key to the implementation of this
provision, and intends it to differentiate between those practices that
are carried out in the workplace and those that are merely written in a
handbook but have not been realized.
Section 1002.213 further defines one aspect of seniority-based
rights and benefits: The requirement that receipt of the benefit be
``reasonably certain.'' The proposed regulation describes a
``reasonably certain'' likelihood as a ``high probability'' that the
returning service member would have obtained the seniority-based
benefit if continuously employed. A ``high probability'' is less than
an ``absolute certainty,'' which the Supreme Court has rejected in
analyzing the degree of probability a reemployed service member must
satisfy in order to establish that his or her advancement would have
been ``reasonably certain'' but for the period of service. See Tilton
v. Missouri Pacific Railroad Co., 376 U.S. 169, 180 (1964). The
employer may not deny a reemployed service member seniority-based
rights or benefits based on a scenario of unlikely events that
allegedly could have occurred during the period of service.
Proposed section 1002.214 established that the returning employee
is also entitled to claim perquisites of seniority that first became
available to co-workers or that were modified while he or she was in
the service. The Department received one comment on this provision,
suggesting that it provide an alternate, and more lucid, illustration
of the application of this provision in section 1002.214(b). After
considering the comment, and reviewing a number of examples that may
serve to illustrate the point, the Department has concluded that the
response provided in section 1002.214(b) is vague and does not provide
practical guidance on the issue addressed. In addition, the principle
established in section 1002.214(a) is simply a reiteration of the
principle established in section 1002.210 regarding the seniority-based
rights and benefits to which a returning
[[Page 75277]]
employee is entitled. As a result, the Department has removed the
section in its entirety from the final rule.
Disabled Employees
USERRA imposes additional requirements in circumstances involving
the reemployment of a disabled service member. A disabled service
member is entitled, to the same extent as any other individual, to the
escalator position he or she would have attained but for military
service. If the disability is not an impediment to the service member's
qualifications for the escalator position, then the disabling condition
is irrelevant for USERRA purposes. If the disability limits the service
member's ability to perform the job, however, the statute imposes a
duty on the employer to make reasonable efforts to accommodate the
disability. 38 U.S.C. 4313(a)(3). In some instances, an employer is
unable to accommodate a service member's disability despite reasonable
efforts. If, despite the employer's reasonable efforts to accommodate
the disability, the returning disabled service member cannot become
qualified for his or her escalator position, that person is entitled to
be reemployed ``in any other position which is equivalent in seniority,
status, and pay, the duties of which the person is qualified to perform
or would become qualified to perform with reasonable efforts by the
employer.'' 38 U.S.C. 4313(a)(3)(A). If no such position exists, the
service member is entitled to reemployment ``in a position which is the
nearest approximation * * *in terms of seniority, status, and pay
consistent with circumstances of such person's case.'' 38 U.S.C.
4313(a)(3)(B). See, e.g., Hembree v. Georgia Power Co., 637 F.2d 423
(5th Cir. 1981); Blake v. City of Columbus, 605 F. Supp. 567, 571 (D.
Ohio 1984).
Section 1002.225 sets forth the priority of reemployment positions
for which the disabled service member should be considered. The
regulation also implements the statutory requirement for reasonable
accommodation of the returning service member's disability. Such
accommodations may include placing the reemployed person in an
alternate position, on ``light duty'' status; modifying technology or
equipment used in the job position; revising work practices; or,
shifting job functions. The appropriate level of accommodation depends
on the nature of the service member's disability, the requirements for
properly performing the job, and any other circumstances surrounding
the particular situation. See 38 U.S.C. 4303(9), (10), and (15);
4313(a)(3); H.R. Rep. No. 103-65, Pt. I, at 31 (1993); S. Rep. No. 103-
158, at 53 (1993).
Section 1002.226 establishes that the employer must make reasonable
accommodations for any disability incurred in, or aggravated during, a
period of service. The accommodation requirement is not limited to
disabilities incurred during training or combat, so long as they are
incurred during the period of service. Any disability that is incurred
or aggravated outside of a period of service (including a disability
incurred between the end of the period of service and the date of
reemployment) is not covered as a service-related disability for USERRA
purposes. The disability must have been incurred or aggravated when the
service member applies for reemployment, even if it has not yet been
detected. If the disability is discovered after the service member
resumes work and it interferes with his or her job performance, then
the reinstatement process should be restarted under USERRA's disability
provisions.
A returning service member may have rights under USERRA based on a
service-related disability that is not permanent. A service member who
incurs a temporary disability may be entitled to interim reemployment
in an alternate position provided he or she is qualified for the
position and the disability will not affect his or her ability to
perform the job. If no such alternate position exists, the disabled
service member would be entitled to reinstatement under a ``sick
leave'' or ``light duty'' status until he or she completely recovers.
In identifying an alternate position for a disabled service member,
the focus should be on the returning service member's ability to
perform the essential duties of the job. The position must be one that
the person can safely perform without unreasonable risk to the person
or fellow employees. The disabled service member is required to provide
information on his or her education and experience, the extent of the
disability, and his or her present capabilities. The employer then has
the duty to disclose all positions that the service member may be
qualified to perform. Because the employer has greater knowledge of the
various positions and their requirements in the organization, the
employer, and not the service member, is exclusively responsible for
accommodating the disability by identifying suitable positions within
the service member's abilities and capabilities.
The Department received four comments regarding the provisions
implementing USERRA's requirements concerning the reemployment of a
disabled service member. One commenter suggests that the Department
should amend section 1002.225 to moderate the employer's duty to make
reasonable efforts to accommodate the disability to reflect that an
employee should bear some responsibility in cooperating in his or her
own reemployment. The Department views the statute as imposing a duty
on the employer to make reasonable efforts to accommodate the
disability. 38 U.S.C. 4313(a)(3). In addition, as stated above, because
the employer has greater knowledge of the various positions and their
requirements in the organization, the burden is appropriately placed on
the employer. Nevertheless, it is customary to assume that an employee
seeking reemployment will cooperate with the employer's reasonable
efforts to accommodate a disabled employee.
The Department received two comments regarding this provision from
one commenter. The commenter requested that the provision include a
statement indicating that as with a non-disabled employee, a disabled
employee is entitled to reemployment on the escalator position. The
commenter also requested that the Department indicate in section
1002.225(b) that in reemploying a returning service member in ``the
nearest approximation'' to the equivalent escalator position, such
position may be one that is higher or lower, depending on the
circumstances. The Department agrees that both suggestions clarify the
text of the final rule, and has made the amendments. See section
1002.225.
Finally, the Department received a suggestion that it employ the
ADA's regulatory standards, in particular, the ADA's provisions
concerning a ``qualified individual with a disability'' and
``reasonable accommodations.'' The Department declines this suggestion
because neither term is used in USERRA. In addition, although
interpretations of the ADA may be useful in providing some guidance
under USERRA's provisions regarding accommodating an employee with a
disability, the Department is reluctant to adopt extensive portions of
complex regulations promulgated under other statutes not administered
or enforced by the Department, and notes that there are significant
differences in the coverage of the two statutes. For example, the ADA
covers only ``disabilities'' as defined in that statute, whereas USERRA
covers any disability incurred in or aggravated during service in the
uniformed services.
[[Page 75278]]
Finally, the Department received one comment requesting that it
require employers to provide lifetime disability coverage for employees
disabled as the result of their service in the uniformed services. Such
a request is beyond the mandates set out in the statute.
Rate of Pay
The escalator principle also determines the returning service
member's rate of pay after an absence from the workplace due to
military service. As with respect to benefits and the reemployment
position, the application of this fundamental principle with respect to
pay is intended to restore the returning service member to the
employment position that he or she would have occupied but for the
interruption in employment occasioned by military service. See
generally Fishgold v. Sullivan Drydock and Repair Corp, 328 U.S. 275
(1946). Section 1002.236 implements the escalator principle for
purposes of determining the reemployed service member's rate of pay.
The regulation also addresses the various elements of compensation that
often comprise the returning service member's ``rate of pay.''
Depending on the particular position, the rate of pay may include more
than the basic salary. The regulation lists various types of
compensation that may factor into determining the employee's overall
compensation package under the escalator principle. The list is not
exclusive; any compensation, in whatever form, that the employee would
have received with reasonable certainty if he or she had remained
continuously employed should be considered an element of compensation.
The returning employee's rate of pay may therefore include pay
increases, differentials, step increases, merit increases, periodic
increases, or performance bonuses.
In some workplaces, merit pay increases are conditioned upon the
employee passing a skills or performance evaluation. The employer
should allow a reasonable period of time for the employee to become
acclimated in the escalator position before such an evaluation is
administered. In order that the employee not be penalized financially
for his or her military service, the employee must be reemployed at the
higher rate of pay, assuming that it is reasonably certain that the
employee would otherwise have attained the merit pay increase during
the period of military service. This requirement is similar to the
requirement in Section 1002.193, which obliges an employer to give a
reemployed employee, after a reasonable amount of time to adjust to the
reemployment position, a missed skills test or examination that is the
basis of an opportunity for promotion.
The Department invited comments as to whether this interpretation
best effectuates the purpose of this provision, or whether the issue of
merit pay requires more detailed treatment in these regulations, and
received seven comments in response. One commenter expressed overall
support for the provision, but found it unworkable due to the
difficulty in accurately predicting the date of the returning service
member's retroactive placement on the escalator. Three commenters seek
more guidance on the provision, in particular, on the length of time
given to the returning service member to acclimate before administering
a makeup evaluation and on the amount of the merit or performance pay
increase. One commenter argues that granting full seniority, and
awarding equal pay, to returning service members penalizes workers
remaining on the job who have obtained valuable training and experience
while the service member was on military leave. One commenter argues
that the escalator principle uses a ``presumption'' in favor of
granting a salary increase, which it believes is inappropriate when
advancements are based on measurable performance or merit evaluations.
Finally, one commenter argues the escalator principle does not apply to
merit or performance based salary increases because they are not
seniority-based, and even if the principle applies, it should be pro
rated and not retroactive.
The regulation's provision regarding rate of pay is consistent with
general principles concerning the application of the escalator
provision under the statute and case law, which require that a service
member receive such compensation upon reemployment if there is a
reasonable certainty that the compensation would have been granted.
See, e.g., McKinney v. Missouri-Kansas-Texas R.R. Co., 357 U.S. 265
(1958); Tilton v. Missouri Pacific R.R. Co., 376 U.S. 169 (1964). A
returning veteran cannot show within the reasonable certainty required
by the Act that he or she would have enjoyed the advancement or
increased compensation by virtue of continuing employment where the
advancement or increased compensation depends on an employer's
discretionary choice not exercised prior to the entry into service.
Tilton, 376 U.S. at 180. Therefore, in response to those comments that
object to this provision and its retroactive application for reasons of
impracticality, burden, or unfairness, the Department declines to
modify the provision in reaction to these concerns, as the provision
adheres to the obligations required under the statute and the long-
standing case law governing its interpretation.
Consistent with section 1002.193 concerning a similar comment about
missed promotional exams, the Department has amended section 1002.236
to include factors an employer should consider in timing the
administration of a makeup test or examination for the purposes of
determining applicable pay increases. The Department suggests that no
fixed time will be appropriate to all cases, and in determining a
reasonable time to schedule a makeup test or examination, employers
should take into account a variety of factors, including but not
limited to the length of time the returning employee was absent from
work, the duties and responsibilities of the reemployment position, and
the nature and responsibilities of the service member while serving in
the uniformed service. See section 1002.236.
Finally, in response to comments stating that the escalator
principle should not apply to merit pay increases, the Department
emphasizes that what is critical is not whether the employer
characterizes the compensation increases as merit-based, but whether
the raise would have been attained with reasonable certainty if not for
the service in the uniformed services. To clarify this point, the
Department has amended section 1002.236 to reflect that when
considering whether merit or performance increases would have been
attained with reasonable certainty, an employer may examine the
returning employee's own work history, his or her history of merit
increases, and the work and pay history of employees in the same or
similar position. See section 1002.236. Finally, in determining rate of
pay, as in other situations, application of the escalator principle may
leave the returning service member with less than he or she had before
performing service. Thus, if nondiscriminatory adverse changes in the
employment position's pay structure would with reasonable certainty
have lowered the compensation rate during the period of service if he
or she had remained continuously employed, the escalator principle may
operate to diminish the returning service member's pay.
Protection Against Discharge
Section 4316(c) of USERRA provides service members special
protection from discharge from civilian employment after returning from
uniformed service. If the individual served over 180 days
[[Page 75279]]
before reemployment, then he or she may not be discharged from the
employment position within one year after reemployment except for
cause. 38 U.S.C. 4316(c)(1). If the individual served between 31 and
180 days in the military, he or she may not be discharged from the
employment position within 180 days after reemployment except for
cause. 38 U.S.C. 4316(c)(2). A reinstated service member whose duration
of service lasted 30 days or less has no similar protection from
discharge; however, the individual is protected by USERRA's anti-
discrimination provisions, 38 U.S.C. 4311, as explained in sections
1002.18-.23. Section 1002.247 elaborates the general rules for
protection against discharge based on the duration of service prior to
reemployment.
Prohibiting a reemployed service member's discharge, except for
cause, ensures that the service member has a reasonable amount of time
to get accustomed to the employment position after a significant
absence. A period of readjustment may be especially warranted if the
service member has assumed a new employment position after the military
service. The discharge protection also guards against an employer's bad
faith or pro forma reinstatement followed by an unjustified termination
of the reemployed service member. Moreover, the time period for special
protection does not start until the service member has been fully
reemployed and any benefits to which the employee is entitled have been
restored. Even assuming the service member receives the benefit of the
full protection period prior to dismissal, an employer nevertheless
violates the Act if the reason for discharging the service member is
impermissible under USERRA.
Section 4316(c) does not provide complete protection from discharge
to a reemployed service member for the duration of the protected
period. An employer may dismiss a reemployed service member even during
the protected period for just cause. Depending on the circumstances of
the specific case, just cause may include unacceptable or
unprofessional public behavior, incompetent or inefficient performance
of duties, or criminal acts. An employer may also discharge the service
member for cause if the application of the escalator principle results
in a legitimate layoff or in the elimination of the job position
itself, provided the person would have faced the same consequences had
he or she remained continuously employed. Section 1002.248 provides
general guidelines for establishing just cause to discharge a
reemployed service member during the protected period, and places the
burden of proof on the employer to demonstrate that it is reasonable to
discharge the person. See H.R. Rep. No. 103-65, Pt. 1, at 35 (1993); S.
Rep. No. 103-158, at 63 (1993).
The Department received six comments regarding these provisions.
One commenter took issue with proposed section 1002.248's statement
that a reemployed service member may be discharged either for cause or
because of the application of the escalator principle. The commenter
suggests that citing only two potential reasons for discharge is too
limited, and there are other ``legitimate nondiscriminatory reasons''
for an employee's discharge. After considering the comment, the
Department concludes that proposed section 1002.248 was unclear, and
has amended the provision. Accordingly, to sustain an employee's
discharge during the protected period, the employer bears the burden of
proving either that the discharge was based on the employee's conduct
or it was the result of some other legitimate nondiscriminatory reason
that would have affected any employee in the reemployed service
member's position, regardless of his or her protected status or
activity. See Duarte v. Agilent Technologies, Inc., 366 F.Supp.2d 1039,
1046 (D.Colo. 2005). Other reasons for discharge may include the
elimination of the employee's position, corporate reorganization or
``downsizing,'' and layoff, provided that those reasons are legitimate,
nondiscriminatory and non-pretextual.
A second comment on these provisions criticizes the use of the
phrase ``just cause'' interchangeably with ``cause'' in the preamble,
and suggests that the Department should refrain from using ``just
cause.'' The Department notes that the text of the rule employs only
the term ``cause,'' as does the statute, although the statute's
drafters employed both terms in the legislative history. See S. Rep.
103-158 (1993) at 63. The Department intends that its use of the term
``just cause'' in the preamble is synonymous with its use of the term
``cause'' in the text of the rule, and concludes that the use of both
terms is not misleading or confusing. A third comment objects to the
Department placing the burden on the employer to prove that a discharge
during the protected period was based on cause. The inclusion of this
provision was based on the legislative history regarding USERRA's
protection against discharge, which itself stated that the burden of
proving that the discharge was for cause belongs on the employer. See
H.R. Rep. 103-65, Pt. I, at 35 (1993); S. Rep. 103-158, at 63 (1993). A
fourth commenter suggests that section 1002.248 either provide a
specific list of what events constitute cause for discharge, or refer
to the application of State law for a definition of what constitutes
cause. The Department must reject both suggestions. First, it is
impossible to identify an exhaustive list of all events or conduct that
would justify a discharge for cause. Second, for the purposes of the
protection against discharge, the Department intends that USERRA's
interpretation and enforcement rely not on the importation or
application of State statute or common law, but instead on the
development of Federal decisional law under the statute and these
regulations. The fifth comment argued that a discharge for cause should
apply only where an employer has an established formal grievance and
appeal process. USERRA allows an employer to discharge a reemployed
employee for cause, and does not require that the employer have a
formal grievance and appeal procedure in order to exercise this right.
However, as discussed above, in any case involving a discharge during
the statutorily protected period, the employer has the burden of
proving that the discharge was for cause. Consequently, this suggested
change has not been made.
Finally, the last comment regarding these provisions resulted in a
change to the text of the rule. The commenter requests that the
provision should clarify that the prerequisite of notice to employees
that certain conduct may result in discharge should include a reference
that such notice may either be express or fairly implied, citing H.R.
Rep. 103-65, Pt. I, at 35 (1993). The Department agrees that the
legislative history supports the suggestion, and has made the requested
revision. See section 1002.248.
Pension Plan Benefits
USERRA establishes specific rights for reemployed service members
in their employee pension benefit plans; the Act's specific provisions
for pension benefit plans supersede general provisions elsewhere in the
statute. 38 U.S.C. 4318(a)(1)(A). USERRA defines an employee pension
benefit plan in the same way that the term is defined under the
Employee Retirement Income Security Act of 1974 (ERISA). See 29 U.S.C.
Chapter 18; 38 U.S.C. 4318(a). The term ``employee pension benefit
plan'' includes any plan, fund or program established or maintained by
[[Page 75280]]
an employer or by an employee organization, or by both, that provides
retirement income or results in the deferral of income for a period of
time extending to or beyond the termination of the employment covered
by the plan. Profit sharing and stock bonus plans that meet this test
are included. USERRA provides that once the service member is
reemployed, he or she is treated as not having a break in service with
the employer or employers maintaining the plan even though the service
member was away from work performing military service.
Sections 1002.259 to .267 describe the types of employee pension
benefit plans that come within the Act and the pension benefits that
must be provided to reemployed service members. Although USERRA relies
on the ERISA definition of an employee pension benefit plan, some plans
excluded from ERISA coverage may be subject to USERRA. For example,
USERRA (but not ERISA) extends coverage to plans sponsored by religious
organizations and plans established under State or Federal law for
governmental employees. Benefits paid pursuant to federally legislated
programs such as Social Security or the Railroad Retirement Act,
however, are not covered by USERRA. USERRA coverage also does not
include benefits under the Thrift Savings Plan (TSP); the rights of
reemployed service members to benefits under the TSP are governed by
another Federal statute. See 5 U.S.C. 8432b. 38 U.S.C. 4318(a)(1)(B).
Section 1002.260.
As sections 1002.259 to .267 illustrate, each period of uniformed
service is treated as an uninterrupted period of employment with the
employer(s) maintaining the pension plan in determining eligibility for
participation in the plan, the non-forfeitability of accrued benefits,
and the accrual of service credits, contributions and elective
deferrals (as defined in section 402(g)(3) of the Internal Revenue
Code) under the plan. 38 U.S.C. 4318(a)(2)(B). As a result, for
purposes of calculating these pension benefits, or for determining the
amount of contributions or deferrals to the plan, the reemployed
service member is treated as though he or she had remained continuously
employed for pension purposes.
The Department received a comment apparently suggesting that
USERRA's provisions regarding employer pension obligations conflict
with an employer's ability to terminate a pension plan under the
Employee Retirement Income Security Act (ERISA). USERRA does not
prohibit pension plan termination, and therefore no change to the final
rule is warranted.
The Department received one comment concerning pension plan
entitlements of employees whose employers provide them with partial or
full civilian pay while the employees are absent from employment to
perform military service. This compensation is commonly referred to as
``differential pay,'' and the amount and duration of the benefit varies
widely. The commenter asked the Department to indicate whether
employees who receive ``differential pay'' are entitled to make
employee contributions or elective deferrals to their pension plan
based on the differential pay received while absent from employment to
perform military service. The Department notes that ``differential
pay'' is not required by USERRA, and is a form of compensation from
employers to employees.
The Department of the Treasury (Treasury Department) and the
Internal Revenue Service (IRS) issued proposed regulations that address
the ability of employees on military leave to make pension
contributions based on differential pay. These proposed regulations can
be found at 70 FR 31214-0 (May 31, 2005), and interpret the provisions
of section 415 of the IRC, which governs benefits and contributions
under qualified retirement plans. The Treasury Department's press
release concerning the proposed rule states, in pertinent part:
Significantly, the proposed regulations will specifically
provide that National Guard and Reserve members are permitted to
continue to contribute to their employer's retirement plan while on
active duty. . . The rules relating to post termination compensation
and the associated clarifications on the ability to contribute to
retirement plans for members of the National Guard and Reserve will
also apply to section 403(b) tax deferred annuities and Section 457
eligible deferred compensation plans. Plan administrators may rely
on today's proposed regulations immediately to allow service members
to contribute to qualified retirement plans.
JS-2471, Office of Public Affairs, Department of the Treasury, May 25,
2005.
The Department received two comments regarding section 1002.259,
which establishes the general principle that upon reemployment, an
employee must be treated as not having a break in service with the
employer for the purposes of ``participation, vesting and accrual'' of
pension benefits. Both comments requested that the provision be
broadened to include an employee's ``eligibility'' for pension
benefits. The phrase ``participation, vesting and accrual'' includes an
employee's ``eligibility'' for pension benefits, and therefore no
modification is needed in response to the commenters' suggestions.
Another commenter requested that the Department clarify the
entitlement to pension credit in cases in which an employee permanently
and lawfully loses reemployment rights, for instance, where an employee
dies during the period of military service or where an employer is
excused from its reemployment obligations based on a statutory defense
under 38 U.S.C 4312(d)(1) (incorporated in section 1002.139). The
commenter suggested that the final rule provide that if a person
permanently and lawfully loses the right to reemployment during a
period of military service, such person (or his or her estate) is
entitled to receive pension credit for the period beginning with
departure from pre-service employment and ending on the date
reemployment rights are lost. Because section 4318(a) of USERRA states
that pension entitlements do not accrue until the returning employee is
reemployed, the Department declines to adopt the commenter's proposal.
As noted in Subpart C, above, section 1002.74 of the final rule
provides that an employee is, in some cases, entitled to time off from
employment prior to the beginning of a period of military service where
such time off is ``necessitated by'' the employee's forthcoming service
in the uniformed services. A commenter requested the Department clarify
whether such period of time must also be considered service with the
employer for purposes of determining the employee's USERRA pension
entitlements upon reemployment following the service. The Department
has responded by amending section 1002.259 to clarify that the entire
period of absence due to or necessitated by service in the uniformed
services is to be considered service with the employer upon
reemployment for pension purposes. This period includes preparation
time, as described above, and time following the completion of service
within which a person may apply for reemployment and/or recover from an
illness or injury incurred in or aggravated by the military service.
See section 1002.259. The Department made a corresponding amendment to
the final rule to clarify that the entire period of absence due to or
necessitated by military service is to be considered in determining a
person's entitlement to seniority and seniority benefits upon
reemployment. See Subpart E, above, and section 1002.210.
Sections 1002.261 and 1002.262 clarify who must make the
contribution
[[Page 75281]]
and/or deferral attributable to a particular period of military service
and the timeframes within which payments are to be made to the plan.
Section 1002.261 also describes how funding obligations differ
depending on whether a plan is a defined benefit or defined
contribution plan. The Department received one comment requesting the
final rule indicate whether ``cash balance'' and similar ``hybrid''
plans should be considered defined benefit plans for USERRA purposes.
The Department consulted with the IRS and the Treasury Department on
this issue, and has been advised that, for their purposes, ``cash
balance'' and other ``hybrid'' plans are considered defined benefit
plans. The Department will apply the same treatment to these plans for
USERRA's purposes.
The employer who reemploys the service member is responsible for
funding any employer contribution to the plan to provide the benefits
described in the Act and the regulation. 38 U.S.C. 4318(b)(1). Some
plans do not require or permit employer contributions. In that case,
the plan is funded by employee contributions or elective deferrals.
Other plans provide that the employer will match a certain portion of
the employee contribution or deferral. If employer contributions are
contingent on employee contributions or elective deferrals, such as
where the employer matches all or a portion of the employee deferral or
contribution, the reemployed service member is entitled to the employer
contribution only to the extent that he or she makes the employee
contributions or elective deferrals to the plan. 38 U.S.C. 4318(b)(2).
USERRA is silent with respect to the amount of time the employer
has to pay to the plan the contributions attributable to a reemployed
service member's period of military service. In proposed section
1002.262, the Department required that employer contributions to a
pension plan that are not contingent on employee contributions or
elective deferrals must be made no later than 30 days after the date of
the person's reemployment. An exception to this limit was provided in
cases in which it was impossible or unreasonable for the employer to
meet the timeframe, and, in that case, contributions were to be made as
soon as practicable. Interested parties were requested to comment on
this proposed requirement, and the Department specifically requested
public comment on whether the proposed 30-day period is too long or too
short.
The Department received eight comments on proposed section
1002.262, and only one commenter, the National Employment Lawyer's
Association, favored the provision, suggesting that the 30-day period
was reasonable in light of the exception for situations where it was
impossible or unreasonable to comply. Other commenters included
WorldatWork, Profit Sharing/401(k) Council of America, Investment
Company Institute, Society for Human Resources Management, Hewitt
Associates, and two law firms. Seven comments indicated that the 30-day
period was too short, and requested that the period be extended. Three
of the seven commenters suggested the period be expanded to ninety days
following reemployment. A fourth comment proposed that employer
contributions be made when they would normally be due for the plan year
in which the employee is reemployed. Two additional commenters
suggested the contributions be due no earlier than the end of the
calendar quarter following the quarter in which the employee is
reemployed. The final commenter suggested the contributions be due
either when they can reasonably be segregated from the employer's
general assets or at the beginning of the quarter following the quarter
in which the employee is reemployed, whichever is earlier. Because the
beginning of the quarter following reemployment could conceivably be
the next day, the Department construes this commenter to have intended
the inclusion of the statement, ``whichever is later.''
After weighing all these comments, the Department has amended
section 1002.262(a) to provide that employer contributions to a pension
plan that are not dependent on employee contributions must be made
within ninety days following reemployment or when contributions are
normally made for the year in which the military service was performed,
whichever is later. In some cases involving an extended period of
service, both timeframes may apply. For instance, assume a case in
which employer contributions for a particular calendar year are made on
February 15 of the following year. An employee leaves the employer to
perform military service on May 1, 2004. The employee completes the
service in early 2005, applies for reemployment, and is reemployed on
February 10, 2005. In this case, pension contributions attributable to
the period of the absence due to military service in 2004 (May 1-
December 31) would be due 90 days after February 10, 2005, the date of
reemployment, because that date is later than February 15, 2005, the
date contributions for 2004 are normally made. Pension contributions
attributable to the period of the absence for military service in 2005
(January 1-February 9) would be due on February 15, 2006, because that
date is later than the date that is 90 days following reemployment.
Where pension benefits are derived from employee contributions or
elective deferrals, or from a combination of employee contributions or
elective deferrals and matching employer contributions, the reemployed
service member may make his or her contributions or deferrals during a
time period starting with the date of reemployment and continuing for
up to three times the length of the employee's immediate past period of
military service, with the repayment period not to exceed five years.
38 U.S.C. 4318(b)(2); section 1002.262(b). No payment by the service
member may exceed the amount that would have been required or permitted
during the period of time had the service member remained continuously
employed. 38 U.S.C. 4318(b)(2). Any permitted or required amount of
employee contributions or elective deferrals would be adjusted for any
employee contributions or elective deferrals made to the plan during
the employee's period of service. Any employer contributions that are
contingent on employee contributions or elective deferrals must be made
according to the plan's requirements for employer matching
contributions.
The Department invited comments as to whether this interpretation
best effectuates the purpose of this provision, and received three
general comments in response. One commenter requested the final rule
specify that the employee make-up contributions be sequential, that is,
that the first make-up payments be attributable to the earliest part of
the absence to perform service. The Department declines to impose this
requirement on all employers and pension plans, and instead suggests
that employers and plan administrators develop reasonable rules for the
allocation of make-up contributions that are appropriate for the type
and size of the particular plan.
The second general comment asked that the Department indicate how
to apply the provision in the case of a reemployed employee who began
making up missed contributions or elective deferrals, and then entered
a subsequent period of military service during the repayment period but
before having made up all the missed contributions or elective
deferrals. Specifically, the commenter proposed
[[Page 75282]]
that the repayment period should be tolled during the second period of
military service, and then resumed when the person was reemployed
following the subsequent service. USERRA provides that the repayment
period for a particular period of military service begins upon
reemployment. See 38 U.S.C. 4318(b)(2). Therefore, the Department
concludes that if a person enters a second period of military service
during the make-up period for a prior period of military service,
USERRA does not require that the first makeup period be tolled; the
repayment period for the first period of service will continue to run
during the subsequent period of service. When the person returns from
the second period of service, the repayment period for the second
period would commence upon the ``second'' reemployment, and the person
may also have any time remaining from the first repayment period. The
Department notes, however, that USERRA does not prevent an employer or
plan from voluntarily extending the first period in the event of an
employee's second period of military service.
The third general comment concerning employee make-up of missed
contributions or elective deferrals suggested that section 1002.262(b)
be amended to provide a period of five years within which a reemployed
employee may make up missed contributions or elective deferrals. The
Department declines to adopt this recommendation, because the period
permitted in section 1002.262(b) is based on the period established
under the statute. See 38 U.S.C. 4318(b)(2).
Under USERRA, a reemployed service member has the right to make his
or her contributions or elective deferrals, but is not required to do
so. Elective deferrals can be made up only to the extent that the
employee has compensation from the employer that can be deferred.
Proposed section 1002.262 provided that, if an individual cannot make
up missed contributions as an elective deferral because he or she does
not have enough compensation from the employer to defer (for example,
if the individual is no longer employed by the employer), the plan must
provide an equivalent opportunity for the individual to receive the
maximum employer matching contributions that were available under the
plan during the period of uniformed service through a match of after-
tax contributions. This provision generated ten separate comments from
eight sources, including WorldAtWork, Profit Sharing/401(k) Council of
America, National Employment Lawyers Association, Investment Company
Institute, and two law firms with expertise in the field, and none of
the commenters expressed support for the provision. Four of the
comments requested clarification with respect to four issues: the
effect of the provision on the treatment of highly compensated
employees; the effect of these contributions on non-discrimination
testing provisions in various sections of the Internal Revenue Code;
whether an employee who is terminated for cause based on conduct is
entitled to this right; and issues associated with after-tax
contributions generally.
The remaining commenters were opposed to this provision on various
additional grounds. Commenters cited administrative costs in re-tooling
administrative systems for plans that do not currently allow after-tax
contributions, because pre- and after-tax contributions must be tracked
and accounted for separately. Most significantly, commenters expressed
concerns that compliance with the proposed provision might cause a plan
to encounter problems with the IRC or tax regulations because of this
rule's requirement that plans accept after-tax contributions from
persons who are not employees. Finally, two commenters suggested that
to avoid after-tax contributions to a former employer's pension plan
and achieve the same result, the final rule should provide for
establishment of an Individual Retirement Account by the former
employee with matching contributions from the former employer.
After considering all the comments, the Department has concluded
that it will remove from section 1002.262(b) of the final rule the
provision that would have required a plan to permit a person to
continue to make-up missed contributions or elective deferrals after
leaving employment with the post-service employer. In construing the
statute liberally in favor of service members, the Department's
original view of section 4318(b)(2) of the Act was that service members
should be permitted the entire period established by the statute for
missed contributions, regardless of whether the service member remained
reemployed during that period. This view was supported by the fact that
neither the face of section 4318(b)(2), nor the legislative history,
contains a limitation on the statutory period that requires a service
member to remain reemployed in order to make up contributions. However,
after considering the comments, the Department ultimately views section
4318(b)(2) as unclear on this point, in particular, because of its
references to ``a person reemployed.'' Thus, this provision of the Act
is better viewed as establishing a right to make up missed
contributions that is conditioned upon continued employment following
reemployment. This interpretation of section 4318(b)(2) is consistent
with the statute as a whole, which generally establishes no rights or
benefits that extend beyond the termination of employment or
reemployment. Notwithstanding, if a reemployed employee leaves and then
returns to employment with his or her post-service employer, the
employee may resume repayments at his or her discretion regardless of
the break in employment, so long as time remains in the statutory
period (three times the length of the employee's immediate past period
of military service, not to exceed five years).
Policy reasons further support the revision to this provision. VETS
recognizes that the proposed section would have benefited a relatively
small number of returning service members who were reemployed, sought
to make up missed contributions, left employment with the post-service
employer, and still wanted the opportunity to make up missed
contributions. Comments from industry experts indicated that the costs
to pension plans associated with the provision would be significant. In
addition, industry experts noted that those plan costs were likely to
be allocated to the plan, so that other plan participants, including
other uniformed service members, may suffer some detriment to their
pension entitlements. As a result of this extensive legal and policy
analysis, and the conclusions reached above, the Department has
modified this provision. See section 1002.262(b).
USERRA does not specify whether the returning service member is
entitled to partial credit in return for making up part (but not all)
of the missed employee contributions or elective deferrals, but it does
not require that the employee make up the full amount. Given that
returning service members sometimes face financial hardships on their
return to civilian employment, and in view of the remedial purposes of
USERRA, the Department interprets the Act to permit the employee to
partially make up missed employee contributions (including required
employee contributions to a defined benefit plan) or elective
deferrals. In such a situation, the employer is required to make any
contributions that are contingent on employee make-up contributions or
elective deferrals only to the extent that the employee makes such
partial
[[Page 75283]]
contributions or elective deferrals. See section 1002.262(c). For
example, in a plan where the employee may or must contribute from zero
to five percent of his or her compensation, and receive a commensurate
employer match, the reemployed service member must be permitted to
partially make up a missed contribution and receive the employer match.
Where contributions from all employees are handled in a similar,
consistent fashion under the plan, either the plan documents or the
normal, established practices of the plan control the disposition of
partial contributions or elective deferrals. See section 1002.262(e)
and (f).
Section 1002.263 of the proposed rule provided that employees are
not required to pay any interest when making up contributions or
elective deferrals attributable to a period of military service. The
Department received a comment asking whether employees are permitted to
include interest when making up missed contributions or elective
deferrals attributable to a period of military service. The statute
requires that such employee payments must not exceed the amount the
employee would have been permitted or required to contribute had the
person remained continuously employed. See 38 U.S.C. 4318(b)(2). Based
on the statute, the Department has amended section 1002.263 to clarify
that employees are neither permitted nor required to pay interest when
making up missed contributions or elective deferrals. See section
1002.263.
Under section 1002.264 in the proposed rule, if the service member
has withdrawn his or her account balance from the employee pension
benefit plan prior to entering military service, he or she must be
allowed to repay the withdrawn amounts upon reemployment. The amount to
be repaid also includes any interest that would have been earned had
the monies not been withdrawn. Repayment entitles the individual to
appropriate credit in the plan. The reemployed service member may repay
his or her withdrawals during a time period starting with the date of
reemployment and continuing for up to three times the length of the
employee's immediate past period of military service, with the
repayment period not to exceed five years; during the time period
provided by 26 U.S.C. 411(a)(7)(C) (if applicable); or within such
longer time period as may be agreed to between the employer and service
member. Proposed section 1002.264 applied to defined benefit plans and
defined contribution plans. The Department invited comments on whether
or how this section should apply to defined contribution plans.
Five commenters responded to the Department concerning this
provision, including Profit Sharing/401(k) Council of America (PSCA),
Investment Company Institute, Hewitt Associates, and Society for Human
Resource Management. PSCA was generally supportive of the proposed
section, but recommended the repayment period be amended to ``be
consistent with the requirements under the IRC.'' Three commenters were
unequivocally opposed to the provision allowing for repayment of
withdrawals. As with the first comment, these commenters were concerned
that compliance with the proposed provision could cause plans to become
disqualified under the IRC. Additionally, the commenters noted that
plans would incur substantial costs in amending procedures to
accommodate this repayment provision, which could involve after-tax
payments being made in some cases. Additionally, one commenter
requested the Department clarify the timing of the withdrawal,
submitting that proposed section 1002.264 could be read to apply the
repayment entitlement to withdrawals made far in advance of the
military service and unrelated to that service.
After weighing all the comments, the Department has made
significant revisions to section 1002.264. First, the Department
concludes that this provision is more appropriately applied only to
defined benefit plans. As in the case of the provision regarding the
entitlement to make up missed contributions or elective deferrals in
section 1002.262(b), VETS recognizes this provision would benefit
relatively few returning service members who incurred the penalties and
tax burden associated with a withdrawal from a defined contribution
plan and wanted to repay that amount, generally through after-tax
payments. VETS also recognizes that this provision similarly would have
required defined contribution plans to incur the substantial costs of
compliance in order to track and account for pre- and after-tax money
separately, and that those costs could reduce the benefits paid to
other plan participants, including other uniformed service members.
Accordingly, the final rule will limit the entitlement to repay
withdrawals to defined benefit plans. Second, the Department agrees
with the comment above, and originally intended, that plan withdrawals
covered under this provision would be limited to those made in
connection with a period of military service. Accordingly, section
1002.264 has been revised to reflect this limitation. Third, for
reasons similar to those stated above regarding the limitation on the
entitlement to make up missed contributions or elective deferrals in
section 1002.262(b), the entitlement to repay withdrawals will be
conditioned upon the person being employed with their post-service
employer. As is the case in section 1002.262(b), if a reemployed
employee leaves and then returns to employment with the post-service
employer, the employee may resume repayments at his or her discretion
regardless of the break in post-service employment, so long as time
remains in the repayment period. Finally, proposed section 1002.264(b),
which allowed for repayment within the time period provided by 26
U.S.C. 411(a)(7)(C), has been deleted from the final rule because the
Department has determined that its inclusion was confusing and
ultimately unnecessary because the time period is already established
by the Internal Revenue Code. See section 1002.264.
The final comment received concerning section 1002.264 recommended
the repayment period be extended in cases where an employee is unable
to repay in a timely manner for a reason related to the person's
military service. The Department is not adopting this suggestion, as
the current language allows for a longer repayment period that is
agreed to by the employer and the employee. See section 1002.264. The
Department expects that employers and employees will negotiate such
longer periods in good faith.
Section 1002.265 specifies that a reemployed service member's
pension entitlement may vary depending on the type of pension plan, and
the Department received a single comment on this provision. In
referring to the defined contribution plans provision, in which the
reemployed person is not entitled to earnings experienced and
forfeitures that occurred during military service, the commenter
appears to confuse it with section 1002.264, related to withdrawal of
funds from a plan. Because the meaning and intent of the comment are
vague and unclear, the Department is unable to supply a response.
The employer must allocate its contribution on behalf of the
employee in the same manner as contributions made for other employees
during the period of the service member's service were allocated.
However, under proposed section 1002.265, the employer is not required
to allocate earnings experienced and forfeitures that occurred during
the period of military service to the reemployed
[[Page 75284]]
service member. 38 U.S.C. 4318(b)(1). A commenter asked whether the
amount of funds in the employee's pension account when the person
leaves employment to perform military service should experience normal
gains and losses (excluding forfeitures) during the period of absence
to the same extent as the accounts of active employees. Funds left in
the employee's account when he or she departs to perform military
service accrue normal gains and losses (excluding forfeitures).
However, the gains or losses that accrued during the person's absence
for uniformed service are not applied to contributions made by the
employer or the employee after reemployment.
Special rules apply to multiemployer plans. 38 U.S.C. 4318(b)(1).
Section 1002.266 focuses on the operation of multiemployer plans. ERISA
defines the term ``multiemployer plan'' as a plan to which more than
one employer is required to contribute; which is maintained pursuant to
one or more collective bargaining agreements between one or more
employee organizations and more than one employer; and which satisfies
regulations prescribed by the Secretary of Labor. 29 U.S.C. 1002(37).
An individual's period of uniformed service that qualifies as
employment for purposes of section 4318(a)(2) is also employment under
the terms of the pension benefit plan; any applicable collective
bargaining agreement under 29 U.S.C. 1145; or any similar Federal or
State law requiring employers who contribute to multiemployer plans to
make contributions as specified in plan documents.
With a multiemployer plan, a service member does not have to be
reemployed by the same employer for whom he or she worked prior to the
period of service in order to be reinstated in the pension plan.
Proposed section 1002.266(c) stated that so long as the post-service
employer is a contributing employer to the plan, the service member is
entitled to be treated as though he or she experienced no break in
service under the plan. One commenter contended that this provision is
overly broad and should be limited based on the language of the
statute, the legislative history, and the applicable case law. The
commenter proposed that in cases in which the pre-service and post-
service employer are different, but both employers participate in the
same multiemployer pension plan, the pre- and post-service employers
must be related by a common job referral or hiring scheme beyond their
common participation in the plan.
USERRA bases the availability of pension protections on the
reemployment of a service member. 38 U.S.C. 4318(a)(2)(A) (``a person
reemployed under this chapter shall be treated as not having incurred a
break in service with the employer or employer's maintaining the
plan''). The statute's legislative history indicates that term
``employer'' is to be construed broadly so that it encompasses not just
the traditional single employer relationship, but also those employer
relationships in which ``a service member works for several employers
in industries such as construction, longshoring, etc., where the
employees are referred to employment.'' H.R. Rep. No. 103-65, Pt. I, at
21 (1993); accord S. Rep. No. 103-158, at 42 (1993) (``In addition to
the traditional interpretations of the term, the Committee intends a
broad construction of ``employer'' to include relationships in which an
employee works for multiple employers within an industry or is referred
to employment in such industries as construction or longshoring.'')
Both the House and the Senate reports cite Imel v. Laborers Pension
Trust Fund for Northern California, 904 F.2d 1327 (9th Cir.), cert.
denied, 489 U.S. 939 (1990), as a leading case on the pension
obligations where the pre- and post-service employers are different. In
Imel, the court imposed liability on the multiemployer plan to provide
pension credit to the plaintiff for his years of military service where
the pre-service and post-service employers were dissimilar. The court
found that the two employers were operating in the same Northern
California construction industry which, broadly construed, was Imel's
employer, and that the two employers both utilized, and were therefore
connected by, their common use of the union's job referral practice.
Id. at 1330, 1333.
The Department concludes that this legislative history suggests
that mere participation by different pre- and post-service employers in
a common multiemployer plan is not enough to invoke pension liability
for service-related absences. Accordingly, the Department has amended
section 1002.266(c) to reflect that in cases in which an employee is
reemployed by an employer that is different from his or her pre-service
employer, and the pre- and post-service employer contribute to the same
multiemployer pension plan, the two employers must be connected by a
common job referral plan or practice in order for USERRA's pension
obligations to attach to the post-service employer. See section
1002.266(c).
Section 1002.266 describes the allocation of the employer's
obligation to fund employer contributions for reemployed service
members participating in multiemployer plans. Initially, the benefits
liability is to be allocated as specified by the sponsor maintaining
the plan. 38 U.S.C. 4318(b)(1)(A). Both of the bargaining parties,
usually the union(s) and the employers, and the plan trustees of a
multiemployer plan are sponsors of the plan. The initial allocation by
the plan sponsor(s) is likely to vary from plan to plan. For purposes
of USERRA, if the plan documents make no provision to allocate the
obligation to contribute, then the individual's last employer before
the service period is liable for the employer contributions. In the
event that entity no longer exists or functions, the plan must
nevertheless provide coverage to the service member. 38 U.S.C.
4318(b)(1)(B).
By authorizing the plan sponsors to designate how the contribution
is to be paid, Congress intended to give employers, employee
organizations and plan trustees (all of whom are plan sponsors)
flexibility in structuring the payment obligation to suit the plan's
particular circumstances. ``The Committee intends that multiemployer
pension plan trustees or bargaining parties should be able to adopt
uniform standard rules under which another employer, such as the last
employer for which the individual worked before going into the
uniformed service or the employer for which the returning service
member had the most service during a given period following release
from the uniformed service, may be considered the `reemploying'
employer for purposes of the pension provisions of Chapter 43. The
Committee also intends for multi-employer pension plan trustees to have
the right to determine that it would be more appropriate not to make
any individual employer liable for such costs and thus to be able to
adopt rules under which returning service members' reconstructed
benefits would be funded out of plan contributions and other assets
without imposing a specific additional funding obligation on any one
employer.'' S. Rep. No. 103-158, at 65 (1993). With respect to both
multiemployer and single employer plans, however, the Committee
indicated: ``It is the intent of the Committee that, with respect to
allocations to individual account plans under section 3(34) of ERISA,
allocations to the accounts of returning service members not be
accomplished by reducing the account balances of other plan
participants.'' Id.
The Department received one comment concerning funding obligations
of defined contribution
[[Page 75285]]
multiemployer pension plans. The commenter requested the Department
explain how such plans ``might be expected'' to fund obligations,
particularly given Congress's intent that funding obligations not be
met by reducing the account balances of other plan participants. The
commenter points out that, unlike single-employer plans, multiemployer
defined contribution plans often will not have a designated source of
funds that is sufficient to fund a plan's USERRA obligations,
particularly in cases in which such obligations are significant, such
as when employees return following an extended absence to perform
military service. While forfeitures and interest provide a source of
funds that might be utilized to fund USERRA obligations, that source
may not always be enough. The commenter submits that in some cases, the
only way in which a multiemployer defined contribution plan can fund
its obligations under USERRA might be to reduce the account balance of
other participants in the plan. While the Department acknowledges this
possibility, it nevertheless expects plans to comport with USERRA's
intent that the funding of obligations required by USERRA should avoid
a reduction in the account balances of other plan participants, and
plans should develop reasonable procedures to achieve this result to
the greatest extent possible.
If an employer participating in a multiemployer plan reemploys an
individual who is entitled to pension benefits attributable to military
service, then the employer must notify the plan administrator of the
reemployment within 30 days. 38 U.S.C. 4318(c). USERRA requires this
notice because multiemployer plan administrators may not be aware that
a contributing employer has reemployed a person who may have a pension
claim arising from his or her military service. In contrast,
administrators of single employer pension plans are more likely to have
access to such information. This notice requirement is implemented by
section 1002.266(b).
The Department received one comment recommending that in the
multiemployer context, section 1002.266 should require that ``non-
obvious entities,'' such as hiring halls, share the obligation to
notify the plan of the reemployment. The commenter points out that in
cases in which the reemploying employer is different from the pre-
service employer, the reemploying employer may be unaware that it has
reemployed the person pursuant to USERRA and therefore will be unable
to fulfill its notice obligation. As noted above, the Department has
modified section 1002.266(c) to reflect that in cases in which
different pre-service and post-service employers participate in a
multiemployer plan, they must also be linked by a common means or
practice of hiring the employee, such as common participation in a
union hiring hall. In addition, the Department agrees with the comment
that in these cases, the post-service employer may be unable to comply
with its 30-day notice obligation to the plan until it knows that it
has reemployed a person pursuant to USERRA. Accordingly, the Department
has modified section 1002.266(b) to provide that the 30-day period
within which notice to the plan must be made does not begin until the
reemploying employer has knowledge that the employee was reemployed
under USERRA. In addition, the amended provision further states that
the returning service member should notify the employer upon
reemployment that he or she has been reemployed following a period of
military service. The Department declines to adopt the recommendation
to require that non-employers such as hiring halls provide notice to
plans, because the statute places that obligation only upon the
reemploying employer. See 38 U.S.C. 4318(c).
Section 4318(b)(3) of the statute describes the method for
calculating the reemployed service member's compensation for the period
of military service to determine the amount the employer and service
member must contribute under the plan. 38 U.S.C. 4318(b)(3). Section
1002.267 provides that the compensation the reemployed service member
would have earned had he or she remained continuously employed provides
the usual benchmark. If that amount cannot be determined with
reasonable certainty (for example, where the compensation rate varies
based on commissions or tips), the compensation rate may be based on
the service member's average compensation rate during the 12-month
period before the service period. For an employee who worked fewer than
12 months before entering the service, the entire employment period
just prior to the service period may be used.
The Department received three comments regarding this provision.
One commenter recommended this provision should apply only where the
employee's absence for military service was a year or more in duration.
The Department declines to adopt this recommendation, which would
create a hierarchy of entitlements based on the duration of service
that is not supported by the statute. The Department received two
comments concerning the method in which the employee's imputed
compensation during the period of absence for military service should
be calculated. One of the commenters proposed the rule state that pay
raises that would have been awarded during the period of service be
included in the calculation. The other suggested the rule state that
any seasonal variations in compensation be included in the calculation.
The Department concludes that section 1002.267 adequately addresses
these issues, and therefore no change is necessary.
Although a service member who is not reemployed under the Act would
not be entitled to pension benefits for his or her period of service,
any vested accrued benefit in the plan to which the service member was
entitled prior to entering military service would remain intact whether
or not he or she was reemployed. Joint Explanatory Statement on H.R.
995, 103-353, at 2507 (1994); H.R. Rep. No. 103-65, Pt. I, at 36-37
(1993). The terms of the plan document control the manner and timing of
distributions of vested accrued benefits from the plan if the service
member is not reemployed by a participant employer.
USERRA provides specific guidance on certain aspects of the
reemployed service member's pension plan rights. At the same time,
employers, fiduciaries and plan administrators must also comply with
other laws that regulate plan administration but are beyond the scope
of these proposed regulations. Federal and State laws governing the
establishment and operation of pension plans, such as ERISA or the
Internal Revenue Code of 1986, as amended, and the regulations of the
Pension Benefit Guaranty Corporation, continue to apply in the context
of providing benefits under USERRA. Thus, for example, while section
4318(b)(1)(A) provides that liability for funding multiemployer pension
plan benefits for a reemployed service member shall be allocated as the
plan sponsor specifies, laws other than USERRA govern the technical
aspects of the allocation.
Subpart F--Compliance Assistance, Enforcement and Remedies
Compliance Assistance
USERRA authorizes the Secretary of Labor to provide assistance to
any person regarding the employment and reemployment rights and
benefits provided under the statute. 38 U.S.C. 4321. The Secretary acts
through the Veterans' Employment and Training Service (VETS). USERRA
promotes the
[[Page 75286]]
resolution of complaints without resort to litigation. In order to
facilitate this process, section 4321 allows VETS to request assistance
from other Federal and State agencies and volunteers engaged in similar
or related activities. Section 1002.277 describes VETS' authority to
provide assistance to both employees and employers. VETS' assistance is
not contingent upon the filing of a USERRA complaint.
The Department received two comments concerning its assistance in
USERRA cases. The first commenter suggested that the regulation
explicitly provide in section 1002.277, which states that that the
``Secretary of Labor, through [VETS], provides assistance to any person
or entity with respect to [USERRA],'' that the Secretary is
``required'' to provide such assistance. The Department concludes that
in stating that the Secretary ``shall provide'' such assistance,
USERRA's directive is mandatory, and the proposed rule adequately
reflects the mandate. A second commenter requested that the assistance
provided to the Department by the National Committee for Employer
Support of the Guard and Reserve (ESGR) be mentioned in the final rule.
The ESGR is an agency within the Office of the Assistant Secretary of
Defense for Reserve Affairs, and was established to promote cooperation
and understanding between Reserve component members and their civilian
employers and to assist in the resolution of conflicts arising from an
employee's military commitment. The Department works closely with ESGR
in its administration of USERRA, and the ESGR provides valuable service
to this Department in this regard. However, the Department concludes it
is not necessary to amend the text of the rule to include this
acknowledgement.
Investigation and Referral
Section 1002.288 implements USERRA's section 4322, which authorizes
VETS to enforce an individual's USERRA rights. Any person claiming
rights or benefits under USERRA may file a complaint with VETS if his
or her employer fails or refuses to comply with the provisions of
USERRA, or indicates that it will not comply in the future. 38 U.S.C.
4322(a). This avenue, however, is optional. Nothing in section 4322
requires an individual to file a complaint with VETS, to request
assistance from VETS, or to await notification from VETS of the right
to bring an enforcement action. Palmatier v. Michigan Dept. of State
Police, 1996 WL 925856 (W.D. Mich. 1996). Invoking VETS' enforcement
authority is an alternative provided by the statute once an employee
decides to file a USERRA complaint. See Gagnon v. Sprint Corp., 284
F.3d 839, 854 (8th Cir.), cert. denied 537 U.S. 1001 (2002). See also
sections 1002.288 and 1002.303. Alternatively, the individual may file
a complaint directly in the appropriate United States district court or
State court in cases involving a private sector or State employer,
respectively (or the Merit Systems Protection Board in cases involving
a Federal executive agency). See 38 U.S.C. 4323(b) (direct action
against State or private employer); 38 U.S.C. 4324(b) (direct action
against Federal executive agency). The Office of Personnel Management
has issued a separate body of regulations that implement USERRA for
employees of Federal executive agencies. See 5 CFR Part 353.
Section 1002.288 also implements the statutory criteria for the
form of a complaint. 38 U.S.C. 4322(b). Any complaint submitted to VETS
must be in writing, using VETS Form 1010, which may be found at http://www.dol.gov/libraryforms/forms/vets/vets-1010.pdf.
In addition, VETS
has recently developed an electronic Form 1010, which can be accessed
through the USERRA e-laws Advisor on its Web site at: http://www.dol.gov/vets.
Claimants may complete and submit the ``e1010''
online, and they will be automatically notified that their complaint
has been received and forwarded to the appropriate VETS staff member.
The Department has amended section 1002.288 to include the option of
electronic filing of the form 1010.
The regulation also contains the procedures for processing a
complaint. See section 1002.289. VETS provides technical assistance to
a potential claimant upon request, and his or her employer if
appropriate. 38 U.S.C. 4322(c). Technical assistance is not limited to
filing a complaint; it also includes responding to requests for
information on specific issues that are not yet part of a formal USERRA
complaint. Once an individual files a complaint, VETS must conduct an
investigation. If the agency determines that a violation of USERRA has
occurred, VETS undertakes ``reasonable efforts'' to effectuate
compliance by the employer (or other entity) with its USERRA
obligations. Section 1002.289-.290; 38 U.S.C. 4322(d). VETS notifies
the claimant of the outcome of the investigation and the claimant's
right to request that VETS refer the case to the Attorney General. See
38 U.S.C. 4322(e), 4323.
The Department received one comment concerning its efforts to
achieve compliance with USERRA, specifically regarding its obligation
to notify the claimant of the results of a USERRA investigation. The
commenter voiced disapproval that the Department ``communicate[s] the
results of its investigation to complaining employees but not to
employers.'' The comment requests that the final rule be modified to
provide that VETS will inform both the employee and the employer of the
results of its investigation. Section 4322(e) of USERRA requires that
the Department ``shall notify the person who submitted the complaint''
of the results of the investigation if the Department is unable to
resolve the complaint, and section 1002.290 reflects this mandate.
Further, in those cases in which VETS' investigation indicates that a
violation of USERRA has occurred, VETS must make reasonable efforts to
resolve the complaint by ensuring that the employer comes into
compliance. See 38 U.S.C. 4322(d). As a practical matter, efforts to
achieve compliance would necessitate notice to the employer and an
opportunity to discuss the investigative findings.
Section 1002.289 sets forth VETS' authority to use subpoenas in
connection with USERRA investigations. VETS may (i) require by subpoena
the attendance and testimony of witnesses and the production of
documents relating to any matter under investigation; and (ii) enforce
the subpoena by requesting the Attorney General to apply to a district
court for an appropriate order. 38 U.S.C. 4326(a)-(b). VETS' subpoena
authority does not apply to the judicial or legislative branch of the
Federal Government. 38 U.S.C. 4326(d).
Enforcement of Rights and Benefits Against a State or Private Employer
Section 4323 establishes the procedures for enforcing USERRA rights
against a State or private employer. ``State'' includes the several
States of the United States, the District of Columbia, the Commonwealth
of Puerto Rico, Guam, the Virgin Islands, and other territories of the
United States. 38 U.S.C. 4303(14). The political subdivisions of a
State (counties, municipalities and school districts), however, are
private employers for enforcement purposes. 38 U.S.C. 4323(j). Although
USERRA does not define ``private employer,'' the term includes all
employers other than the Federal Government or a State. Sections
1002.303 to .314 implement section 4323 of the Act.
An aggrieved individual may initiate a USERRA action either by
filing an action in court or by filing a complaint
[[Page 75287]]
with VETS. If a complaint is filed with VETS and voluntary compliance
cannot be achieved, the claimant may request VETS to refer the
complaint to the Attorney General. 38 U.S.C. 4323(a)(1). If the
Attorney General considers the complaint meritorious, the Attorney
General may represent the claimant and file a complaint in the
appropriate U.S. district court. In cases where representation is
provided by the Attorney General, the complainant is the plaintiff if
the case is brought against a private employer, including a political
subdivision of a State; however, if the complaint involves a State
employer, it is brought in the name of the United States. A claimant
may also proceed directly to the courts in the following circumstances:
(i) The claimant foregoes informal resolution by VETS; (ii) the
claimant declines referral of the complaint to the Attorney General
after an unsuccessful informal resolution; or, (iii) the Attorney
General refuses to represent the claimant after referral. 38 U.S.C.
4323(a)(2). Sections 1002.303 and .304 implement these provisions.
Section 4323 establishes requirements for several aspects of the
judicial process involving USERRA complaints, which are explained in
sections 1002.305 through 1002.311. The United States district courts
have jurisdiction over actions against a State or private employer
brought by the United States, and actions against a private employer by
a person. For actions brought by a person against a State, the action
may be brought in a State court of competent jurisdiction. 38 U.S.C.
4323(b); section 1002.305. Venue for an action between the United
States and a State lies in any Federal district in which the State
exercises authority or carries out functions. Venue for an action
against a private employer lies in any Federal district in which the
employer maintains a place of business. 38 U.S.C. 4323(c); section
1002.307. Only persons claiming rights or benefits under USERRA (or the
United States acting on their behalf) have standing to initiate a
USERRA action. 38 U.S.C. 4323(f). Section 1002.308 therefore prohibits
employers or other entities (such as pension plans or unions) from
initiating actions. See H.R. Rep. No. 103-65, Pt. I, at 39 (1993). As
for the respondents necessary to maintain an action, the statute
requires only the employer or prospective employer to be named as
necessary parties, and section 1002.239 implements this provision. 38
U.S.C. 4323(g); see H.R. Rep. No. 103-65, Pt. I, at 39 (1993).
No fees or court costs may be imposed on the claimant. In addition,
the court may award a prevailing claimant his or her attorney's fee,
expert witness fees, and other litigation expenses. 38 U.S.C. 4323(h);
section 1002.310.
No State statute of limitations applies to a USERRA proceeding. 38
U.S.C. 4323(i). Section 1002.311 provides that an unreasonable delay by
the claimant in asserting his or her rights that causes prejudice to
the employer may result in dismissal of the claim under the doctrine of
laches. See H.R. Rep. No. 103-65, Pt. I, at 39 (1993). The legislative
history relies in part on a Sixth Circuit decision, which held that any
limitation upon a former employee's right to sue is derived from the
equitable doctrine of laches rather than an analogous State statute of
limitations. See Stevens v. Tennessee Valley Authority, 712 F.2d 1047,
1049 (6th Cir. 1983) (decided under the predecessor Veterans'
Reemployment Rights Act).
The Department has long taken the position that no Federal statute
of limitations applied to actions under USERRA. USERRA's provision that
State statutes of limitations are inapplicable, together with USERRA's
legislative history, show that the Congress intended that the only
time-related defense that may be asserted in defending against a USERRA
claim is the equitable doctrine of laches. 38 U.S.C. 4323(i); see S.
Rep. No. 103-158, at 70 (1993); H.R. Rep. No. 103-65, Pt. I, at 39
(1993). However, a Federal district court has ruled that USERRA claims
are subject to a four-year statute of limitations enacted prior to the
enactment of USERRA that imposes a general limitations period for all
Federal causes of action where no statute of limitations is ``otherwise
provided by law,'' 28 U.S.C. 1658. Rogers v. City of San Antonio, 2003
WL 1566502, *7 (W.D. Tex.) (applying section 1658 because ``USERRA was
essentially a new Act'' designed to replace entirely the VRRA in order
to ``clarify, simplify, and where necessary, strengthen the existing
veterans'' employment and reemployment rights provisions''), reversed
on other grounds, Rogers v. City of San Antonio, 392 F.3d 758, 772 fn.
36, 773 (5th Cir. 2004) (court declined to consider whether no statute
of limitations applies to USERRA, noting the Department of Labor's
position in its Notice of Proposed Rule Making, because the plaintiffs
argued at the district court level that the four-year limitations
period applied and therefore waived the no-limitations argument in the
proceedings below).
Another recent district court decision, Akhdary v. City of
Chattanooga, No. 1:01-CV-106, 2002 WL 32060140 (E.D. Tenn. May 22,
2002), held that 28 U.S.C. 1658 does not apply to USERRA claims. The
recent decision of the United States Supreme Court in Jones v. R.R.
Donnelley & Sons Co., 541 U.S. 369(2004) is not dispositive because
USERRA ``otherwise provides by law'' that no statute of limitations
applies, and because, with respect to some USERRA claims, the cause of
action previously existed under the VRRA and consequently predates the
effective date of 28 U.S.C. 1658.
The Department received seven comments concerning the applicability
of a Federal statute of limitations to actions under USERRA. Commenters
included the National Employment Lawyers Association (NELA), ORC
Worldwide, Equal Employment Advisory Council, Society for Human
Resource Management, Food Marketing Institute, U.S. Chamber of
Commerce, and a law firm. NELA recommended that the Department declare
in the final rule that 28 U.S.C. 1658 does not apply to actions under
USERRA, and that the Department rejects those court decisions to the
contrary. The remaining six commenters opposed the Department's
position on the issue for various reasons: Two comments argued that the
proposed provision exceeds the Department's regulatory authority
because it is outside of any statutory authority and because it is
``vague and unclear''; one comment suggested deleting the provision
pending resolution of the matter by the courts; and the three remaining
comments submitted that 28 U.S.C. 1658 conclusively applies to actions
under USERRA.
After considering these comments, the Department will continue to
adhere to its view that section 1658 does not apply to USERRA for two
reasons. First, as noted above, because USERRA ``otherwise provides by
law'' adequate guidance on the statute of limitations issue, the
residual limitations period in section 1658 is inapplicable. See, e.g.,
Miller v. City of Indianapolis, 281 F.3d 648, 653-654 (7th Cir. 2002)
(court held that laches barred claims under USERRA; parties did not
argue the application of Sec. 1658 and the court did not raise its
applicability). In addition, as noted above, the Wallace court
specifically rejected the argument that a Federal statute of
limitations applied to a claim under USERRA's predecessor, the Vietnam
Era Veterans' Readjustment Assistance Act (VEVRAA), which includes the
same Congressional intent that no limitations period other than laches
should apply. Wallace v. Hardee's of Oxford, 874 F. Supp. 374, 376-77
(M.D. Ala. 1995). The court
[[Page 75288]]
reasoned that Congress enacted the bar on use of State statutes of
limitations specifically to overrule case law on that issue. The
Wallace court further concluded that Congress did not enact a bar on
use of Federal statutes of limitations because there was no need--no
court had ever applied a Federal limitations statute to decide a claim
under USERRA. Id.
The Department views the Supreme Court's interpretation of section
1658 in R.R. Donnelley as supportive of the argument that the four-year
limitations period should apply only to statutes whose claims have been
resolved through the borrowed application of State statutes of
limitations, a category that does not include USERRA. In R.R.
Donnelley, the Court relied heavily on Congress's purpose in enacting
section 1658, and looked beyond the terms of the phrase ``arising
under'' to examine ``the context in which [section 1658] was enacted
and the purposes it was designed to accomplish.'' Id. at 377. The Court
concluded that ``a central purpose'' of section 1658 was to minimize
the occasions for the practice of borrowing State statutes of
limitations. Id. at 380, fn. 13 (citing H.R. Rep. No. 101-734 at 24
(1990)). The Court's holding thus ``best serves Congress'' interest in
alleviating the uncertainty inherent in the practice of borrowing State
statutes of limitations while at the same time protecting settled
interests.'' Id. at 382.
Unlike statutes to which section 1658 was intended to apply, USERRA
has no ``void'' that has ``created so much unnecessary work for federal
judges.'' Id at 380. Because USERRA already prohibits borrowing of
State statutes of limitations, it is not the type of statute Congress
had in mind when it enacted section 1658. In fact, courts have
``borrowed'' from USERRA and its predecessors in order to determine an
appropriate statute of limitations for claims under other statutes.
See, e.g., Stevens, 712 F.2d at 1056 (``borrowing'' from the most
analogous Federal statute, VRRA, to determine that laches rather than
State limitations period applies to action under the Veteran's
Preference Act). These decisions indicate that USERRA offers enough
guidance on the statute of limitations issue that it should fall within
the ``otherwise provided by law'' exception to section 1658.
The second basis for the argument that section 1658 does not apply
to claims under USERRA is also found in the R.R. Donnelley case. In
R.R. Donnelley, the Court determined that the limitations statute
governs a cause of action ``if the plaintiff's claim against the
defendant was made possible by a post-1990 enactment.'' R.R. Donnelley,
541 U.S. at 382. Many, and possibly most, claims arising under 1994's
USERRA were possible under USERRA's predecessor statutes and therefore
not ``made possible by a post-1990 enactment'' within the meaning of
R.R. Donnelley. USERRA is simply a Congressional reaffirmation of
decades-old law governing reemployment rights of service members, and
contains few new causes of action, See, e.g., Akhdary v. City of
Chattanooga, 2002 WL 32060140, *6 (E.D. Tenn. 2002) (section 1658 does
not apply to claims under USERRA because USERRA amends the preexisting
law of the VRRA). But see Rogers v. City of San Antonio.
Although the Department will continue to advance the view that
section 1658 does not apply to cases arising under USERRA, there are
conflicting decisions regarding the applicability of section 1658 to
USERRA, and the issue will ultimately be resolved by the courts. Until
the issue is resolved, potential USERRA plaintiffs would be well
advised to file USERRA claims within section 1658's four-year period.
Accordingly, the Department has amended section 1002.311 to acknowledge
that at least one court has held that 28 U.S.C. 1658 applies to actions
under USERRA, and that individuals asserting rights under USERRA should
determine whether the issue of the applicability of the Federal four-
year statute of limitations has been resolved and, in any event, act
promptly to preserve their rights under USERRA.
Finally on the issue of time-barred claims, Rep. John Boehner,
Chairman of the U.S. House of Representatives Committee on Education
and the Workforce, requested the final rule provide some explanation of
the ``equitable doctrine of laches,'' which is the common-law principle
applicable to USERRA cases that serves to bar untimely actions. Section
1002.311, which states that USERRA claims may be barred as untimely if
``an individual unreasonably delays asserting his or her rights, and
that unreasonable delay causes prejudice to the employer,'' adequately
incorporates the principles that govern the doctrine of laches.
With respect to remedies, the court has broad authority to protect
the rights and benefits of persons covered by USERRA. The court may
order the employer to comply with USERRA's provisions; compensate the
claimant for lost wages and/or benefits; and pay additional,
liquidated, damages equivalent to the lost wages/benefits if it
determines that the employer's violation is willful. 38 U.S.C.
4323(d)(1). The legislative history establishes that ``a violation
shall be considered to be willful if the employer or potential employer
`either knew or showed reckless disregard for the matter of whether its
conduct was prohibited by the [provisions of this chapter].' '' H.R.
Rep. No. 103-65, Pt. I, at 38 (1993), quoting Hazen Paper Co. v.
Biggins, 507 U.S. 604, 617 (1993) (holding that a violation of the ADEA
is willful if the employee either knew or showed reckless disregard for
whether the statute prohibited its conduct); see also Fink v. City of
New York, 129 F.Supp.2d 511, 523-25; Duarte v. Agilent Technologies,
Inc., 366 F.Supp.2d 1039, 1048. Section 1002.312 lists the possible
remedies allowed under section 4323(d). Section 1002.313 states that
compensation consisting of lost wages, benefits or liquidated damages
derived from any action brought on behalf of the United States shall be
paid directly to the aggrieved individual. Finally, the court may use
its equity powers to enforce the rights guaranteed by USERRA. 38 U.S.C.
4323(e); section 1002.314.
The Department received one comment broadly concerning the issues
of enforcement and court procedures, arguing that the proposed
regulations were attempting to create substantive rights not provided
for by USERRA and that are ``inconsistent with a number of federal
statutes and court decisions.'' In addition, the comment states that
through the regulations, the Department is attempting to ``establish
jurisdiction, venue, statutes of limitation, * * * [and] provide
remedies not set forth by statute.'' In registering its complaint, the
commenter fails to specify the allegedly conflicting ``federal statutes
and court decisions'' to which it refers. Moreover, following a
thorough review during the rule-making process and the preparation for
publication of the final rule, the Department is confident that every
provision in the final rule has a sound basis in the statute's
directives, its legislative intent, and in case law under USERRA.
Effective Date and Compliance Deadlines
These regulations impose no new legal requirements but explain
existing ones, in some cases for the first time. In the Notice of
Proposed Rulemaking, the Department proposed that these regulations be
effective 30 days after publication of the final rule, and requested
comment on whether this would allow adequate time for covered parties
to come into full compliance. The Department noted at that time that it
expected that most employers were already in full compliance. However,
to
[[Page 75289]]
the extent that these regulations clarify USERRA's requirements and
require adjustments in employer policies and practices, the Department
expressed its intent to allow a reasonable amount of time for the
transition to take place.
The Department received eight comments concerning the proposed
effective date of the final rule following its publication. One of the
commenters, an employer association, agreed that the 30-day effective
date was reasonable. Three commenters recommended adoption of a 90-day
effective date. The remaining four commenters recommended longer
periods that ranged from 180 days to the end of the benefits plan year
following the plan year in which the final rule is published. In
addition, one commenter who proposed a 90-day effective date indicated
that the additional time is necessary to permit small businesses the
opportunity to ``study'' the regulations. All commenters proposing an
expansion of time based their recommendations on the need for employers
and plan administrators to have sufficient time to make adjustments to
health and benefit plans necessitated by provisions in the proposed
rule.
As noted in Subparts D and E, above, the Department has made
several significant revisions to the health and pension plan
provisions. After considering the comments from health and pension plan
experts, the Department concludes that these modifications have
eliminated the administrative burden associated with those sections of
the proposed rule. As a result, the Department anticipates that
significant plan adjustments, as raised in the comments, will not be
necessary. In addition, as stated above, the regulations impose no new
legal requirements but merely explain existing ones; small and large
businesses alike should not require additional time to ``study'' and
come into compliance with a statute to which they have been subject for
many years. For all these reasons, the Department has retained the
provision that states that the rule will become effective 30 days after
publication of the final rule.
VI. Procedural Determinations
A. Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501, et
seq.), Federal agencies must seek Office of Management and Budget (OMB)
approval for all collections of information (i.e., paperwork). As part
of the approval process, agencies must solicit comment from affected
parties with regard to the collections of information, including the
cost and burden-hour estimates made for these collections by the
agencies. The paperwork cost and burden-hour estimates that an agency
submits to OMB are termed an ``Information Collection Request'' (ICR).
In the proposed rule, VETS requested the public to comment on the
information-collection (i.e., reporting and recordkeeping) requirements
contained in the ICR that it submitted to OMB (69 FR 56282). The
following chart describes these requirements.
Comparison of Final Rule and Statutory Language Containing Paperwork
Requirements
------------------------------------------------------------------------
Statutory provision and
Final provision and language language
------------------------------------------------------------------------
1002.85(a) The employee or an 4312(a)(1) [Reemployment rights
appropriate officer of the uniformed and benefits available if] the
service in which his or her service is person (or an appropriate
to be performed, must notify the officer of the uniformed
employer that the employee intends to service in which such service
leave the employment position to is performed) has given
perform service in the uniformed advance written or verbal
services. * * * notice of such service to such
person's employer[.]
1002.85(c) The employee's notice to the
employer may be either verbal or
written.
1002.115 * * * Upon completing service 4312(a)(3) [Reemployment rights
in the uniformed services, the and benefits available if] the
employee must notify the pre-service person reports to, or submits
employer of his or her intent to an application for
return to the employment position by reemployment to, such employer
either reporting to work or submitting in accordance with the
a timely application for reemployment. provisions of subsection (e).
1002.118 * * * The employee may apply
orally or in writing.
1002.193 * * * The employer must 4313(a)(2)(A) [A person
determine the seniority rights, entitled to reemployment shall
status, and rate of pay as though the be promptly reemployed] in the
employee had been continuously position of employment in
employed during the period of service. which the person would have
been employed if the
continuous employment of such
person with the employer had
not been interrupted by such
service, or a position of like
seniority, status and pay
[with certain exceptions].
1002.266(b) * * * An employer that 4318(c) Any employer who
contributes to a multiemployer plan reemploys a person under this
and that reemploys the employee * * * chapter and who is an employer
must provide written notice of contributing to a
reemployment to the plan multiemployer plan * * * under
administrator. * * * which benefits are or may be
payable to such person by
reason of the obligations set
forth in this chapter, shall *
* * provide information, in
writing, of such reemployment
to the administrator of the
plan.
1002.288 A complaint may be filed with 4322(b) Such complaint shall be
VETS either in writing, using VETS in writing, be in such form as
Form 1010, or electronically, using [VETS] may prescribe, include
VETS Form e1010 * * * [and] must the name and address of the
include the name and address of the employer against whom the
employer, a summary of the basis for complaint is filed, and
the complaint, and a request for contain a summary of the
relief. allegations that form the
basis of for the complaint.
------------------------------------------------------------------------
Note: VETS Form 1010 currently is approved by OMB, 1293-0002,
expiration date March 2007.
The following four paragraphs describe the burden and cost
estimates for the paperwork requirements described in this chart.
Notifying employers of departure from employment (1002.85). Based
on its extensive industry knowledge, VETS determined that, in the
overwhelming majority of cases, employees will provide this information
orally, and that it will take them only a few seconds to complete the
necessary communication. In view of the brief period of communication
involved, VETS believes that this information-collection provision will
impose a de minimus burden on employees and employers; therefore, VETS
claims no burden for this activity.
Notifying employers of plan to return to pre-service employment
(1002.115). Similar to the previous paragraph, VETS estimates that in
the vast majority of instances in which employees communicate the
required notice to employers, they will do so orally and
[[Page 75290]]
will take only a few seconds to complete the task. Therefore, VETS
considers this information-collection provision to be de minimus, and
claims no burden for this activity.
Determining reemployment positions (1002.193). Estimates made by
the Department of Defense indicate that 50,000 to 125,000 service
members covered by USERRA will demobilize in the coming year. For the
purpose of making burden-hour and cost estimates for this provision,
VETS assumes that the maximum number of service members (i.e., 125,000)
will demobilize each year, and that all of these service members plan
to resume their pre-service employment positions (a highly unlikely
possibility). Using its extensive experience with the same provision in
the USERRA statute, VETS estimates that a secretary (at an hourly wage
rate of $18.99, including benefits) takes about 20 minutes (.33 hour)
to compile and review the necessary information (i.e., seniority
rights, status, and rate of pay) and to make a preliminary
determination regarding a returning service member's reemployment
position, and that a supervisor (at an hourly wage rate of $22.97,
including benefits) requires an average of 10 minutes (.17 hour) to
review this information and approve the final determination. Therefore,
this provision will result in an annual employer burden of 62,500 hours
at a cost of $1,271,451.
Notifying plan administrators of reemployment (1002.266(b)). Data
compiled by the Department of Labor from 1998 indicate that about 6
percent of all private-wage and salary workers participate in
multiemployer defined-benefit plans. As noted previously, 50,000 to
125,000 service members covered by USERRA will demobilize in the coming
year. If 6 percent of these uniformed-service members reenroll in a
multiemployer pension plan after demobilization, then this information-
collection provision will apply to 7,500 of these returning service
members. Based on its previous experience with this provision in the
USERRA statute, VETS determined that it takes about 30 minutes (.5
hours) for a secretary to type and mail a standardized letter to a plan
administrator that provides the administrator with notification of an
employee's reemployment status. Therefore, the annual burden-hour and
cost estimates for the proposed information-collection provision are
3,750 hours and $71,213.
VETS received no public comment on the four proposed collections of
information, nor is any other record evidence available indicating that
the Agency's cost and burden-hour estimates as described in the
proposal are incorrect or need revision. Therefore, VETS did not revise
any of the proposed collections of information contained in the ICR for
this final rule.
In the final rule, the Department added the following statement to
section 1002.171: ``The employer should counsel the employee about
these options and the consequences of selecting one or the other.'' The
use of the verb ``should'' makes this provision advisory, i.e., the
employer has discretion in determining whether to communicate
information about the available options to an employee. Therefore, this
provision is not enforceable, and will not be enforced, by VETS.
Consequently, the Agency is not including this provision in its
estimate of the paperwork burden attributable to this final rule.
The first four paperwork requirements described in the Table above
have been approved by OMB, 1293-0011, which expires December,
2008. The final paperwork requirement relating to VETS Form 1010, was
previously approved by OMB, 1293-0002, which expires March,
2007.
B. Final Economic Analysis and Regulatory Flexibility Certification
VETS is treating this final rule as a ``significant regulatory
action'' within the meaning of Executive Order 12866 (58 FR 51735;
September 30, 1993) (``Order''), because of its importance to the
public and the Department's priorities. However, because this final
rule is not ``economically significant'' as defined in section 3(f)(1)
of EO 12866 as discussed below, it does not require a full economic-
impact analysis under section 6(a)(3)(C) of the Order. Additionally,
the rule will impose no additional costs on any private or public
sector entity, and will not meet any of the criteria for an
economically significant or major rule specified by the Order or
relevant statutes. Consequently, the final rule is not a ``major rule''
under the Unfunded Mandates Reform Act, 2 U.S.C. 1501, et seq., or
Section 801 of the Small Business Regulatory Enforcement Fairness Act
(SBREFA), 5 U.S.C. 801.
One commenter took exception to the cost determinations made by
VETS in the proposed rule. This commenter had concerns about the cost
of the proposed regulations for small businesses. In expressing these
concerns, the commenter asserted:
Because there is no size limitation in the USERRA, these
regulations will apply to employers of any size. To say that this
regulation will impose no costs at all on employers is unrealistic *
* *. To the extent that employers have handled [compliance with
USERRA] differently because of ambiguity, these changes will likely
have a cost impact which will apply to all employers, even the
smallest. Merely by publishing these regulations, employers will be
on more notice about their obligations and[,] therefore[,] will be
more likely to come into compliance.
The Agency concludes that this commenter misunderstood its use of
the term ``cost'' as used in this context. Accordingly, VETS used the
term in the proposal to describe additional costs, over and above the
costs of complying with USERRA, that employers would bear in complying
with the proposed regulations. In addition, the commenter noted that
compliance with the proposed standard may increase employer costs
because some employers may have misinterpreted the USERRA provisions,
or because additional employers may come into compliance. However, VETS
believes that employers have an existing statutory obligation to comply
with USERRA, and any increase in compliance, or alteration in the
manner of compliance, that results from the final rule only ensures
that employers are meeting these statutory obligations. Consequently,
the final regulations will afford service members with all of the
benefits to which they are entitled under USERRA.
Another commenter objected to the statement in the proposal that
the regulations would ``impose no new legal requirements'' and ``would
not impose any additional costs on employers'' (Ex. 60). Accordingly,
this commenter asserted that proposed section 1002.266(c) would
increase compliance costs by holding contributing employers to a
multiemployer pension plan responsible for the participation, vesting,
and benefit-accrual protections to which returning service members
would be entitled, even though they were not the pre-service employers
of that employee. The Agency has responded to this comment in Subpart E
of Section V (``Section-by-Section Summary of Final Rule and Discussion
of Comments'') of this preamble. Based on this response, VETS believes
that final section 1002.266(c) will not increase the cost to employers
of complying with these final regulations.
In the proposed rule, VETS noted that the Senate Committee report
accompanying the passage of USERRA noted that the ``[Congressional
Budget Office] estimates that the enactment of [section 9 of USERRA,
transitioning from the predecessor veterans' reemployment rights law to
USERRA] would entail no significant cost.'' (See
[[Page 75291]]
S. Rep. No. 103-158, at 82 (1993)). The same report states further on
page 84, under the heading ``Regulatory Impact Statement,'' that:
[T]he Committee [on Veterans' Affairs] has made an evaluation of
the regulatory impact which would be incurred in carrying out the
Committee bill. The Committee finds that the enactment of the bill
would not entail any significant new regulation of individuals or
business * * *.
In this regard, USERRA is the latest in a series of laws protecting
veterans' employment and reemployment rights going back to the
Selective Training and Service Act of 1940. USERRA's immediate
predecessor was the Veterans' Reemployment Rights Act (``VRRA'').
USERRA continued the fundamental protections of the VRRA and the case
law interpreting the VRRA while clarifying that law, and VETS considers
that by recodifying and clarifying longstanding statutory and case law
under the VRRA, USERRA did not impose new economic burdens on
employers.
This final rule implements USERRA, and while it imposes no new
costs, VETS considers that it may provide some economic benefits. For
example, delays may occur when employers respond to employee claims and
inquiries concerning USERRA due to confusion or ambiguity as to the
correct interpretation of USERRA. Moreover, some employee claims are
contested in part because of a lack of employer knowledge about the
statute. The final rule should reduce these costs by: providing
employers with accurate information necessary to respond efficiently
and effectively to employee claims; potentially reducing the number of
contested claims and the resulting need for administrative resolution
or legal action; expediting the settlement of outstanding claims
because employers and employees will have an enhanced knowledge of
their rights and responsibilities under USERRA; and reducing the number
of inquiries made by employers and employees to administrative agencies
such as VETS and the Office of Personnel Management. In addition, by
lessening the possibility of contested claims, the final rule also will
reduce the likelihood that employees will receive liquidated damages
from employers should the claims prove successful.
VETS noted in the proposal that it:
[E]xpects the rule to benefit both pension- and health-plan
sponsors and participants by helping to dispel plan administrators'
uncertainty about compliance with USERRA provisions, and by reducing
delays and the risk of inadvertent noncompliance. The rule may
assist participants and beneficiaries to better understand their
USERRA rights as well, thereby averting disputes and lost
opportunities to elect continuing health-plan coverage, or to obtain
reinstated pension-plan coverage.
VETS maintains these views with respect to this final rule.
Therefore, based on this discussion and the record evidence, VETS
concludes that the final rule will not impose any additional costs on
employers. Consequently, this final rule requires no final economic
analysis. Furthermore, because the final rule imposes no costs on
employers, VETS certifies that it will not have a significant impact on
a substantial number of small businesses; accordingly, the Agency need
not prepare a final regulatory flexibility analysis. In this regard,
VETS finds that the economic burden of the final rule is equitably
distributed across businesses, including small businesses, because the
number of employees covered by the final rule will vary in proportion
to the size of the business (i.e., small businesses have proportionally
fewer covered employees than medium or large businesses).
C. Unfunded Mandates
The Congressional Budget Office (``CBO'') determined that State and
local governments would incur no cost resulting from passage of USERRA
(see S. Rep. No. 103-158, at 84 (1993)). Consequently, under this final
rule, State and local governments will incur an obligation to comply
with USERRA to the same extent as private employers; therefore, when
USERRA (and this final rule) impose no cost on private employers, they
also impose no cost on State and local government employers. The House
Committee Report for USERRA (H.R. Rep. No. 103-65, Pt. I, at 49-51
(1993)) contained similar CBO language. However, the CBO determined
that, because of changes to Thrift Savings Plan provisions, the cost
for the Federal government to comply with USERRA are about $1 million
in FY 1994 and 1995, and zero cost thereafter.
The Agency reviewed this final rule according to the Unfunded
Mandates Reform Act of 1995 (2 U.S.C. 1501 et seq.) and Executive Order
12875 (58 FR 58093; October 26, 1993). Based on the CBO determinations
described in the previous paragraph, the Agency has determined that
this final rule does not include any Federal mandate that will result
in increased expenditures by State, local, or tribal governments in the
aggregate of more than $100 million, or increased expenditures by the
private sector of more than $100 million. Therefore, the Agency
concludes that this final rule: (1) Will not affect State, local, or
tribal entities significantly or uniquely; (2) does not contain an
unfunded mandate requiring consultation with these entities; and (3)
will not impose substantial direct compliance costs on Native American
tribal governments. Accordingly, this final rule does not mandate that
State, local, or tribal governments adopt new, unfunded regulatory
obligations.
D. Federalism
This final rule does not have federalism implications as specified
under Executive Order 13132 (64 FR 43255; August 10, 1999) because it
has no substantial direct effect on the States, on the relationship
between the national government and the States, or on the distribution
of power and responsibilities among the various levels of government.
Section 4302 of USERRA provides that its provisions supersede any and
all laws of the States as they relate to any rights and benefits
provided under USERRA if such State laws reduce, limit, or eliminate in
any manner any right or benefit provided by USERRA. Accordingly, the
requirements implemented by this final rule do not alter these
fundamental statutory provisions with respect to military service
members' and veterans' employment and reemployment rights and benefits.
Therefore, this final rule has no implications for the States, or for
the relationship or distribution of power between the national
government and the States.
E. Congressional Review Act and Executive Order 12866
Consistent with the Congressional Review Act, 5 U.S.C. 801, et
seq., the Department will submit to Congress and to the Comptroller
General of the United States, a report regarding the issuance of this
Final Rule prior to the effective date set forth at the outset of this
document.
OMB has determined that this rule is not a ``major rule'' as
defined by the Congressional Review Act (Section 804 of the Small
Business Regulatory Enforcement Fairness Act of 1996), and that it is
not ``economically significant,'' as defined by Executive Order 12866,
as it will not have an economic impact of $100 million in any one year.
USERRA is the latest in a series of laws protecting service members'
employment and reemployment rights dating back to 1940, and USERRA
continues the fundamental protections contained in those longstanding
statutes. As the Senate Committee report accompanying the passage of
USERRA noted, the Congressional Budget Office determined that the
enactment of USERRA would impose no new economic burdens on
[[Page 75292]]
employers. See S. Rep. No. 103-158, at 82 (1993). Similarly, the Senate
Report's Regulatory Impact Statement concluded that USERRA's regulatory
impact ``would not entail any significant new regulation of individuals
or business* * *.'' As would be expected, therefore, the vast majority
of these regulations simply restate statutory requirements that would
be self-implementing, even in the absence of the regulatory action.
Accordingly, USERRA and promulgation of this rule impose no additional
costs on employers or on any private or public sector entity that would
approach the $100 million threshold.
As noted above, VETS received two comments regarding its conclusion
in the proposed rule that the regulation would not impose any
additional costs on the regulated community. One comment suggested that
the final rule would increase compliance costs to employers because the
clarifications contained in the rule may result in modifications to
employers' compliance strategies and the novelty of the rule may
increase overall compliance. VETS recognizes that the rule may lead to
an increase in compliance, but the complexity inherent in assessing the
economic costs and benefits of this rule and the relative paucity of
data associated with implementation costs provide insufficient
information to estimate what the effect of additional compliance might
be. However, as discussed below, VETS does not consider that such costs
would approach the $100 million threshold, and no commenter suggested
that it would.
One of the primary effects of USERRA is that employees who have
been absent from civilian employment due to military service will be
reinstated to the appropriate reemployment position. Because employees
absent from employment for military service are not required to be
compensated by their civilian employer during that service, and because
temporary replacements hired during the period of military service may
be displaced by returning service members, costs to employers in
complying with the reinstatement obligation will reflect insubstantial
administrative expenditures. An additional effect of USERRA is its
reduction of employment discrimination against members of the uniformed
service, which presents no additional costs to compliant employers and
offers an intangible economic good to the economy, which is moved
toward a discrimination-free model. Similarly, USERRA's provision that
employees may continue their employment-based health coverage during
uniformed service specifies that employees must pay for that benefit at
no more than 102% of the cost of the premium, so that employers'
premium and administrative costs of maintaining the coverage are
minimized.
USERRA's requirement that employers reasonably accommodate
employees returning from service with a service-related illness or
injury presents some costs to employers. However, when costs to the
economy associated with a similar requirement under the Americans with
Disabilities Act, 42 U.S.C 12101, were evaluated, those costs were
calculated to be well below the $100 million threshold, in part due to
increased productivity resulting from the optimization of investment in
human capital. See 56 FR 8578, 8582-8584 (Feb. 28, 1991). Moreover, by
comparison, the ADA's ``reasonable accommodation'' requirement is
broader than USERRA's in that it is not limited to the provision of
reasonable accommodations only to employees returning from service with
service-related illnesses or injuries. Accordingly, reasonable
accommodation costs to employers under USERRA should be less
significant than similar costs generated by implementation of the ADA.
USERRA's provision that employers maintain their obligation to
provide pension benefits to employees absent from employment due to
military service as if there were no break in service does impose costs
on employers and plans. However, VETS estimates that such costs will be
incurred by a small percentage of covered employers, and that the
resulting impact on the economy from this provision is not great. A
second comment suggested that the rule imposed additional pension-
related costs on post-service employers beyond those costs already
imposed by the statute. However, VETS has narrowed the provision of the
rule at issue in the comment, and concludes that the provision includes
no additional regulatory costs beyond those associated with statutory
compliance. As a final note, the benefits of USERRA and this
implementing regulation include outcomes that cannot be readily and
precisely monetized or quantified but that greatly outweigh any minimal
additional costs. As noted above, these include the societal benefit of
nondiscrimination in employment. Further, by protecting employment and
reemployment rights of service members, USERRA and this regulation
remove disincentives to enlistment and promote a national defense.
After considering all comments, the conclusion that this rule presents
minimal additional costs to private or public sector entities remains
sound. Accordingly, this regulation is not a major rule for purposes of
the Congressional Review Act, nor economically significant for purposes
of Executive Order 12866.
VII. Statutory and Rulemaking Background
The Uniformed Services Employment and Reemployment Rights Act
(USERRA), Pub. L. 103-353, 108 Stat. 3150 (codified at 38 U.S.C. 4301-
4333), became law on October 13, 1994, replacing the Veterans'
Reemployment Rights Act (VRRA). Congress enacted USERRA, in part, to
clarify the ambiguities of the VRRA and strengthen the rights of
service members and veterans. USERRA's guiding principle is that a
person who leaves civilian employment to perform service in the
uniformed services is entitled to return to that job with the
seniority, status, and rate of pay that would have accrued during the
absence, provided the person meets USERRA's eligibility criteria.
USERRA applies to voluntary or involuntary military service in
peacetime as well as wartime. Its provisions apply to virtually all
employers, regardless of size. USERRA also codifies 55 years of
accumulated case law and clarifies previously existing rights and
obligations. For most purposes, USERRA applies to reemployments
initiated on or after December 12, 1994. Congress enacted amendments to
the Act in 1996, 1998, 2000, and 2004.
VIII. Statutory Authority
This regulation is proposed pursuant to the authority in section
4331(a) of USERRA (Pub. L. 103-353, 108 Stat. 3150, 38 U.S.C. 4331(a)).
List of Subjects in 20 CFR Part 1002
Labor, Veterans, Pensions.
Final Regulation
0
For the reasons set out in the preamble, the Department revises Part
1002 of Chapter IX of Title 20 of the Code of Federal Regulations
implementing the provisions of USERRA as follows:
[[Page 75293]]
PART 1002--REGULATIONS UNDER THE UNIFORMED SERVICES EMPLOYMENT AND
REEMPLOYMENT RIGHTS ACT OF 1994
Subpart A--Introduction to the Regulations Under the Uniformed Services
Employment and Reemployment Rights Act of 1994
General Provisions
Sec.
1002.1 What is the purpose of this part?
1002.2 Is USERRA a new law?
1002.3 When did USERRA become effective?
1002.4 What is the role of the Secretary of Labor under USERRA?
1002.5 What definitions apply to USERRA?
1002.6 What types of service in the uniformed services are covered
by USERRA?
1002.7 How does USERRA relate to other laws, public and private
contracts, and employer practices?
Subpart B--Anti-Discrimination and Anti-Retaliation
Protection From Employer Discrimination and Retaliation
1002.18 What status or activity is protected from employer
discrimination by USERRA?
1002.19 What activity is protected from employer retaliation by
USERRA?
1002.20 Does USERRA protect an individual who does not actually
perform service in the uniformed services?
1002.21 Do the Act's prohibitions against discrimination and
retaliation apply to all employment positions?
1002.22 Who has the burden of proving discrimination or retaliation
in violation of USERRA?
1002.23 What must the individual show to carry the burden of proving
that the employer discriminated or retaliated against him or her?
Subpart C--Eligibility for Reemployment
General Eligibility Requirements for Reemployment
1002.32 What criteria must the employee meet to be eligible under
USERRA for reemployment after service in the uniformed services?
1002.33 Does the employee have to prove that the employer
discriminated against him or her in order to be eligible for
reemployment?
Coverage of Employers and Positions
1002.34 Which employers are covered by USERRA?
1002.35 Is a successor in interest an employer covered by USERRA?
1002.36 Can an employer be liable as a successor in interest if it
was unaware that an employee may claim reemployment rights when the
employer acquired the business?
1002.37 Can one employee be employed in one job by more than one
employer?
1002.38 Can a hiring hall be an employer?
1002.39 Are States (and their political subdivisions), the District
of Columbia, the Commonwealth of Puerto Rico, and United States
territories, considered employers?
1002.40 Does USERRA protect against discrimination in initial hiring
decisions?
1002.41 Does an employee have rights under USERRA even though he or
she holds a temporary, part-time, probationary, or seasonal
employment position?
1002.42 What rights does an employee have under USERRA if he or she
is on layoff, on strike, or on a leave of absence?
1002.43 Does an individual have rights under USERRA even if he or
she is an executive, managerial, or professional employee?
1002.44 Does USERRA cover an independent contractor?
Coverage of Service in the Uniformed Services
1002.54 Are all military fitness examinations considered ``service
in the uniformed services?''
1002.55 Is all funeral honors duty considered ``service in the
uniformed services?''
1002.56 What types of service in the National Disaster Medical
System are considered ``service in the uniformed services?''
1002.57 Is all service as a member of the National Guard considered
``service in the uniformed services?''
1002.58 Is service in the commissioned corps of the Public Health
Service considered ``service in the uniformed services?''
1002.59 Are there any circumstances in which special categories of
persons are considered to perform ``service in the uniformed
services?''
1002.60 Does USERRA cover an individual attending a military service
academy?
1002.61 Does USERRA cover a member of the Reserve Officers Training
Corps?
1002.62 Does USERRA cover a member of the Commissioned Corps of the
National Oceanic and Atmospheric Administration, the Civil Air
Patrol, or the Coast Guard Auxiliary?
Absence From a Position of Employment Necessitated by Reason of Service
in the Uniformed Services
1002.73 Does service in the uniformed services have to be an
employee's sole reason for leaving an employment position in order
to have USERRA reemployment rights?
1002.74 Must the employee begin service in the uniformed services
immediately after leaving his or her employment position in order to
have USERRA reemployment rights?
Requirement of Notice
1002.85 Must the employee give advance notice to the employer of his
or her service in the uniformed services?
1002.86 When is the employee excused from giving advance notice of
service in the uniformed services?
1002.87 Is the employee required to get permission from his or her
employer before leaving to perform service in the uniformed
services?
1002.88 Is the employee required to tell his or her civilian
employer that he or she intends to seek reemployment after
completing uniformed service before the employee leaves to perform
service in the uniformed services?
Period of Service
1002.99 Is there a limit on the total amount of service in the
uniformed services that an employee may perform and still retain
reemployment rights with the employer?
1002.100 Does the five-year service limit include all absences from
an employment position that are related to service in the uniformed
services?
1002.101 Does the five-year service limit include periods of service
that the employee performed when he or she worked for a previous
employer?
1002.102 Does the five-year service limit include periods of service
that the employee performed before USERRA was enacted?
1002.103 Are there any types of service in the uniformed services
that an employee can perform that do not count against USERRA's
five-year service limit?
1002.104 Is the employee required to accommodate his or her
employer's needs as to the timing, frequency or duration of service?
Application for Reemployment
1002.115 Is the employee required to report to or submit a timely
application for reemployment to his or her pre-service employer upon
completing the period of service in the uniformed services?
1002.116 Is the time period for reporting back to an employer
extended if the employee is hospitalized for, or convalescing from,
an illness or injury incurred in, or aggravated during, the
performance of service?
1002.117 Are there any consequences if the employee fails to report
for or submit a timely application for reemployment?
1002.118 Is an application for reemployment required to be in any
particular form?
1002.119 To whom must the employee submit the application for
reemployment?
1002.120 If the employee seeks or obtains employment with an
employer other than the pre-service employer before the end of the
period within which a reemployment application must be filed, will
that jeopardize reemployment rights with the pre-service employer?
1002.121 Is the employee required to submit documentation to the
employer in connection with the application for reemployment?
1002.122 Is the employer required to reemploy the employee if
documentation establishing the employee's eligibility does not exist
or is not readily available?
1002.123 What documents satisfy the requirement that the employee
establish eligibility for reemployment after a period of service of
more than thirty days?
[[Page 75294]]
Character of Service
1002.134 What type of discharge or separation from service is
required for an employee to be entitled to reemployment under
USERRA?
1002.135 What types of discharge or separation from uniformed
service will make the employee ineligible for reemployment under
USERRA?
1002.136 Who determines the characterization of service?
1002.137 If the employee receives a disqualifying discharge or
release from uniformed service and it is later upgraded, will
reemployment rights be restored?
1002.138 If the employee receives a retroactive upgrade in the
characterization of service, will that entitle him or her to claim
back wages and benefits lost as of the date of separation from
service?
Employer Statutory Defenses
1002.139 Are there any circumstances in which the pre-service
employer is excused from its obligation to reemploy the employee
following a period of uniformed service? What statutory defenses are
available to the employer in an action or proceeding for
reemployment benefits?
Subpart D--Rights, Benefits, and Obligations of Persons Absent from
Employment Due to Service in the Uniformed Services
Furlough and Leave of Absence
1002.149 What is the employee's status with his or her civilian
employer while performing service in the uniformed services?
1002.150 Which non-seniority rights and benefits is the employee
entitled to during a period of service?
1002.151 If the employer provides full or partial pay to the
employee while he or she is on military leave, is the employer
required to also provide the non-seniority rights and benefits
ordinarily granted to similarly situated employees on furlough or
leave of absence?
1002.152 If employment is interrupted by a period of service in the
uniformed services, are there any circumstances under which the
employee is not entitled to the non-seniority rights and benefits
ordinarily granted to similarly situated employees on furlough or
leave of absence?
1002.153 If employment is interrupted by a period of service in the
uniformed services, is the employee permitted upon request to use
accrued vacation, annual or similar leave with pay during the
service? Can the employer require the employee to use accrued leave
during a period of service?
Health Plan Coverage
1002.163 What types of health plans are covered by USERRA?
1002.164 What health plan coverage must the employer provide for the
employee under USERRA?
1002.165 How does the employee elect continuing health plan
coverage?
1002.166 How much must the employee pay in order to continue health
plan coverage?
1002.167 What actions may a plan administrator take if the employee
does not elect or pay for continuing coverage in a timely manner?
1002.168 If the employee's coverage was terminated at the beginning
of or during service, does his or her coverage have to be reinstated
upon reemployment?
1002.169 Can the employee elect to delay reinstatement of health
plan coverage until a date after the date he or she is reemployed?
1002.170 In a multiemployer health plan, how is liability allocated
for employer contributions and benefits arising under USERRA's
health plan provisions?
1002.171 How does the continuation of health plan coverage apply to
a multiemployer plan that provides health plan coverage through a
health benefits account system?
Subpart E--Reemployment Rights and Benefits
Prompt Reemployment
1002.180 When is an employee entitled to be reemployed by his or her
civilian employer?
1002.181 How is ``prompt reemployment'' defined?
Reemployment Position
1002.191 What position is the employee entitled to upon
reemployment?
1002.192 How is the specific reemployment position determined?
1002.193 Does the reemployment position include elements such as
seniority, status, and rate of pay?
1002.194 Can the application of the escalator principle result in
adverse consequences when the employee is reemployed?
1002.195 What other factors can determine the reemployment position?
1002.196 What is the employee's reemployment position if the period
of service was less than 91 days?
1002.197 What is the reemployment position if the employee's period
of service in the uniformed services was more than 90 days?
1002.198 What efforts must the employer make to help the employee
become qualified for the reemployment position?
1002.199 What priority must the employer follow if two or more
returning employees are entitled to reemployment in the same
position?
Seniority Rights and Benefits
1002.210 What seniority rights does an employee have when reemployed
following a period of uniformed service?
1002.211 Does USERRA require the employer to use a seniority system?
1002.212 How does a person know whether a particular right or
benefit is a seniority-based right or benefit?
1002.213 How can the employee demonstrate a reasonable certainty
that he or she would have received the seniority right or benefit if
he or she had remained continuously employed during the period of
service?
Disabled Employees
1002.225 Is the employee entitled to any specific reemployment
benefits if he or she has a disability that was incurred in, or
aggravated during, the period of service?
1002.226 If the employee has a disability that was incurred in, or
aggravated during, the period of service, what efforts must the
employer make to help him or her become qualified for the
reemployment position?
Rate of Pay
1002.236 How is the employee's rate of pay determined when he or she
returns from a period of service?
Protection Against Discharge
1002.247 Does USERRA provide the employee with protection against
discharge?
1002.248 What constitutes cause for discharge under USERRA?
Pension Plan Benefits
1002.259 How does USERRA protect an employee's pension benefits?
1002.260 What pension benefit plans are covered under USERRA?
1002.261 Who is responsible for funding any plan obligation to
provide the employee with pension benefits?
1002.262 When is the employer required to make the plan contribution
that is attributable to the employee's period of uniformed service?
1002.263 Does the employee pay interest when he or she makes up
missed contributions or elective deferrals?
1002.264 Is the employee allowed to repay a previous distribution
from a pension benefits plan upon being reemployed?
1002.265 If the employee is reemployed with his or her pre-service
employer, is the employee's pension benefit the same as if he or she
had remained continuously employed?
1002.266 What are the obligations of a multiemployer pension benefit
plan under USERRA?
1002.267 How is compensation during the period of service calculated
in order to determine the employee's pension benefits, if benefits
are based on compensation?
Subpart F--Compliance Assistance, Enforcement and Remedies
Compliance Assistance
1002.277 What assistance does the Department of Labor provide to
employees and employers concerning employment, reemployment, or
other rights and benefits under USERRA?
Investigation and Referral
1002.288 How does an individual file a USERRA complaint?
1002.289 How will VETS investigate a USERRA complaint?
[[Page 75295]]
1002.290 Does VETS have the authority to order compliance with
USERRA?
1002.291 What actions may an individual take if the complaint is not
resolved by VETS?
1002.292 What can the Attorney General do about the complaint?
Enforcement of Rights and Benefits Against a State or Private Employer
1002.303 Is an individual required to file his or her complaint with
VETS?
1002.304 If an individual files a complaint with VETS and VETS'
efforts do not resolve the complaint, can the individual pursue the
claim on his or her own?
1002.305 What court has jurisdiction in an action against a State or
private employer?
1002.306 Is a National Guard civilian technician considered a State
or Federal employee for purposes of USERRA?
1002.307 What is the proper venue in an action against a State or
private employer?
1002.308 Who has legal standing to bring an action under USERRA?
1002.309 Who is a necessary party in an action under USERRA?
1002.310 How are fees and court costs charged or taxed in an action
under USERRA?
1002.311 Is there a statute of limitations in an action under
USERRA?
1002.312 What remedies may be awarded for a violation of USERRA?
1002.313 Are there special damages provisions that apply to actions
initiated in the name of the United States?
1002.314 May a court use its equity powers in an action or
proceeding under the Act?
Authority: Veterans Benefits Improvement Act of 2004 (VBIA) Pub.
L. 108-454 (Dec. 10, 2004).
Subpart A--Introduction to the Regulations under the Uniformed
Services Employment and Reemployment Rights Act of 1994
General Provisions
Sec. 1002.1 What is the purpose of this part?
This part implements the Uniformed Services Employment and
Reemployment Rights Act of 1994 (``USERRA'' or ``the Act''). 38 U.S.C.
4301-4334. USERRA is a law that establishes certain rights and benefits
for employees, and duties for employers. USERRA affects employment,
reemployment, and retention in employment, when employees serve or have
served in the uniformed services. There are five subparts to these
regulations. Subpart A gives an introduction to the USERRA regulations.
Subpart B describes USERRA's anti-discrimination and anti-retaliation
provisions. Subpart C explains the steps that must be taken by a
uniformed service member who wants to return to his or her previous
civilian employment. Subpart D describes the rights, benefits, and
obligations of persons absent from employment due to service in the
uniformed services, including rights and obligations related to health
plan coverage. Subpart E describes the rights, benefits, and
obligations of the returning veteran or service member. Subpart F
explains the role of the Department of Labor in enforcing and giving
assistance under USERRA. These regulations implement USERRA as it
applies to States, local governments, and private employers. Separate
regulations published by the Federal Office of Personnel Management
implement USERRA for Federal executive agency employers and employees.
Sec. 1002.2 Is USERRA a new law?
USERRA is the latest in a series of laws protecting veterans'
employment and reemployment rights going back to the Selective Training
and Service Act of 1940. USERRA's immediate predecessor was commonly
referred to as the Veterans' Reemployment Rights Act (VRRA), which was
enacted as section 404 of the Vietnam Era Veterans' Readjustment
Assistance Act of 1974. In enacting USERRA, Congress emphasized
USERRA's continuity with the VRRA and its intention to clarify and
strengthen that law. Congress also emphasized that Federal laws
protecting veterans' employment and reemployment rights for the past
fifty years had been successful and that the large body of case law
that had developed under those statutes remained in full force and
effect, to the extent it is consistent with USERRA. USERRA authorized
the Department of Labor to publish regulations implementing the Act for
State, local government, and private employers. USERRA also authorized
the Office of Personnel Management to issue regulations implementing
the Act for Federal executive agencies (other than some Federal
intelligence agencies). USERRA established a separate program for
employees of some Federal intelligence agencies.
Sec. 1002.3 When did USERRA become effective?
USERRA became law on October 13, 1994. USERRA's reemployment
provisions apply to members of the uniformed services seeking civilian
reemployment on or after December 12, 1994. USERRA's anti-
discrimination and anti-retaliation provisions became effective on
October 13, 1994.
Sec. 1002.4 What is the role of the Secretary of Labor under USERRA?
(a) USERRA charges the Secretary of Labor (through the Veterans'
Employment and Training Service) with providing assistance to any
person with respect to the employment and reemployment rights and
benefits to which such person is entitled under the Act. More
information about the Secretary's role in providing this assistance is
contained in Subpart F.
(b) USERRA also authorizes the Secretary of Labor to issue
regulations implementing the Act with respect to States, local
governments, and private employers. These regulations are issued under
this authority.
(c) The Secretary of Labor delegated authority to the Assistant
Secretary for Veterans' Employment and Training for administering the
veterans' reemployment rights program by Secretary's Order 1-83
(February 3, 1983) and for carrying out the functions and authority
vested in the Secretary pursuant to USERRA by memorandum of April 22,
2002 (67 FR 31827).
Sec. 1002.5 What definitions apply to USERRA?
(a) Attorney General means the Attorney General of the United
States or any person designated by the Attorney General to carry out a
responsibility of the Attorney General under USERRA.
(b) Benefit, benefit of employment, or rights and benefits means
any advantage, profit, privilege, gain, status, account, or interest
(other than wages or salary for work performed) that accrues to the
employee because of an employment contract, employment agreement, or
employer policy, plan, or practice. The term includes rights and
benefits under a pension plan, health plan, or employee stock ownership
plan, insurance coverage and awards, bonuses, severance pay,
supplemental unemployment benefits, vacations, and the opportunity to
select work hours or the location of employment.
(c) Employee means any person employed by an employer. The term
also includes any person who is a citizen, national or permanent
resident alien of the United States who is employed in a workplace in a
foreign country by an employer that is an entity incorporated or
organized in the United States, or that is controlled by an entity
organized in the United States. ``Employee'' includes the former
employees of an employer.
(d)(1) Employer, except as provided in paragraphs (d)(2) and (3) of
this section, means any person, institution, organization, or other
entity that pays salary or wages for work performed, or
[[Page 75296]]
that has control over employment opportunities, including--
(i) A person, institution, organization, or other entity to whom
the employer has delegated the performance of employment-related
responsibilities, except in the case that such entity has been
delegated functions that are purely ministerial in nature, such as
maintenance of personnel files or the preparation of forms for
submission to a government agency;
(ii) The Federal Government;
(iii) A State;
(iv) Any successor in interest to a person, institution,
organization, or other entity referred to in this definition; and,
(v) A person, institution, organization, or other entity that has
denied initial employment in violation of 38 U.S.C. 4311, USERRA's
anti-discrimination and anti-retaliation provisions.
(2) In the case of a National Guard technician employed under 32
U.S.C. 709, the term ``employer'' means the adjutant general of the
State in which the technician is employed.
(3) An employee pension benefit plan as described in section 3(2)
of the Employee Retirement Income Security Act of 1974 (ERISA)(29
U.S.C. 1002(2)) is considered an employer for an individual that it
does not actually employ only with respect to the obligation to provide
pension benefits.
(e) Health plan means an insurance policy, insurance contract,
medical or hospital service agreement, membership or subscription
contract, or other arrangement under which health services for
individuals are provided or the expenses of such services are paid.
(f) National Disaster Medical System (NDMS) is an agency within the
Federal Emergency Management Agency, Department of Homeland Security,
established by the Public Health Security and Bioterrorism Preparedness
and Response Act of 2002, Public Law 107-188. The NDMS provides
medical-related assistance to respond to the needs of victims of public
health emergencies. Participants in the NDMS are volunteers who serve
as intermittent Federal employees when activated. For purposes of
USERRA coverage only, these persons are treated as members of the
uniformed services when they are activated to provide assistance in
response to a public health emergency or to be present for a short
period of time when there is a risk of a public health emergency, or
when they are participating in authorized training. See 42 U.S.C.
300hh-11(e).
(g) Notice, when the employee is required to give advance notice of
service, means any written or verbal notification of an obligation or
intention to perform service in the uniformed services provided to an
employer by the employee who will perform such service, or by the
uniformed service in which the service is to be performed.
(h) Qualified, with respect to an employment position, means having
the ability to perform the essential tasks of the position.
(i) Reasonable efforts, in the case of actions required of an
employer, means actions, including training provided by an employer
that do not place an undue hardship on the employer.
(j) Secretary means the Secretary of Labor or any person designated
by the Secretary of Labor to carry out an activity under USERRA and
these regulations, unless a different office is expressly indicated in
the regulation.
(k) Seniority means longevity in employment together with any
benefits of employment that accrue with, or are determined by,
longevity in employment.
(l) Service in the uniformed services means the performance of duty
on a voluntary or involuntary basis in a uniformed service under
competent authority. Service in the uniformed services includes active
duty, active and inactive duty for training, National Guard duty under
Federal statute, and a period for which a person is absent from a
position of employment for an examination to determine the fitness of
the person to perform such duty. The term also includes a period for
which a person is absent from employment to perform funeral honors duty
as authorized by law (10 U.S.C. 12503 or 32 U.S.C. 115). The Public
Health Security and Bioterrorism Preparedness and Response Act of 2002,
Pub. L. 107-188, provides that service as an intermittent disaster-
response appointee upon activation of the National Disaster Medical
System (NDMS) or as a participant in an authorized training program is
deemed ``service in the uniformed services.'' 42 U.S.C. 300hh-11(e)(3).
(m) State means each of the several States of the United States,
the District of Columbia, the Commonwealth of Puerto Rico, Guam, the
Virgin Islands, and other territories of the United States (including
the agencies and political subdivisions thereof); however, for purposes
of enforcement of rights under 38 U.S.C. 4323, a political subdivision
of a State is a private employer.
(n) Undue hardship, in the case of actions taken by an employer,
means an action requiring significant difficulty or expense, when
considered in light of--
(1) The nature and cost of the action needed under USERRA and these
regulations;
(2) The overall financial resources of the facility or facilities
involved in the provision of the action; the number of persons employed
at such facility; the effect on expenses and resources, or the impact
otherwise of such action upon the operation of the facility;
(3) The overall financial resources of the employer; the overall
size of the business of an employer with respect to the number of its
employees; the number, type, and location of its facilities; and,
(4) The type of operation or operations of the employer, including
the composition, structure, and functions of the work force of such
employer; the geographic separateness, administrative, or fiscal
relationship of the facility or facilities in question to the employer.
(o) Uniformed services means the Armed Forces; the Army National
Guard and the Air National Guard when engaged in active duty for
training, inactive duty training, or full-time National Guard duty; the
commissioned corps of the Public Health Service; and any other category
of persons designated by the President in time of war or national
emergency. For purposes of USERRA coverage only, service as an
intermittent disaster response appointee of the NDMS when federally
activated or attending authorized training in support of their Federal
mission is deemed ``service in the uniformed services,'' although such
appointee is not a member of the ``uniformed services'' as defined by
USERRA.
Sec. 1002.6 What types of service in the uniformed services are
covered by USERRA?
USERRA's definition of ``service in the uniformed services'' covers
all categories of military training and service, including duty
performed on a voluntary or involuntary basis, in time of peace or war.
Although most often understood as applying to National Guard and
reserve military personnel, USERRA also applies to persons serving in
the active components of the Armed Forces. Certain types of service
specified in 42 U.S.C. 300hh-11 by members of the National Disaster
Medical System are covered by USERRA.
Sec. 1002.7 How does USERRA relate to other laws, public and private
contracts, and employer practices?
(a) USERRA establishes a floor, not a ceiling, for the employment
and reemployment rights and benefits of
[[Page 75297]]
those it protects. In other words, an employer may provide greater
rights and benefits than USERRA requires, but no employer can refuse to
provide any right or benefit guaranteed by USERRA.
(b) USERRA supersedes any State law (including any local law or
ordinance), contract, agreement, policy, plan, practice, or other
matter that reduces, limits, or eliminates in any manner any right or
benefit provided by USERRA, including the establishment of additional
prerequisites to the exercise of any USERRA right or the receipt of any
USERRA benefit. For example, an employment contract that determines
seniority based only on actual days of work in the place of employment
would be superseded by USERRA, which requires that seniority credit be
given for periods of absence from work due to service in the uniformed
services.
(c) USERRA does not supersede, nullify or diminish any Federal or
State law (including any local law or ordinance), contract, agreement,
policy, plan, practice, or other matter that establishes an employment
right or benefit that is more beneficial than, or is in addition to, a
right or benefit provided under the Act. For example, although USERRA
does not require an employer to pay an employee for time away from work
performing service, an employer policy, plan, or practice that provides
such a benefit is permissible under USERRA.
(d) If an employer provides a benefit that exceeds USERRA's
requirements in one area, it cannot reduce or limit other rights or
benefits provided by USERRA. For example, even though USERRA does not
require it, an employer may provide a fixed number of days of paid
military leave per year to employees who are members of the National
Guard or Reserve. The fact that it provides such a benefit, however,
does not permit an employer to refuse to provide an unpaid leave of
absence to an employee to perform service in the uniformed services in
excess of the number of days of paid military leave.
Subpart B--Anti-Discrimination and Anti-Retaliation
Protection From Employer Discrimination and Retaliation
Sec. 1002.18 What status or activity is protected from employer
discrimination by USERRA?
An employer must not deny initial employment, reemployment,
retention in employment, promotion, or any benefit of employment to an
individual on the basis of his or her membership, application for
membership, performance of service, application for service, or
obligation for service in the uniformed services.
Sec. 1002.19 What activity is protected from employer retaliation by
USERRA?
An employer must not retaliate against an individual by taking any
adverse employment action against him or her because the individual has
taken an action to enforce a protection afforded any person under
USERRA; testified or otherwise made a statement in or in connection
with a proceeding under USERRA; assisted or participated in a USERRA
investigation: or, exercised a right provided for by USERRA.
Sec. 1002.20 Does USERRA protect an individual who does not actually
perform service in the uniformed services?
Yes. Employers are prohibited from taking actions against an
individual for any of the activities protected by the Act, whether or
not he or she has performed service in the uniformed services.
Sec. 1002.21 Do the Act's prohibitions against discrimination and
retaliation apply to all employment positions?
The prohibitions against discrimination and retaliation apply to
all covered employers (including hiring halls and potential employers,
see sections 1002.36 and .38) and employment positions, including those
that are for a brief, nonrecurrent period, and for which there is no
reasonable expectation that the employment position will continue
indefinitely or for a significant period. However, USERRA's
reemployment rights and benefits do not apply to such brief,
nonrecurrent positions of employment.
Sec. 1002.22 Who has the burden of proving discrimination or
retaliation in violation of USERRA?
The individual has the burden of proving that a status or activity
protected by USERRA was one of the reasons that the employer took
action against him or her, in order to establish that the action was
discrimination or retaliation in violation of USERRA. If the individual
succeeds in proving that the status or activity protected by USERRA was
one of the reasons the employer took action against him or her, the
employer has the burden to prove the affirmative defense that it would
have taken the action anyway.
Sec. 1002.23 What must the individual show to carry the burden of
proving that the employer discriminated or retaliated against him or
her?
(a) In order to prove that the employer discriminated or retaliated
against the individual, he or she must first show that the employer's
action was motivated by one or more of the following:
(1) Membership or application for membership in a uniformed
service;
(2) Performance of service, application for service, or obligation
for service in a uniformed service;
(3) Action taken to enforce a protection afforded any person under
USERRA;
(4) Testimony or statement made in or in connection with a USERRA
proceeding;
(5) Assistance or participation in a USERRA investigation; or,
(6) Exercise of a right provided for by USERRA.
(b) If the individual proves that the employer's action was based
on one of the prohibited motives listed in paragraph (a) of this
section, the employer has the burden to prove the affirmative defense
that the action would have been taken anyway absent the USERRA-
protected status or activity.
Subpart C--Eligibility For Reemployment
General Eligibility Requirements for Reemployment
Sec. 1002.32 What criteria must the employee meet to be eligible
under USERRA for reemployment after service in the uniformed services?
(a) In general, if the employee has been absent from a position of
civilian employment by reason of service in the uniformed services, he
or she will be eligible for reemployment under USERRA by meeting the
following criteria:
(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;
(3) The employee timely returns to work or applies for
reemployment; and,
(4) The employee has not been separated from service with a
disqualifying discharge or under other than honorable conditions.
(b) These general eligibility requirements have important
qualifications and exceptions, which are described in detail in
Sec. Sec. 1002.73 through 1002.138. If the employee meets these
eligibility criteria, then he or she is eligible for reemployment
unless the employer establishes one of the defenses described in Sec.
1002.139. The employment position to which the employee is entitled is
described in Sec. Sec. 1002.191 through 1002.199.
[[Page 75298]]
Sec. 1002.33 Does the employee have to prove that the employer
discriminated against him or her in order to be eligible for
reemployment?
No. The employee is not required to prove that the employer
discriminated against him or her because of the employee's uniformed
service in order to be eligible for reemployment.
Coverage of Employers and Positions
Sec. 1002.34 Which employers are covered by USERRA?
(a) USERRA applies to all public and private employers in the
United States, regardless of size. For example, an employer with only
one employee is covered for purposes of the Act.
(b) USERRA applies to foreign employers doing business in the
United States. A foreign employer that has a physical location or
branch in the United States (including U.S. territories and
possessions) must comply with USERRA for any of its employees who are
employed in the United States.
(c) An American company operating either directly or through an
entity under its control in a foreign country must also comply with
USERRA for all its foreign operations, unless compliance would violate
the law of the foreign country in which the workplace is located.
Sec. 1002.35 Is a successor in interest an employer covered by
USERRA?
USERRA's definition of ``employer'' includes a successor in
interest. In general, an employer is a successor in interest where
there is a substantial continuity in operations, facilities, and
workforce from the former employer. The determination whether an
employer is a successor in interest must be made on a case-by-case
basis using a multi-factor test that considers the following:
(a) Whether there has been a substantial continuity of business
operations from the former to the current employer;
(b) Whether the current employer uses the same or similar
facilities, machinery, equipment, and methods of production;
(c) Whether there has been a substantial continuity of employees;
(d) Whether there is a similarity of jobs and working conditions;
(e) Whether there is a similarity of supervisors or managers; and,
(f) Whether there is a similarity of products or services.
Sec. 1002.36 Can an employer be liable as a successor in interest if
it was unaware that an employee may claim reemployment rights when the
employer acquired the business?
Yes. In order to be a successor in interest, it is not necessary
for an employer to have notice of a potential reemployment claim at the
time of merger, acquisition, or other form of succession.
Sec. 1002.37 Can one employee be employed in one job by more than one
employer?
Yes. Under USERRA, an employer includes not only the person or
entity that pays an employee's salary or wages, but also includes a
person or entity that has control over his or her employment
opportunities, including a person or entity to whom an employer has
delegated the performance of employment-related responsibilities. For
example, if the employee is a security guard hired by a security
company and he or she is assigned to a work site, the employee may
report both to the security company and to the site owner. In such an
instance, both employers share responsibility for compliance with
USERRA. If the security company declines to assign the employee to a
job because of a uniformed service obligation (for example, National
Guard duties), then the security company could be in violation of the
reemployment requirements and the anti-discrimination provisions of
USERRA. Similarly, if the employer at the work site causes the
employee's removal from the job position because of his or her
uniformed service obligations, then the work site employer could be in
violation of the reemployment requirements and the anti-discrimination
provisions of USERRA.
Sec. 1002.38 Can a hiring hall be an employer?
Yes. In certain occupations (for example, longshoreman, stagehand,
construction worker), the employee may frequently work for many
different employers. A hiring hall operated by a union or an employer
association typically assigns the employee to the jobs. In these
industries, it may not be unusual for the employee to work his or her
entire career in a series of short-term job assignments. The definition
of ``employer'' includes a person, institution, organization, or other
entity to which the employer has delegated the performance of
employment-related responsibilities. A hiring hall therefore is
considered the employee's employer if the hiring and job assignment
functions have been delegated by an employer to the hiring hall. As the
employer, a hiring hall has reemployment responsibilities to its
employees. USERRA's anti-discrimination and anti-retaliation provisions
also apply to the hiring hall.
Sec. 1002.39 Are States (and their political subdivisions), the
District of Columbia, the Commonwealth of Puerto Rico, and United
States territories, considered employers?
Yes. States and their political subdivisions, such as counties,
parishes, cities, towns, villages, and school districts, are considered
employers under USERRA. The District of Columbia, the Commonwealth of
Puerto Rico, Guam, the Virgin Islands, and territories of the United
States, are also considered employers under the Act.
Sec. 1002.40 Does USERRA protect against discrimination in initial
hiring decisions?
Yes. The Act's definition of employer includes a person,
institution, organization, or other entity that has denied initial
employment to an individual in violation of USERRA's anti-
discrimination provisions. An employer need not actually employ an
individual to be his or her ``employer'' under the Act, if it has
denied initial employment on the basis of the individual's membership,
application for membership, performance of service, application for
service, or obligation for service in the uniformed services.
Similarly, the employer would be liable if it denied initial employment
on the basis of the individual's action taken to enforce a protection
afforded to any person under USERRA, his or her testimony or statement
in connection with any USERRA proceeding, assistance or other
participation in a USERRA investigation, or the exercise of any other
right provided by the Act. For example, if the individual has been
denied initial employment because of his or her obligations as a member
of the National Guard or Reserves, the company or entity denying
employment is an employer for purposes of USERRA. Similarly, if an
entity withdraws an offer of employment because the individual is
called upon to fulfill an obligation in the uniformed services, the
entity withdrawing the employment offer is an employer for purposes of
USERRA.
Sec. 1002.41 Does an employee have rights under USERRA even though he
or she holds a temporary, part-time, probationary, or seasonal
employment position?
USERRA rights are not diminished because an employee holds a
temporary, part-time, probationary, or seasonal employment position.
However, an employer is not required to reemploy an employee if the
employment he or she
[[Page 75299]]
left to serve in the uniformed services was for a brief, nonrecurrent
period and there is no reasonable expectation that the employment would
have continued indefinitely or for a significant period. The employer
bears the burden of proving this affirmative defense.
Sec. 1002.42 What rights does an employee have under USERRA if he or
she is on layoff, on strike, or on a leave of absence?
(a) If an employee is laid off with recall rights, on strike, or on
a leave of absence, he or she is an employee for purposes of USERRA. If
the employee is on layoff and begins service in the uniformed services,
or is laid off while performing service, he or she may be entitled to
reemployment on return if the employer would have recalled the employee
to employment during the period of service. Similar principles apply if
the employee is on strike or on a leave of absence from work when he or
she begins a period of service in the uniformed services.
(b) If the employee is sent a recall notice during a period of
service in the uniformed services and cannot resume the position of
employment because of the service, he or she still remains an employee
for purposes of the Act. Therefore, if the employee is otherwise
eligible, he or she is entitled to reemployment following the
conclusion of the period of service even if he or she did not respond
to the recall notice.
(c) If the employee is laid off before or during service in the
uniformed services, and the employer would not have recalled him or her
during that period of service, the employee is not entitled to
reemployment following the period of service simply because he or she
is a covered employee. Reemployment rights under USERRA cannot put the
employee in a better position than if he or she had remained in the
civilian employment position.
Sec. 1002.43 Does an individual have rights under USERRA even if he
or she is an executive, managerial, or professional employee?
Yes. USERRA applies to all employees. There is no exclusion for
executive, managerial, or professional employees.
Sec. 1002.44 Does USERRA cover an independent contractor?
(a) No. USERRA does not provide protections for an independent
contractor.
(b) In deciding whether an individual is an independent contractor,
the following factors need to be considered:
(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 upon 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.
(c) No single one of these factors is controlling, but all are
relevant to determining whether an individual is an employee or an
independent contractor.
Coverage of Service in the Uniformed Services
Sec. 1002.54 Are all military fitness examinations considered
``service in the uniformed services?''
Yes. USERRA's definition of ``service in the uniformed services''
includes a period for which an employee is absent from a position of
employment for the purpose of an examination to determine his or her
fitness to perform duty in the uniformed services. Military fitness
examinations can address more than physical or medical fitness, and
include evaluations for mental, educational, and other types of
fitness. Any examination to determine an employee's fitness for service
is covered, whether it is an initial or recurring examination. For
example, a periodic medical examination required of a Reserve component
member to determine fitness for continued service is covered.
Sec. 1002.55 Is all funeral honors duty considered ``service in the
uniformed services?''
(a) USERRA's definition of ``service in the uniformed services''
includes a period for which an employee is absent from employment for
the purpose of performing authorized funeral honors duty under 10
U.S.C. 12503 (members of Reserve ordered to perform funeral honors
duty) or 32 U.S.C. 115 (Member of Air or Army National Guard ordered to
perform funeral honors duty).
(b) Funeral honors duty performed by persons who are not members of
the uniformed services, such as members of veterans' service
organizations, is not ``service in the uniformed services.''
Sec. 1002.56 What types of service in the National Disaster Medical
System are considered ``service in the uniformed services?''
Under a provision of the Public Health Security and Bioterrorism
Preparedness and Response Act of 2002, 42 U.S.C. 300hh 11(e)(3),
``service in the uniformed services'' includes service performed as an
intermittent disaster-response appointee upon activation of the
National Disaster Medical System or participation in an authorized
training program, even if the individual is not a member of the
uniformed services.
Sec. 1002.57 Is all service as a member of the National Guard
considered ``service in the uniformed services?''
The National Guard has a dual status. It is a Reserve component of
the Army, or, in the case of the Air National Guard, of the Air Force.
Simultaneously, it is a State military force subject to call-up by the
State Governor for duty not subject to Federal control, such as
emergency duty in cases of floods or riots. National Guard members may
perform service under either Federal or State authority, but only
Federal National Guard service is covered by USERRA.
(a) National Guard service under Federal authority is protected by
USERRA. Service under Federal authority includes active duty performed
under Title 10 of the United States Code. Service under Federal
authority also includes duty under Title 32 of the United States Code,
such as active duty for training, inactive duty training, or full-time
National Guard duty.
(b) National Guard service under authority of State law is not
protected by USERRA. However, many States have laws protecting the
civilian job rights of National Guard members who serve under State
orders. Enforcement of those State laws is not covered by USERRA or
these regulations.
Sec. 1002.58 Is service in the commissioned corps of the Public
Health Service considered ``service in the uniformed services?''
Yes. Service in the commissioned corps of the Public Health Service
(PHS) is ``service in the uniformed services'' under USERRA.
Sec. 1002.59 Are there any circumstances in which special categories
of persons are considered to perform ``service in the uniformed
services?''
Yes. In time of war or national emergency the President has
authority to designate any category of persons as a ``uniformed
service'' for purposes of USERRA. If the President exercises this
authority, service as a member of that category of persons would be
``service in the uniformed services'' under USERRA.
[[Page 75300]]
Sec. 1002.60 Does USERRA cover an individual attending a military
service academy?
Yes. Attending a military service academy is considered uniformed
service for purposes of USERRA. There are four service academies: The
United States Military Academy (West Point, New York), the United
States Naval Academy (Annapolis, Maryland), the United States Air Force
Academy (Colorado Springs, Colorado), and the United States Coast Guard
Academy (New London, Connecticut).
Sec. 1002.61 Does USERRA cover a member of the Reserve Officers
Training Corps?
Yes, under certain conditions.
(a) Membership in the Reserve Officers Training Corps (ROTC) or the
Junior ROTC is not ``service in the uniformed services.'' However, some
Reserve and National Guard enlisted members use a college ROTC program
as a means of qualifying for commissioned officer status. National
Guard and Reserve members in an ROTC program may at times, while
participating in that program, be receiving active duty and inactive
duty training service credit with their unit. In these cases,
participating in ROTC training sessions is considered ``service in the
uniformed services,'' and qualifies a person for protection under
USERRA's reemployment and anti-discrimination provisions.
(b) Typically, an individual in a College ROTC program enters into
an agreement with a particular military service that obligates such
individual to either complete the ROTC program and accept a commission
or, in case he or she does not successfully complete the ROTC program,
to serve as an enlisted member. Although an individual does not qualify
for reemployment protection, except as specified in (a) above, he or
she is protected under USERRA's anti-discrimination provisions because,
as a result of the agreement, he or she has applied to become a member
of the uniformed services and has incurred an obligation to perform
future service.
Sec. 1002.62 Does USERRA cover a member of the Commissioned Corps of
the National Oceanic and Atmospheric Administration, the Civil Air
Patrol, or the Coast Guard Auxiliary?
No. Although the Commissioned Corps of the National Oceanic and
Atmospheric Administration (NOAA) is a ``uniformed service'' for some
purposes, it is not included in USERRA's definition of this term.
Service in the Civil Air Patrol and the Coast Guard Auxiliary similarly
is not considered ``service in the uniformed services'' for purposes of
USERRA. Consequently, service performed in the Commissioned Corps of
the National Oceanic and Atmospheric Administration (NOAA), the Civil
Air Patrol, and the Coast Guard Auxiliary is not protected by USERRA.
Absence From a Position of Employment Necessitated by Reason of Service
in the Uniformed Services
Sec. 1002.73 Does service in the uniformed services have to be an
employee's sole reason for leaving an employment position in order to
have USERRA reemployment rights?
No. If absence from a position of employment is necessitated by
service in the uniformed services, and the employee otherwise meets the
Act's eligibility requirements, he or she has reemployment rights under
USERRA, even if the employee uses the absence for other purposes as
well. An employee is not required to leave the employment position for
the sole purpose of performing service in the uniformed services. For
example, if the employee is required to report to an out of State
location for military training and he or she spends off-duty time
during that assignment moonlighting as a security guard or visiting
relatives who live in that State, the employee will not lose
reemployment rights simply because he or she used some of the time away
from the job to do something other than attend the military training.
Also, if an employee receives advance notification of a mobilization
order, and leaves his or her employment position in order to prepare
for duty, but the mobilization is cancelled, the employee will not lose
any reemployment rights.
Sec. 1002.74 Must the employee begin service in the uniformed
services immediately after leaving his or her employment position in
order to have USERRA reemployment rights?
No. At a minimum, an employee must have enough time after leaving
the employment position to travel safely to the uniformed service site
and arrive fit to perform the service. Depending on the specific
circumstances, including the duration of service, the amount of notice
received, and the location of the service, additional time to rest, or
to arrange affairs and report to duty, may be necessitated by reason of
service in the uniformed services. The following examples help to
explain the issue of the period of time between leaving civilian
employment and beginning of service in the uniformed services:
(a) If the employee performs a full overnight shift for the
civilian employer and travels directly from the work site to perform a
full day of uniformed service, the employee would not be considered fit
to perform the uniformed service. An absence from that work shift is
necessitated so that the employee can report for uniformed service fit
for duty.
(b) If the employee is ordered to perform an extended period of
service in the uniformed services, he or she may require a reasonable
period of time off from the civilian job to put his or her personal
affairs in order, before beginning the service. Taking such time off is
also necessitated by the uniformed service.
(c) If the employee leaves a position of employment in order to
enlist or otherwise perform service in the uniformed services and,
through no fault of his or her own, the beginning date of the service
is delayed, this delay does not terminate any reemployment rights.
Requirement of Notice
Sec. 1002.85 Must the employee give advance notice to the employer of
his or her service in the uniformed services?
(a) Yes. The employee, or an appropriate officer of the uniformed
service in which his or her service is to be performed, must notify the
employer that the employee intends to leave the employment position to
perform service in the uniformed services, with certain exceptions
described below. In cases in which an employee is employed by more than
one employer, the employee, or an appropriate office of the uniformed
service in which his or her service is to be performed, must notify
each employer that the employee intends to leave the employment
position to perform service in the uniformed services, with certain
exceptions described below.
(b) The Department of Defense USERRA regulations at 32 CFR 104.3
provide that an ``appropriate officer'' can give notice on the
employee's behalf. An ``appropriate officer'' is a commissioned,
warrant, or non-commissioned officer authorized to give such notice by
the military service concerned.
(c) The employee's notice to the employer may be either verbal or
written. The notice may be informal and does not need to follow any
particular format.
(d) Although USERRA does not specify how far in advance notice must
be given to the employer, an employee should provide notice as far in
advance as is reasonable under the circumstances. In regulations
promulgated by the Department of Defense under USERRA, 32 CFR
104.6(a)(2)(i)(B), the Defense
[[Page 75301]]
Department ``strongly recommends that advance notice to civilian
employers be provided at least 30 days prior to departure for uniformed
service when it is feasible to do so.''
Sec. 1002.86 When is the employee excused from giving advance notice
of service in the uniformed services?
The employee is required to give advance notice of pending service
unless giving such notice is prevented by military necessity, or is
otherwise impossible or unreasonable under all the circumstances.
(a) Only a designated authority can make a determination of
``military necessity,'' and such a determination is not subject to
judicial review. Guidelines for defining ``military necessity'' appear
in regulations issued by the Department of Defense at 32 CFR 104.3. In
general, these regulations cover situations where a mission, operation,
exercise or requirement is classified, or could be compromised or
otherwise adversely affected by public knowledge. In certain cases, the
Secretary of Homeland Security, in consultation with the Secretary of
Defense, can make a determination that giving of notice by intermittent
disaster-response appointees of the National Disaster Medical System is
precluded by ``military necessity.'' See 42 U.S.C. 300hh-11(e)(3)(B).
(b) It may be impossible or unreasonable to give advance notice
under certain circumstances. Such circumstances may include the
unavailability of the employee's employer or the employer's
representative, or a requirement that the employee report for uniformed
service in an extremely short period of time.
Sec. 1002.87 Is the employee required to get permission from his or
her employer before leaving to perform service in the uniformed
services?
No. The employee is not required to ask for or get his or her
employer's permission to leave to perform service in the uniformed
services. The employee is only required to give the employer notice of
pending service.
Sec. 1002.88 Is the employee required to tell his or her civilian
employer that he or she intends to seek reemployment after completing
uniformed service before the employee leaves to perform service in the
uniformed services?
No. When the employee leaves the employment position to begin a
period of service, he or she is not required to tell the civilian
employer that he or she intends to seek reemployment after completing
uniformed service. Even if the employee tells the employer before
entering or completing uniformed service that he or she does not intend
to seek reemployment after completing the uniformed service, the
employee does not forfeit the right to reemployment after completing
service. The employee is not required to decide in advance of leaving
the civilian employment position whether he or she will seek
reemployment after completing uniformed service.
Period of Service
Sec. 1002.99 Is there a limit on the total amount of service in the
uniformed services that an employee may perform and still retain
reemployment rights with the employer?
Yes. In general, the employee may perform service in the uniformed
services for a cumulative period of up to five (5) years and retain
reemployment rights with the employer. The exceptions to this rule are
described below.
Sec. 1002.100 Does the five-year service limit include all absences
from an employment position that are related to service in the
uniformed services?
No. The five-year period includes only the time the employee spends
actually performing service in the uniformed services. A period of
absence from employment before or after performing service in the
uniformed services does not count against the five-year limit. For
example, after the employee completes a period of service in the
uniformed services, he or she is provided a certain amount of time,
depending upon the length of service, to report back to work or submit
an application for reemployment. The period between completing the
uniformed service and reporting back to work or seeking reemployment
does not count against the five-year limit.
Sec. 1002.101 Does the five-year service limit include periods of
service that the employee performed when he or she worked for a
previous employer?
No. An employee is entitled to a leave of absence for uniformed
service for up to five years with each employer for whom he or she
works. When the employee takes a position with a new employer, the
five-year period begins again regardless of how much service he or she
performed while working in any previous employment relationship. If an
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.
Sec. 1002.102 Does the five-year service limit include periods of
service that the employee performed before USERRA was enacted?
It depends. USERRA provides reemployment rights to which an
employee may become entitled beginning on or after December 12, 1994,
but any uniformed service performed before December 12, 1994, that was
counted against the service limitations of the previous law (the
Veterans Reemployment Rights Act), also counts against USERRA's five-
year limit.
Sec. 1002.103 Are there any types of service in the uniformed
services that an employee can perform that do not count against
USERRA's five-year service limit?
(a) USERRA creates the following exceptions to the five-year limit
on service in the uniformed services:
(1) Service that is required beyond five years to complete an
initial period of obligated service. Some military specialties require
an individual to serve more than five years because of the amount of
time or expense involved in training. If the employee works in one of
those specialties, he or she has reemployment rights when the initial
period of obligated service is completed;
(2) If the employee was unable to obtain orders releasing him or
her from service in the uniformed services before the expiration of the
five-year period, and the inability was not the employee's fault;
(3)(i) Service performed to fulfill periodic National Guard and
Reserve training requirements as prescribed by 10 U.S.C. 10147 and 32
U.S.C. 502(a) and 503; and,
(ii) Service performed to fulfill additional training requirements
determined and certified by a proper military authority as necessary
for the employee's professional development, or to complete skill
training or retraining;
(4) Service performed in a uniformed service if he or she was
ordered to or retained on active duty under:
(i) 10 U.S.C. 688 (involuntary active duty by a military retiree);
(ii) 10 U.S.C. 12301(a) (involuntary active duty in wartime);
(iii) 10 U.S.C. 12301(g) (retention on active duty while in captive
status);
(iv) 10 U.S.C. 12302 (involuntary active duty during a national
emergency for up to 24 months);
(v) 10 U.S.C. 12304 (involuntary active duty for an operational
mission for up to 270 days);
(vi) 10 U.S.C. 12305 (involuntary retention on active duty of a
critical person during time of crisis or other specific conditions);
[[Page 75302]]
(vii) 14 U.S.C. 331 (involuntary active duty by retired Coast Guard
officer);
(viii) 14 U.S.C. 332 (voluntary active duty by retired Coast Guard
officer);
(ix) 14 U.S.C. 359 (involuntary active duty by retired Coast Guard
enlisted member);
(x) 14 U.S.C. 360 (voluntary active duty by retired Coast Guard
enlisted member);
(xi) 14 U.S.C. 367 (involuntary retention of Coast Guard enlisted
member on active duty); and
(xii) 14 U.S.C. 712 (involuntary active duty by Coast Guard Reserve
member for natural or man-made disasters).
(5) Service performed in a uniformed service if the employee was
ordered to or retained on active duty (other than for training) under
any provision of law because of a war or national emergency declared by
the President or the Congress, as determined by the Secretary
concerned;
(6) Service performed in a uniformed service if the employee was
ordered to active duty (other than for training) in support of an
operational mission for which personnel have been ordered to active
duty under 10 U.S.C. 12304, as determined by a proper military
authority;
(7) Service performed in a uniformed service if the employee was
ordered to active duty in support of a critical mission or requirement
of the uniformed services as determined by the Secretary concerned;
and,
(8) Service performed as a member of the National Guard if the
employee was called to respond to an invasion, danger of invasion,
rebellion, danger of rebellion, insurrection, or the inability of the
President with regular forces to execute the laws of the United States.
(b) Service performed to mitigate economic harm where the
employee's employer is in violation of its employment or reemployment
obligations to him or her.
Sec. 1002.104 Is the employee required to accommodate his or her
employer's needs as to the timing, frequency or duration of service?
No. The employee is not required to accommodate his or her
employer's interests or concerns regarding the timing, frequency, or
duration of uniformed service. The employer cannot refuse to reemploy
the employee because it believes that the timing, frequency or duration
of the service is unreasonable. However, the employer is permitted to
bring its concerns over the timing, frequency, or duration of the
employee's service to the attention of the appropriate military
authority. Regulations issued by the Department of Defense at 32 CFR
104.4 direct military authorities to provide assistance to an employer
in addressing these types of employment issues. The military
authorities are required to consider requests from employers of
National Guard and Reserve members to adjust scheduled absences from
civilian employment to perform service.
Application for Reemployment
Sec. 1002.115 Is the employee required to report to or submit a
timely application for reemployment to his or her pre-service employer
upon completing the period of service in the uniformed services?
Yes. Upon completing service in the uniformed services, the
employee must notify the pre-service employer of his or her intent to
return to the employment position by either reporting to work or
submitting a timely application for reemployment. Whether the employee
is required to report to work or submit a timely application for
reemployment depends upon the length of service, as follows:
(a) Period of service less than 31 days or for a period of any
length for the purpose of a fitness examination. If the period of
service in the uniformed services was less than 31 days, or the
employee was absent from a position of employment for a period of any
length for the purpose of an examination to determine his or her
fitness to perform service, the employee must report back to the
employer not later than the beginning of the first full regularly-
scheduled work period on the first full calendar day following the
completion of the period of service, and the expiration of eight hours
after a period allowing for safe transportation from the place of that
service to the employee's residence. For example, if the employee
completes a period of service and travel home, arriving at ten o'clock
in the evening, he or she cannot be required to report to the employer
until the beginning of the next full regularly-scheduled work period
that begins at least eight hours after arriving home, i.e., no earlier
than six o'clock the next morning. If it is impossible or unreasonable
for the employee to report within such time period through no fault of
his or her own, he or she must report to the employer as soon as
possible after the expiration of the eight-hour period.
(b) Period of service more than 30 days but less than 181 days. If
the employee's period of service in the uniformed services was for more
than 30 days but less than 181 days, he or she must submit an
application for reemployment (written or verbal) with the employer not
later than 14 days after completing service. If it is impossible or
unreasonable for the employee to apply within 14 days through no fault
of his or her own, he or she must submit the application not later than
the next full calendar day after it becomes possible to do so.
(c) Period of service more than 180 days. If the employee's period
of service in the uniformed services was for more than 180 days, he or
she must submit an application for reemployment (written or verbal) not
later than 90 days after completing service.
Sec. 1002.116 Is the time period for reporting back to an employer
extended if the employee is hospitalized for, or convalescing from, an
illness or injury incurred in, or aggravated during, the performance of
service?
Yes. If the employee is hospitalized for, or convalescing from, an
illness or injury incurred in, or aggravated during, the performance of
service, he or she must report to or submit an application for
reemployment to the employer at the end of the period necessary for
recovering from the illness or injury. This period may not exceed two
years from the date of the completion of service, except that it must
be extended by the minimum time necessary to accommodate circumstances
beyond the employee's control that make reporting within the period
impossible or unreasonable. This period for recuperation and recovery
extends the time period for reporting to or submitting an application
for reemployment to the employer, and is not applicable following
reemployment.
Sec. 1002.117 Are there any consequences if the employee fails to
report for or submit a timely application for reemployment?
(a) If the employee fails to timely report for or apply for
reemployment, he or she does not automatically forfeit entitlement to
USERRA's reemployment and other rights and benefits. Rather, the
employee becomes subject to the conduct rules, established policy, and
general practices of the employer pertaining to an absence from
scheduled work.
(b) If reporting or submitting an employment application to the
employer is impossible or unreasonable through no fault of the
employee, he or she may report to the employer as soon as possible (in
the case of a period of service less than 31 days) or submit an
application for reemployment to the employer by the next full calendar
day after it becomes possible to do so (in the case of a period of
service from 31 to 180 days), and the employee will be considered to
have timely reported or applied for reemployment.
[[Page 75303]]
Sec. 1002.118 Is an application for reemployment required to be in
any particular form?
An application for reemployment need not follow any particular
format. The employee may apply orally or in writing. The application
should indicate that the employee is a former employee returning from
service in the uniformed services and that he or she seeks reemployment
with the pre-service employer. The employee is permitted but not
required to identify a particular reemployment position in which he or
she is interested.
Sec. 1002.119 To whom must the employee submit the application for
reemployment?
The application must be submitted to the pre-service employer or to
an agent or representative of the employer who has apparent
responsibility for receiving employment applications. Depending upon
the circumstances, such a person could be a personnel or human
resources officer, or a first-line supervisor. If there has been a
change in ownership of the employer, the application should be
submitted to the employer's successor-in-interest.
Sec. 1002.120 If the employee seeks or obtains employment with an
employer other than the pre-service employer before the end of the
period within which a reemployment application must be filed, will that
jeopardize reemployment rights with the pre-service employer?
No. The employee has reemployment rights with the pre-service
employer provided that he or she makes a timely reemployment
application to that employer. The employee may seek or obtain
employment with an employer other than the pre-service employer during
the period of time within which a reemployment application must be
made, without giving up reemployment rights with the pre-service
employer. However, such alternative employment during the application
period should not be of a type that would constitute cause for the
employer to discipline or terminate the employee following
reemployment. For instance, if the employer forbids employees from
working concurrently for a direct competitor during employment,
violation of such a policy may constitute cause for discipline or even
termination.
Sec. 1002.121 Is the employee required to submit documentation to the
employer in connection with the application for reemployment?
Yes, if the period of service exceeded 30 days and if requested by
the employer to do so. If the employee submits an application for
reemployment after a period of service of more than 30 days, he or she
must, upon the request of the employer, provide documentation to
establish that:
(a) The reemployment application is timely;
(b) The employee has not exceeded the five-year limit on the
duration of service (subject to the exceptions listed at Sec.
1002.103); and,
(c) The employee's separation or dismissal from service was not
disqualifying.
Sec. 1002.122 Is the employer required to reemploy the employee if
documentation establishing the employee's eligibility does not exist or
is not readily available?
Yes. The employer is not permitted to delay or deny reemployment by
demanding documentation that does not exist or is not readily
available. The employee is not liable for administrative delays in the
issuance of military documentation. If the employee is reemployed after
an absence from employment for more than 90 days, the employer may
require that he or she submit the documentation establishing
entitlement to reemployment before treating the employee as not having
had a break in service for pension purposes. If the documentation is
received after reemployment and it shows that the employee is not
entitled to reemployment, the employer may terminate employment and any
rights or benefits that the employee may have been granted.
Sec. 1002.123 What documents satisfy the requirement that the
employee establish eligibility for reemployment after a period of
service of more than thirty days?
(a) Documents that satisfy the requirements of USERRA include the
following:
(1) DD (Department of Defense) 214 Certificate of Release or
Discharge from Active Duty;
(2) Copy of duty orders prepared by the facility where the orders
were fulfilled carrying an endorsement indicating completion of the
described service;
(3) Letter from the commanding officer of a Personnel Support
Activity or someone of comparable authority;
(4) Certificate of completion from military training school;
(5) Discharge certificate showing character of service; and,
(6) Copy of extracts from payroll documents showing periods of
service;
(7) Letter from National Disaster Medical System (NDMS) Team Leader
or Administrative Officer verifying dates and times of NDMS training or
Federal activation.
(b) The types of documents that are necessary to establish
eligibility for reemployment will vary from case to case. Not all of
these documents are available or necessary in every instance to
establish reemployment eligibility.
Character of Service
Sec. 1002.134 What type of discharge or separation from service is
required for an employee to be entitled to reemployment under USERRA?
USERRA does not require any particular form of discharge or
separation from service. However, even if the employee is otherwise
eligible for reemployment, he or she will be disqualified if the
characterization of service falls within one of four categories. USERRA
requires that the employee not have received one of these types of
discharge.
Sec. 1002.135 What types of discharge or separation from uniformed
service will make the employee ineligible for reemployment under
USERRA?
Reemployment rights are terminated if the employee is:
(a) Separated from uniformed service with a dishonorable or bad
conduct discharge;
(b) Separated from uniformed service under other than honorable
conditions, as characterized by regulations of the uniformed service;
(c) A commissioned officer dismissed as permitted under 10 U.S.C.
1161(a) by sentence of a general court-martial; in commutation of a
sentence of a general court-martial; or, in time of war, by order of
the President; or,
(d) A commissioned officer dropped from the rolls under 10 U.S.C.
1161(b) due to absence without authority for at least three months;
separation by reason of a sentence to confinement adjudged by a court-
martial; or, a sentence to confinement in a Federal or State
penitentiary or correctional institution.
Sec. 1002.136 Who determines the characterization of service?
The branch of service in which the employee performs the tour of
duty determines the characterization of service.
Sec. 1002.137 If the employee receives a disqualifying discharge or
release from uniformed service and it is later upgraded, will
reemployment rights be restored?
Yes. A military review board has the authority to prospectively or
retroactively upgrade a disqualifying discharge or release. A
retroactive upgrade would restore reemployment rights providing the
employee otherwise meets the Act's eligibility criteria.
[[Page 75304]]
Sec. 1002.138 If the employee receives a retroactive upgrade in the
characterization of service, will that entitle him or her to claim back
wages and benefits lost as of the date of separation from service?
No. A retroactive upgrade allows the employee to obtain
reinstatement with the former employer, provided the employee otherwise
meets the Act's eligibility criteria. Back pay and other benefits such
as pension plan credits attributable to the time period between
discharge and the retroactive upgrade are not required to be restored
by the employer in this situation.
Employer Statutory Defenses
Sec. 1002.139 Are there any circumstances in which the pre-service
employer is excused from its obligation to reemploy the employee
following a period of uniformed service? What statutory defenses are
available to the employer in an action or proceeding for reemployment
benefits?
(a) Even if the employee is otherwise eligible for reemployment
benefits, the employer is not required to reemploy him or her if the
employer establishes that its circumstances have so changed as to make
reemployment impossible or unreasonable. For example, an employer may
be excused from reemploying the employee where there has been an
intervening reduction in force that would have included that employee.
The employer may not, however, refuse to reemploy the employee on the
basis that another employee was hired to fill the reemployment position
during the employee's absence, even if reemployment might require the
termination of that replacement employee;
(b) Even if the employee is otherwise eligible for reemployment
benefits, the employer is not required to reemploy him or her if it
establishes that assisting the employee in becoming qualified for
reemployment would impose an undue hardship, as defined in Sec.
1002.5(n) and discussed in Sec. 1002.198, on the employer; or,
(c) Even if the employee is otherwise eligible for reemployment
benefits, the employer is not required to reemploy him or her if it
establishes that the employment position vacated by the employee in
order to perform service in the uniformed services was for a brief,
nonrecurrent period and there was no reasonable expectation that the
employment would continue indefinitely or for a significant period.
(d) The employer defenses included in this section are affirmative
ones, and the employer carries the burden to prove by a preponderance
of the evidence that any one or more of these defenses is applicable.
Subpart D--Rights, Benefits, and Obligations of Persons Absent from
Employment Due to Service in the Uniformed Services
Furlough and Leave of Absence
Sec. 1002.149 What is the employee's status with his or her civilian
employer while performing service in the uniformed services?
During a period of service in the uniformed services, the employee
is deemed to be on furlough or leave of absence from the civilian
employer. In this status, the employee is entitled to the non-seniority
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. Entitlement to these non-seniority rights and
benefits is not dependent on how the employer characterizes the
employee's status during a period of service. For example, if the
employer characterizes the employee as ``terminated'' during the period
of uniformed service, this characterization cannot be used to avoid
USERRA's requirement that the employee be deemed on furlough or leave
of absence, and therefore entitled to the non-seniority rights and
benefits generally provided to employees on furlough or leave of
absence.
Sec. 1002.150 Which non-seniority rights and benefits is the employee
entitled to during a period of service?
(a) The non-seniority rights and benefits to which an employee is
entitled during a period of service are those that the employer
provides to similarly situated employees by an employment contract,
agreement, policy, practice, or plan in effect at the employee's
workplace. These rights and benefits include those in effect at the
beginning of the employee's employment and those established after
employment began. They also include those rights and benefits that
become effective during the employee's period of service and that are
provided to similarly situated employees on furlough or leave of
absence.
(b) If the non-seniority benefits to which employees on furlough or
leave of absence are entitled vary according to the type of leave, the
employee must be given the most favorable treatment accorded to any
comparable form of leave when he or she performs service in the
uniformed services. In order to determine whether any two types of
leave are comparable, the duration of the leave may be the most
significant factor to compare. For instance, a two-day funeral leave
will not be ``comparable'' to an extended leave for service in the
uniformed service. In addition to comparing the duration of the
absences, other factors such as the purpose of the leave and the
ability of the employee to choose when to take the leave should also be
considered.
(c) As a general matter, accrual of vacation leave is considered to
be a non-seniority benefit that must be provided by an employer to an
employee on a military leave of absence only if the employer provides
that benefit to similarly situated employees on comparable leaves of
absence.
Sec. 1002.151 If the employer provides full or partial pay to the
employee while he or she is on military leave, is the employer required
to also provide the non-seniority rights and benefits ordinarily
granted to similarly situated employees on furlough or leave of
absence?
Yes. If the employer provides additional benefits such as full or
partial pay when the employee performs service, the employer is not
excused from providing other rights and benefits to which the employee
is entitled under the Act.
Sec. 1002.152 If employment is interrupted by a period of service in
the uniformed services, are there any circumstances under which the
employee is not entitled to the non-seniority rights and benefits
ordinarily granted to similarly situated employees on furlough or leave
of absence?
If employment is interrupted by a period of service in the
uniformed services and the employee knowingly provides written notice
of intent not to return to the position of employment after service in
the uniformed services, he or she is not entitled to those non-
seniority rights and benefits. The employee's written notice does not
waive entitlement to any other rights to which he or she is entitled
under the Act, including the right to reemployment after service.
Sec. 1002.153 If employment is interrupted by a period of service in
the uniformed services, is the employee permitted upon request to use
accrued vacation, annual or similar leave with pay during the service?
Can the employer require the employee to use accrued leave during a
period of service?
(a) If employment is interrupted by a period of service, the
employee must be permitted upon request to use any accrued vacation,
annual, or similar leave with pay during the period of service, in
order to continue his or her civilian pay. However, the employee is not
entitled to use sick leave that accrued with the civilian employer
during a period of service in the uniformed services, unless the
employer
[[Page 75305]]
allows employees to use sick leave for any reason, or allows other
similarly situated employees on comparable furlough or leave of absence
to use accrued paid sick leave. Sick leave is usually not comparable to
annual or vacation leave; it is generally intended to provide income
when the employee or a family member is ill and the employee is unable
to work.
(b) The employer may not require the employee to use accrued
vacation, annual, or similar leave during a period of service in the
uniformed services.
Health Plan Coverage
Sec. 1002.163 What types of health plans are covered by USERRA?
(a) USERRA defines a health plan to include an insurance policy or
contract, medical or hospital service agreement, membership or
subscription contract, or arrangement under which the employee's health
services are provided or the expenses of those services are paid.
(b) USERRA covers group health plans as defined in the Employee
Retirement Income Security Act of 1974 (ERISA) at 29 U.S.C. 1191b(a).
USERRA applies to group health plans that are subject to ERISA, and
plans that are not subject to ERISA, such as those sponsored by State
or local governments or religious organizations for their employees.
(c) USERRA covers multiemployer plans maintained pursuant to one or
more collective bargaining agreements between employers and employee
organizations. USERRA applies to multiemployer plans as they are
defined in ERISA at 29 U.S.C. 1002(37). USERRA contains provisions that
apply specifically to multiemployer plans in certain situations.
Sec. 1002.164 What health plan coverage must the employer provide for
the employee under USERRA?
If the employee has coverage under a health plan in connection with
his or her employment, the plan must permit the employee to elect to
continue the coverage for a certain period of time as described below:
(a) When the employee is performing service in the uniformed
services, he or she is entitled to continuing coverage for himself or
herself (and dependents if the plan offers dependent coverage) under a
health plan provided in connection with the employment. The plan must
allow the employee to elect to continue coverage for a period of time
that is the lesser of:
(1) The 24-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 purpose of performing service begins, and ending on the
date on which he or she fails to return from service or apply for a
position of employment as provided under sections 1002.115-123 of these
regulations.
(b) USERRA does not require the employer to establish a health plan
if there is no health plan coverage in connection with the employment,
or, where there is a plan, to provide any particular type of coverage.
(c) USERRA does not require the employer to permit the employee to
initiate new health plan coverage at the beginning of a period of
service if he or she did not previously have such coverage.
Sec. 1002.165 How does the employee elect continuing health plan
coverage?
USERRA does not specify requirements for electing continuing
coverage. Health plan administrators may develop reasonable
requirements addressing how continuing coverage may be elected,
consistent with the terms of the plan and the Act's exceptions to the
requirement that the employee give advance notice of service in the
uniformed services. For example, the employee cannot be precluded from
electing continuing health plan coverage under circumstances where it
is impossible or unreasonable for him or her to make a timely election
of coverage.
Sec. 1002.166 How much must the employee pay in order to continue
health plan coverage?
(a) If the employee performs service in the uniformed service for
fewer than 31 days, he or she cannot be required to pay more than the
regular employee share, if any, for health plan coverage.
(b) If the employee performs service in the uniformed service for
31 or more days, he or she may be required to pay no more than 102% of
the full premium under the plan, which represents the employer's share
plus the employee's share, plus 2% for administrative costs.
(c) USERRA does not specify requirements for methods of paying for
continuing coverage. Health plan administrators may develop reasonable
procedures for payment, consistent with the terms of the plan.
Sec. 1002.167 What actions may a plan administrator take if the
employee does not elect or pay for continuing coverage in a timely
manner?
The actions a plan administrator may take regarding the provision
or cancellation of an employee's continuing coverage depend on whether
the employee is excused from the requirement to give advance notice,
whether the plan has established reasonable rules for election of
continuation coverage, and whether the plan has established reasonable
rules for the payment for continuation coverage.
(a) No notice of service and no election of continuation coverage:
If an employer provides employment-based health coverage to an employee
who leaves employment for uniformed service without giving advance
notice of service, the plan administrator may cancel the employee's
health plan coverage upon the employee's departure from employment for
uniformed service. However, in cases in which an employee's failure to
give advance notice of service was excused under the statute because it
was impossible, unreasonable, or precluded by military necessity, the
plan administrator must reinstate the employee's health coverage
retroactively upon his or her election to continue coverage and payment
of all unpaid amounts due, and the employee must incur no
administrative reinstatement costs. In order to qualify for an
exception to the requirement of timely election of continuing health
care, an employee must first be excused from giving notice of service
under the statute.
(b) Notice of service but no election of continuing coverage: Plan
administrators may develop reasonable requirements addressing how
continuing coverage may be elected. Where health plans are also covered
under the Consolidated Omnibus Budget Reconciliation Act of 1985, 26
U.S.C. 4980B (COBRA), it may be reasonable for a health plan
administrator to adopt COBRA-compliant rules regarding election of
continuing coverage, as long as those rules do not conflict with any
provision of USERRA or this rule. If an employer provides employment-
based health coverage to an employee who leaves employment for
uniformed service for a period of service in excess of 30 days after
having given advance notice of service but without making an election
regarding continuing coverage, the plan administrator may cancel the
employee's health plan coverage upon the employee's departure from
employment for uniformed service, but must reinstate coverage without
the imposition of administrative reinstatement costs under the
following conditions:
(1) Plan administrators who have developed reasonable rules
regarding the period within which an employee
[[Page 75306]]
may elect continuing coverage must permit retroactive reinstatement of
uninterrupted coverage to the date of departure if the employee elects
continuing coverage and pays all unpaid amounts due within the periods
established by the plan;
(2) In cases in which plan administrators have not developed rules
regarding the period within which an employee may elect continuing
coverage, the plan must permit retroactive reinstatement of
uninterrupted coverage to the date of departure upon the employee's
election and payment of all unpaid amounts at any time during the
period established in section 1002.164(a).
(c) Election of continuation coverage without timely payment:
Health plan administrators may adopt reasonable rules allowing
cancellation of coverage if timely payment is not made. Where health
plans are covered under COBRA, it may be reasonable for a health plan
administrator to adopt COBRA-compliant rules regarding payment for
continuing coverage, as long as those rules do not conflict with any
provision of USERRA or this rule.
Sec. 1002.168 If the employee's coverage was terminated at the
beginning of or during service, does his or her coverage have to be
reinstated upon reemployment?
(a) 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. An exclusion or waiting
period may not be imposed in connection with the reinstatement of
coverage upon reemployment, if an exclusion or waiting period would not
have been imposed had coverage not been terminated by reason of such
service.
(b) USERRA permits a health plan to impose an exclusion or waiting
period as to illnesses or injuries determined by the Secretary of
Veterans Affairs to have been incurred in, or aggravated during,
performance of service in the uniformed services. The determination
that the employee's illness or injury was incurred in, or aggravated
during, the performance of service may only be made by the Secretary of
Veterans Affairs or his or her representative. Other coverage, for
injuries or illnesses that are not service-related (or for the
employee's dependents, if he or she has dependent coverage), must be
reinstated subject to paragraph (a) of this section.
Sec. 1002.169 Can the employee elect to delay reinstatement of health
plan coverage until a date after the date he or she is reemployed?
USERRA requires the employer to reinstate health plan coverage upon
request at reemployment. USERRA permits but does not require the
employer to allow the employee to delay reinstatement of health plan
coverage until a date that is later than the date of reemployment.
Sec. 1002.170 In a multiemployer health plan, how is liability
allocated for employer contributions and benefits arising under
USERRA's health plan provisions?
Liability under a multiemployer plan for employer contributions and
benefits in connection with USERRA's health plan provisions must be
allocated either as the plan sponsor provides, or, if the sponsor does
not provide, to the employee's last employer before his or her service.
If the last employer is no longer functional, liability for continuing
coverage is allocated to the health plan.
Sec. 1002.171 How does the continuation of health plan benefits apply
to a multiemployer plan that provides health plan coverage through a
health benefits account system?
(a) Some employees receive health plan benefits provided pursuant
to a multiemployer plan that utilizes a health benefits account system
in which an employee accumulates prospective health benefit
eligibility, also commonly referred to as ``dollar bank,'' ``credit
bank,'' and ``hour bank'' plans. In such cases, where an employee with
a positive health benefits account balance elects to continue the
coverage, the employee may further elect either option below:
(1) The employee may expend his or her health account balance
during an absence from employment due to service in the uniformed
services in lieu of paying for the continuation of coverage as set out
in Sec. 1002.166. If an employee's health account balance becomes
depleted during the applicable period provided for in Sec.
1002.164(a), the employee must be permitted, at his or her option, to
continue coverage pursuant to Sec. 1002.166. Upon reemployment, the
plan must provide for immediate reinstatement of the employee as
required by Sec. 1002.168, but may require the employee to pay the
cost of the coverage until the employee earns the credits necessary to
sustain continued coverage in the plan.
(2) The employee may pay for continuation coverage as set out in
Sec. 1002.166, in order to maintain intact his or her account balance
as of the beginning date of the absence from employment due to service
in the uniformed services. This option permits the employee to resume
usage of the account balance upon reemployment.
(b) Employers or plan administrators providing such plans should
counsel employees of their options set out in this subsection.
Subpart E--Reemployment Rights and Benefits
Prompt Reemployment
Sec. 1002.180 When is an employee entitled to be reemployed by his or
her civilian employer?
The employer must promptly reemploy the employee when he or she
returns from a period of service if the employee meets the Act's
eligibility criteria as described in Subpart C of these regulations.
Sec. 1002.181 How is ``prompt reemployment'' defined?
``Prompt reemployment'' means as soon as practicable under the
circumstances of each case. Absent unusual circumstances, reemployment
must occur within two weeks of the employee's application for
reemployment. For example, prompt reinstatement after a weekend
National Guard duty generally means the next regularly scheduled
working day. On the other hand, prompt reinstatement following several
years of active duty may require more time, because the employer may
have to reassign or give notice to another employee who occupied the
returning employee's position.
Reemployment Position
Sec. 1002.191 What position is the employee entitled to upon
reemployment?
As a general rule, the employee is entitled to reemployment in the
job position that he or she would have attained with reasonable
certainty if not for the absence due to uniformed service. This
position is known as the escalator position. The principle behind the
escalator position is that, if not for the period of uniformed service,
the employee could have been promoted (or, alternatively, demoted,
transferred, or laid off) due to intervening events. The escalator
principle requires that the employee be reemployed in a position that
reflects with reasonable certainty the pay, benefits, seniority, and
other job perquisites, that he or she would have attained if not for
the period of service. Depending upon the specific circumstances, the
employer may have the option, or be required, to reemploy
[[Page 75307]]
the employee in a position other than the escalator position.
Sec. 1002.192 How is the specific reemployment position determined?
In all cases, the starting point for determining the proper
reemployment position is the escalator position, which is the job
position that the employee would have attained if his or her continuous
employment had not been interrupted due to uniformed service. Once this
position is determined, the employer may have to consider several
factors before determining the appropriate reemployment position in any
particular case. Such factors may include the employee's length of
service, qualifications, and disability, if any. The reemployment
position may be either the escalator position; the pre-service
position; a position comparable to the escalator or pre-service
position; or, the nearest approximation to one of these positions.
Sec. 1002.193 Does the reemployment position include elements such as
seniority, status, and rate of pay?
(a) Yes. The reemployment position includes the seniority, status,
and rate of pay that an employee would ordinarily have attained in that
position given his or her job history, including prospects for future
earnings and advancement. The employer must determine the seniority
rights, status, and rate of pay as though the employee had been
continuously employed during the period of service. The seniority
rights, status, and pay of an employment position include those
established (or changed) by a collective bargaining agreement, employer
policy, or employment practice. The sources of seniority rights,
status, and pay include agreements, policies, and practices in effect
at the beginning of the employee's service, and any changes that may
have occurred during the period of service. In particular, the
employee's status in the reemployment position could include
opportunities for advancement, general working conditions, job
location, shift assignment, rank, responsibility, and geographical
location.
(b) 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. No fixed amount of time for permitting
adjustment to reemployment will be deemed reasonable in all cases.
However, in determining a reasonable amount of time to permit an
employee to adjust to reemployment before scheduling a makeup test or
examination, an employer may take into account a variety of factors,
including but not limited to the length of time the returning employee
was absent from work, the level of difficulty of the test itself, the
typical time necessary to prepare or study for the test, the duties and
responsibilities of the reemployment position and the promotional
position, and the nature and responsibilities of the service member
while serving in the uniformed service. If the employee is successful
on the makeup exam and, based on the results of that exam, there is a
reasonable certainty that he or she would have been promoted, or made
eligible for promotion, during the time that the employee served in the
uniformed service, then the promotion or eligibility for promotion must
be made effective as of the date it would have occurred had employment
not been interrupted by uniformed service.
Sec. 1002.194 Can the application of the escalator principle result
in adverse consequences when the employee is reemployed?
Yes. The Act does not prohibit lawful adverse job consequences that
result from the employee's restoration on the seniority ladder.
Depending on the circumstances, the escalator principle may cause an
employee to be reemployed in a higher or lower position, laid off, or
even terminated. For example, if an employee's seniority or job
classification would have resulted in the employee being laid off
during the period of service, and the layoff continued after the date
of reemployment, reemployment would reinstate the employee to layoff
status. Similarly, the status of the reemployment position requires the
employer to assess what would have happened to such factors as the
employee's opportunities for advancement, working conditions, job
location, shift assignment, rank, responsibility, and geographical
location, if he or she had remained continuously employed. The
reemployment position may involve transfer to another shift or
location, more or less strenuous working conditions, or changed
opportunities for advancement, depending upon the application of the
escalator principle.
Sec. 1002.195 What other factors can determine the reemployment
position?
Once the employee's escalator position is determined, other factors
may allow, or require, the employer to reemploy the employee in a
position other than the escalator position. These factors, which are
explained in Sec. Sec. 1002.196 through 1002.199, are:
(a) The length of the employee's most recent period of uniformed
service;
(b) The employee's qualifications; and,
(c) Whether the employee has a disability incurred or aggravated
during uniformed service.
Sec. 1002.196 What is the employee's reemployment position if the
period of service was less than 91 days?
Following a period of service in the uniformed services of less
than 91 days, the employee must be reemployed according to the
following priority:
(a) The employee must be reemployed in the escalator position. He
or she must be qualified to perform the duties of this position. The
employer must make reasonable efforts to help the employee become
qualified to perform the duties of this position.
(b) If the employee is not qualified to perform the duties of the
escalator position after reasonable efforts by the employer, the
employee must be reemployed in the position in which he or she was
employed on the date that the period of service began. The employee
must be qualified to perform the duties of this position. The employer
must make reasonable efforts to help the employee become qualified to
perform the duties of this position.
(c) If the employee is not qualified to perform the duties of the
escalator position or the pre-service position, after reasonable
efforts by the employer, he or she must be reemployed in any other
position that is the nearest approximation first to the escalator
position and then to the pre-service position. The employee must be
qualified to perform the duties of this position. The employer must
make reasonable efforts to help the employee become qualified to
perform the duties of this position.
Sec. 1002.197 What is the reemployment position if the employee's
period of service in the uniformed services was more than 90 days?
Following a period of service of more than 90 days, the employee
must be reemployed according to the following priority:
(a) The employee must be reemployed in the escalator position or a
position of like seniority, status, and pay. He or she must be
qualified to perform the duties of this position. The employer must
make reasonable efforts to help the employee become qualified to
perform the duties of this position.
(b) If the employee is not qualified to perform the duties of the
escalator
[[Page 75308]]
position or a like position after reasonable efforts by the employer,
the employee must be reemployed in the position in which he or she was
employed on the date that the period of service began or in a position
of like seniority, status, and pay. The employee must be qualified to
perform the duties of this position. The employer must make reasonable
efforts to help the employee become qualified to perform the duties of
this position.
(c) If the employee is not qualified to perform the duties of the
escalator position, the pre-service position, or a like position, after
reasonable efforts by the employer, he or she must be reemployed in any
other position that is the nearest approximation first to the escalator
position and then to the pre-service position. The employee must be
qualified to perform the duties of this position. The employer must
make reasonable efforts to help the employee become qualified to
perform the duties of this position.
Sec. 1002.198 What efforts must the employer make to help the
employee become qualified for the reemployment position?
The employee must be qualified for the reemployment position. The
employer must make reasonable efforts to help the employee become
qualified to perform the duties of this position. The employer is not
required to reemploy the employee on his or her return from service if
he or she cannot, after reasonable efforts by the employer, qualify for
the appropriate reemployment position.
(a)(1) ``Qualified'' means that the employee has the ability to
perform the essential tasks of the position. The employee's inability
to perform one or more non-essential tasks of a position does not make
him or her unqualified.
(2) Whether a task is essential depends on several factors, and
these factors include but are not limited to:
(i) The employer's judgment as to which functions are essential;
(ii) Written job descriptions developed before the hiring process
begins;
(iii) The amount of time on the job spent performing the function;
(iv) The consequences of not requiring the individual to perform
the function;
(v) The terms of a collective bargaining agreement;
(vi) The work experience of past incumbents in the job; and/or
(vii) The current work experience of incumbents in similar jobs.
(b) Only after the employer makes reasonable efforts, as defined in
Sec. 1002.5(i), may it determine that the employee is not qualified
for the reemployment position. These reasonable efforts must be made at
no cost to the employee.
Sec. 1002.199 What priority must the employer follow if two or more
returning employees are entitled to reemployment in the same position?
If two or more employees are entitled to reemployment in the same
position and more than one employee has reported or applied for
employment in that position, the employee who first left the position
for uniformed service has the first priority on reemployment in that
position. The remaining employee (or employees) is entitled to be
reemployed in a position similar to that in which the employee would
have been reemployed according to the rules that normally determine a
reemployment position, as set out in Sec. Sec. 1002.196 and 1002.197.
Seniority Rights and Benefits
Sec. 1002.210 What seniority rights does an employee have when
reemployed following a period of uniformed service?
The employee is entitled to the seniority and seniority-based
rights and benefits 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. In determining entitlement to seniority
and seniority-based rights and benefits, the period of absence from
employment due to or necessitated by uniformed service is not
considered a break in employment. The rights and benefits protected by
USERRA upon reemployment include those provided by the employer and
those required by statute. For example, under USERRA, a reemployed
service member would be eligible for leave under the Family and Medical
Leave Act of 1993, 29 U.S.C. 2601-2654 (FMLA), if the number of months
and the number of hours of work for which the service member was
employed by the civilian employer, together with the number of months
and the number of hours of work for which the service member would have
been employed by the civilian employer during the period of uniformed
service, meet FMLA's eligibility requirements. In the event that a
service member is denied FMLA leave for failing to satisfy the FMLA's
hours of work requirement due to absence from employment necessitated
by uniformed service, the service member may have a cause of action
under USERRA but not under the FMLA.
Sec. 1002.211 Does USERRA require the employer to use a seniority
system?
No. USERRA does not require the employer to adopt a formal
seniority system. USERRA defines seniority as longevity in employment
together with any employment benefits that accrue with, or are
determined by, longevity in employment. In the absence of a formal
seniority system, such as one established through collective
bargaining, USERRA looks to the custom and practice in the place of
employment to determine the employee's entitlement to any employment
benefits that accrue with, or are determined by, longevity in
employment.
Sec. 1002.212 How does a person know whether a particular right or
benefit is a seniority-based right or benefit?
A seniority-based right or benefit is one that accrues with, or is
determined by, longevity in employment. Generally, whether a right or
benefit is seniority-based depends on three factors:
(a) Whether the right or benefit is a reward for length of service
rather than a form of short-term compensation for work performed;
(b) 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,
(c) 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. Provisions of an employment contract or policies in the
employee handbook are not controlling if the employer's actual custom
or practice is different from what is written in the contract or
handbook.
Sec. 1002.213 How can the employee demonstrate a reasonable certainty
that he or she would have received the seniority right or benefit if he
or she had remained continuously employed during the period of service?
A reasonable certainty is a high probability that the employee
would have received the seniority or seniority-based right or benefit
if he or she had been continuously employed. The employee does not have
to establish that he or she would have received the benefit as an
absolute certainty. The employee can demonstrate a reasonable certainty
that he or she would have received the seniority right or benefit by
showing that other employees with seniority similar to that which the
employee would have had if he or she had remained continuously employed
received the right or benefit. The employer cannot withhold the right
or benefit based on an assumption that a
[[Page 75309]]
series of unlikely events could have prevented the employee from
gaining the right or benefit.
Disabled Employees
Sec. 1002.225 Is the employee entitled to any specific reemployment
benefits if he or she has a disability that was incurred in, or
aggravated during, the period of service?
Yes. A disabled service member is entitled, to the same extent as
any other individual, to the escalator position he or she would have
attained but for uniformed service. If the 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 to help the employee become qualified
to perform the duties of his or her reemployment position. If the
employee is not qualified for reemployment in the escalator position
because of a disability after reasonable efforts by the employer to
accommodate the disability and to help the employee to become
qualified, the employee must be reemployed in a position according to
the following priority. The employer must make reasonable efforts to
accommodate the employee's disability and to help him or her to become
qualified to perform the duties of one of these positions:
(a) A position that is equivalent in seniority, status, and pay to
the escalator position; or,
(b) A position that is the nearest approximation to the equivalent
position, consistent with the circumstances of the employee's case, in
terms of seniority, status, and pay. A position that is the nearest
approximation to the equivalent position may be a higher or lower
position, depending on the circumstances.
Sec. 1002.226 If the employee has a disability that was incurred in,
or aggravated during, the period of service, what efforts must the
employer make to help him or her become qualified for the reemployment
position?
(a) USERRA requires that the employee be qualified for the
reemployment position regardless of any disability. The employer must
make reasonable efforts to help the employee to become qualified to
perform the duties of this position. The employer is not required to
reemploy the employee on his or her return from service if he or she
cannot, after reasonable efforts by the employer, qualify for the
appropriate reemployment position.
(b) ``Qualified'' has the same meaning here as in Sec. 1002.198.
Rate of Pay
Sec. 1002.236 How is the employee's rate of pay determined when he or
she returns from a period of service?
The employee's rate of pay is determined by applying the same
escalator principles that are used to determine the reemployment
position, as follows:
(a) If the employee is reemployed in the escalator position, the
employer must compensate him or her at the rate of pay associated with
the escalator position. The rate of pay must be determined by taking
into account any pay increases, differentials, step increases, merit
increases, or periodic increases that the employee would have attained
with reasonable certainty had he or she remained continuously employed
during the period of service. In addition, when considering whether
merit or performance increases would have been attained with reasonable
certainty, an employer may examine the returning employee's own work
history, his or her history of merit increases, and the work and pay
history of employees in the same or similar position. For example, if
the employee missed a merit pay increase while performing service, but
qualified for previous merit pay increases, then the rate of pay should
include the merit pay increase that was missed. If the merit pay
increase that the employee missed during service is based on a skills
test or examination, then the employer should give the employee a
reasonable amount of time to adjust to the reemployment position and
then give him or her the skills test or examination. No fixed amount of
time for permitting adjustment to reemployment will be deemed
reasonable in all cases. However, in determining a reasonable amount of
time to permit an employee to adjust to reemployment before scheduling
a makeup test or examination, an employer may take into account a
variety of factors, including but not limited to the length of time the
returning employee was absent from work, the level of difficulty of the
test itself, the typical time necessary to prepare or study for the
test, the duties and responsibilities of the reemployment position and
the promotional position, and the nature and responsibilities of the
service member while serving in the uniformed service. The escalator
principle also applies in the event a pay reduction occurred in the
reemployment position during the period of service. Any pay adjustment
must be made effective as of the date it would have occurred had the
employee's employment not been interrupted by uniformed service.
(b) If the employee is reemployed in the pre-service position or
another position, the employer must compensate him or her at the rate
of pay associated with the position in which he or she is reemployed.
As with the escalator position, the rate of pay must be determined by
taking into account any pay increases, differentials, step increases,
merit increases, or periodic increases that the employee would have
attained with reasonable certainty had he or she remained continuously
employed during the period of service.
Protection Against Discharge
Sec. 1002.247 Does USERRA provide the employee with protection
against discharge?
Yes. If the employee's most recent period of service in the
uniformed services was more than 30 days, he or she must not be
discharged except for cause--
(a) For 180 days after the employee's date of reemployment if his
or her most recent period of uniformed service was more than 30 days
but less than 181 days; or,
(b) For one year after the date of reemployment if the employee's
most recent period of uniformed service was more than 180 days.
Sec. 1002.248 What constitutes cause for discharge under USERRA?
The employee may be discharged for cause based either on conduct
or, in some circumstances, because of the application of other
legitimate nondiscriminatory reasons.
(a) In a discharge action based on conduct, the employer bears the
burden of proving that it is reasonable to discharge the employee for
the conduct in question, and that he or she had notice, which was
express or can be fairly implied, that the conduct would constitute
cause for discharge.
(b) If, based on the application of other legitimate
nondiscriminatory reasons, the employee's job position is eliminated,
or the employee is placed on layoff status, either of these situations
would constitute cause for purposes of USERRA. The employer bears the
burden of proving that the employee's job would have been eliminated or
that he or she would have been laid off.
Pension Plan Benefits
Sec. 1002.259 How does USERRA protect an employee's pension benefits?
On reemployment, the employee is treated as not having a break in
service with the employer or employers
[[Page 75310]]
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.
(a) Depending on the length of the employee's period of service, he
or she is entitled to take from one to ninety days following service
before reporting back to work or applying for reemployment (See Sec.
1002.115). This period of time must be treated as continuous service
with the employer for purposes of determining participation, vesting
and accrual of pension benefits under the plan.
(b) If the employee is hospitalized for, or convalescing from, an
illness or injury incurred in, or aggravated during, service, he or she
is entitled to report to or submit an application for reemployment at
the end of the time period necessary for him or her to recover from the
illness or injury. This period, which may not exceed two years from the
date the employee completed service, except in circumstances beyond his
or her control, must be treated as continuous service with the employer
for purposes of determining the participation, vesting and accrual of
pension benefits under the plan.
Sec. 1002.260 What pension benefit plans are covered under USERRA?
(a) The Employee Retirement Income Security Act of 1974 (ERISA)
defines an employee pension benefit plan as a plan that provides
retirement income to employees, or defers employee income to a period
extending to or beyond the termination of employment. Any such plan
maintained by the employer or employers is covered under USERRA. USERRA
also covers certain pension plans not covered by ERISA, such as those
sponsored by a State, government entity, or church for its employees.
(b) USERRA does not cover pension benefits under the Federal Thrift
Savings Plan; those benefits are covered under 5 U.S.C. 8432b.
Sec. 1002.261 Who is responsible for funding any plan obligation to
provide the employee with pension benefits?
With the exception of multiemployer plans, which have separate
rules discussed below, the employer is liable to the pension benefit
plan to fund any obligation of the plan to provide benefits that are
attributable to the employee's period of service. In the case of a
defined contribution plan, once the employee is reemployed, the
employer must allocate the amount of its make-up contribution for the
employee, if any; his or her make-up employee contributions, if any;
and his or her elective deferrals, if any; in the same manner and to
the same extent that it allocates the amounts for other employees
during the period of service. In the case of a defined benefit plan,
the employee's accrued benefit will be increased for the period of
service once he or she is reemployed and, if applicable, has repaid any
amounts previously paid to him or her from the plan and made any
employee contributions that may be required to be made under the plan.
Sec. 1002.262 When is the employer required to make the plan
contribution that is attributable to the employee's period of uniformed
service?
(a) The employer is not required to make its contribution until the
employee is reemployed. For employer contributions to a plan in which
the employee is not required or permitted to contribute, the employer
must make the contribution attributable to the employee's period of
service no later than ninety days after the date of reemployment, or
when plan contributions are normally due for the year in which the
service in the uniformed services was performed, whichever is later. If
it is impossible or unreasonable for the employer to make the
contribution within this time period, the employer must make the
contribution as soon as practicable.
(b) If the employee is enrolled in a contributory plan he or she is
allowed (but not required) to make up his or her missed contributions
or elective deferrals. These makeup contributions or elective deferrals
must be made during a time period starting with the date of
reemployment and continuing for up to three times the length of the
employee's immediate past period of uniformed service, with the
repayment period not to exceed five years. Makeup contributions or
elective deferrals may only be made during this period and while the
employee is employed with the post-service employer.
(c) If the employee's plan is contributory and he or she does not
make up his or her contributions or elective deferrals, he or she will
not receive the employer match or the accrued benefit attributable to
his or her contribution because the employer is required to make
contributions that are contingent on or attributable to the employee's
contributions or elective deferrals only to the extent that the
employee makes up his or her payments to the plan. Any employer
contributions that are contingent on or attributable to the employee's
make-up contributions or elective deferrals must be made according to
the plan's requirements for employer matching contributions.
(d) The employee is not required to make up the full amount of
employee contributions or elective deferrals that he or she missed
making during the period of service. If the employee does not make up
all of the missed contributions or elective deferrals, his or her
pension may be less than if he or she had done so.
(e) Any vested accrued benefit in the pension plan that the
employee was entitled to prior to the period of uniformed service
remains intact whether or not he or she chooses to be reemployed under
the Act after leaving the uniformed service.
(f) An adjustment will be made to the amount of employee
contributions or elective deferrals the employee will be able to make
to the pension plan for any employee contributions or elective
deferrals he or she actually made to the plan during the period of
service.
Sec. 1002.263 Does the employee pay interest when he or she makes up
missed contributions or elective deferrals?
No. The employee is not required or permitted to make up a missed
contribution in an amount that exceeds the amount he or she would have
been permitted or required to contribute had he or she remained
continuously employed during the period of service.
Sec. 1002.264 Is the employee allowed to repay a previous
distribution from a pension benefits plan upon being reemployed?
Yes, provided the plan is a defined benefit plan. If the employee
received a distribution of all or part of the accrued benefit from a
defined benefit plan in connection with his or her service in the
uniformed services before he or she became reemployed, he or she must
be allowed to repay the withdrawn amounts when he or she is reemployed.
The amount the employee must repay includes any interest that would
have accrued had the monies not been withdrawn. The employee must be
allowed to repay these amounts during a time period starting with the
date of reemployment and continuing for up to three times the length of
the employee's immediate past period of uniformed service, with the
repayment period not to exceed five years (or such longer time as may
be agreed to between the employer and the employee), provided the
employee is employed with the post-service employer during this period.
[[Page 75311]]
Sec. 1002.265 If the employee is reemployed with his or her pre-
service employer, is the employee's pension benefit the same as if he
or she had remained continuously employed?
The amount of the employee's pension benefit depends on the type of
pension plan.
(a) In a non-contributory defined benefit plan, where the amount of
the pension benefit is determined according to a specific formula, the
employee's benefit will be the same as though he or she had remained
continuously employed during the period of service.
(b) In a contributory defined benefit plan, the employee will need
to make up contributions in order to have the same benefit as if he or
she had remained continuously employed during the period of service.
(c) In a defined contribution plan, the benefit may not be the same
as if the employee had remained continuously employed, even though the
employee and the employer make up any contributions or elective
deferrals attributable to the period of service, because the employee
is not entitled to forfeitures and earnings or required to experience
losses that accrued during the period or periods of service.
Sec. 1002.266 What are the obligations of a multiemployer pension
benefit plan under USERRA?
A multiemployer pension benefit plan is one to which more than one
employer is required to contribute, and which is maintained pursuant to
one or more collective bargaining agreements between one or more
employee organizations and more than one employer. The Act uses ERISA's
definition of a multiemployer plan. In addition to the provisions of
USERRA that apply to all pension benefit plans, there are provisions
that apply specifically to multiemployer plans, as follows:
(a) The last employer that employed the employee before the period
of service is responsible for making the employer contribution to the
multiemployer plan, if the plan sponsor does not provide otherwise. If
the last employer is no longer functional, the plan must nevertheless
provide coverage to the employee.
(b) An employer that contributes to a multiemployer plan and that
reemploys the employee pursuant to USERRA must provide written notice
of reemployment to the plan administrator within 30 days after the date
of reemployment. The returning service member should notify the
reemploying employer that he or she has been reemployed pursuant to
USERRA. The 30-day period within which the reemploying employer must
provide written notice to the multiemployer plan pursuant to this
subsection does not begin until the employer has knowledge that the
employee was reemployed pursuant to USERRA.
(c) The employee is entitled to the same employer contribution
whether he or she is reemployed by the pre-service employer or by a
different employer contributing to the same multiemployer plan,
provided that the pre-service employer and the post-service employer
share a common means or practice of hiring the employee, such as common
participation in a union hiring hall.
Sec. 1002.267 How is compensation during the period of service
calculated in order to determine the employee's pension benefits, if
benefits are based on compensation?
In many pension benefit plans, the employee's compensation
determines the amount of his or her contribution or the retirement
benefit to which he or she is entitled.
(a) Where the employee's rate of compensation must be calculated to
determine pension entitlement, the calculation must be made using the
rate of pay that the employee would have received but for the period of
uniformed service.
(b)(1) Where the rate of pay the employee would have received is
not reasonably certain, such as where compensation is based on
commissions earned, the average rate of compensation during the 12-
month period prior to the period of uniformed service must be used.
(2) Where the rate of pay the employee would have received is not
reasonably certain and he or she was employed for less than 12 months
prior to the period of uniformed service, the average rate of
compensation must be derived from this shorter period of employment
that preceded service.
Subpart F--Compliance Assistance, Enforcement and Remedies
Compliance Assistance
Sec. 1002.277 What assistance does the Department of Labor provide to
employees and employers concerning employment, reemployment, or other
rights and benefits under USERRA?
The Secretary, through the Veterans' Employment and Training
Service (VETS), provides assistance to any person or entity with
respect to employment and reemployment rights and benefits under
USERRA. This assistance includes a wide range of compliance assistance
outreach activities, such as responding to inquiries; conducting USERRA
briefings and Webcasts; issuing news releases; and, maintaining the
elaws USERRA Advisor (located at http://www.dol.gov/elaws/userra.htm),
the e-VETS Resource Advisor and other web-based materials (located at
http://www.dol.gov/vets), which are designed to increase awareness of
the Act among affected persons, the media, and the general public. In
providing such assistance, VETS may request the assistance of other
Federal and State agencies, and utilize the assistance of volunteers.
Investigation and Referral
Sec. 1002.288 How does an individual file a USERRA complaint?
If an individual is claiming entitlement to employment rights or
benefits or reemployment rights or benefits and alleges that an
employer has failed or refused, or is about to fail or refuse, to
comply with the Act, the individual may file a complaint with VETS or
initiate a private legal action in a court of law (see Sec. 1002.303).
A complaint may be filed with VETS either in writing, using VETS Form
1010, or electronically, using VETS Form e1010 (instructions and the
forms can be accessed at http://www.dol.gov/elaws/vets/userra/1010.asp
). A complaint must include the name and address of the
employer, a summary of the basis for the complaint, and a request for
relief.
Sec. 1002.289 How will VETS investigate a USERRA complaint?
(a) In carrying out any investigation, VETS has, at all reasonable
times, reasonable access to and the right to interview persons with
information relevant to the investigation. VETS also has reasonable
access to, for purposes of examination, the right to copy and receive
any documents of any person or employer that VETS considers relevant to
the investigation.
(b) VETS may require by subpoena the attendance and testimony of
witnesses and the production of documents relating to any matter under
investigation. In case of disobedience of or resistance to the
subpoena, the Attorney General may, at VETS' request, apply to any
district court of the United States in whose jurisdiction such
disobedience or resistance occurs for an order enforcing the subpoena.
The district courts of the United States have jurisdiction to order
compliance with the subpoena, and to punish failure to obey a subpoena
as a contempt of court. This paragraph does not authorize VETS to seek
issuance of a subpoena to the legislative or judicial branches of the
United States.
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Sec. 1002.290 Does VETS have the authority to order compliance with
USERRA?
No. If VETS determines as a result of an investigation that the
complaint is meritorious, VETS attempts to resolve the complaint by
making reasonable efforts to ensure that any persons or entities named
in the complaint comply with the Act.
If VETS' efforts do not resolve the complaint, VETS notifies the
person who submitted the complaint of:
(a) The results of the investigation; and,
(b) The person's right to proceed under the enforcement of rights
provisions in 38 U.S.C. 4323 (against a State or private employer), or
38 U.S.C. 4324 (against a Federal executive agency or the Office of
Personnel Management (OPM)).
Sec. 1002.291 What actions may an individual take if the complaint is
not resolved by VETS?
If an individual receives a notification from VETS of an
unsuccessful effort to resolve his or her complaint relating to a State
or private employer, the individual may request that VETS refer the
complaint to the Attorney General.
Sec. 1002.292 What can the Attorney General do about the complaint?
(a) If the Attorney General is reasonably satisfied that an
individual's complaint is meritorious, meaning that he or she is
entitled to the rights or benefits sought, the Attorney General may
appear on his or her behalf and act as the individual's attorney, and
initiate a legal action to obtain appropriate relief.
(b) If the Attorney General determines that the individual's
complaint does not have merit, the Attorney General may decline to
represent him or her.
Enforcement of Rights and Benefits Against a State or Private Employer
Sec. 1002.303 Is an individual required to file his or her complaint
with VETS?
No. The individual may initiate a private action for relief against
a State or private employer if he or she decides not to apply to VETS
for assistance.
Sec. 1002.304 If an individual files a complaint with VETS and VETS'
efforts do not resolve the complaint, can the individual pursue the
claim on his or her own?
Yes. If VETS notifies an individual that it is unable to resolve
the complaint, the individual may pursue the claim on his or her own.
The individual may choose to be represented by private counsel whether
or not the Attorney General decides to represent him or her as to the
complaint.
Sec. 1002.305 What court has jurisdiction in an action against a
State or private employer?
(a) If an action is brought against a State or private employer by
the Attorney General, the district courts of the United States have
jurisdiction over the action. If the action is brought against a State
by the Attorney General, it must be brought in the name of the United
States as the plaintiff in the action.
(b) If an action is brought against a State by a person, the action
may be brought in a State court of competent jurisdiction according to
the laws of the State.
(c) If an action is brought against a private employer or a
political subdivision of a State by a person, the district courts of
the United States have jurisdiction over the action.
(d) An action brought against a State Adjutant General, as an
employer of a civilian National Guard technician, is considered an
action against a State for purposes of determining which court has
jurisdiction.
Sec. 1002.306 Is a National Guard civilian technician considered a
State or Federal employee for purposes of USERRA?
A National Guard civilian technician is considered a State employee
for USERRA purposes, although he or she is considered a Federal
employee for most other purposes.
Sec. 1002.307 What is the proper venue in an action against a State
or private employer?
(a) If an action is brought by the Attorney General against a
State, the action may proceed in the United States district court for
any district in which the State exercises any authority or carries out
any function.
(b) If an action is brought against a private employer, or a
political subdivision of a State, the action may proceed in the United
States district court for any district in which the employer maintains
a place of business.
Sec. 1002.308 Who has legal standing to bring an action under USERRA?
An action may be brought only by the United States or by the
person, or representative of a person, claiming rights or benefits
under the Act. An employer, prospective employer or other similar
entity may not bring an action under the Act.
Sec. 1002.309 Who is a necessary party in an action under USERRA?
In an action under USERRA only an employer or a potential employer,
as the case may be, is a necessary party respondent. In some
circumstances, such as where terms in a collective bargaining agreement
need to be interpreted, the court may allow an interested party to
intervene in the action.
Sec. 1002.310 How are fees and court costs charged or taxed in an
action under USERRA?
No fees or court costs may be charged or taxed against an
individual if he or she is claiming rights under the Act. If the
individual obtains private counsel for any action or proceeding to
enforce a provision of the Act, and prevails, the court may award
reasonable attorney fees, expert witness fees, and other litigation
expenses.
Sec. 1002.311 Is there a statute of limitations in an action under
USERRA?
USERRA does not have a statute of limitations, and it expressly
precludes the application of any State statute of limitations. At least
one court, however, has held that the four-year general Federal statute
of limitations, 28 U.S.C. 1658, applies to actions under USERRA. Rogers
v. City of San Antonio, 2003 WL 1566502 (W.D. Texas), reversed on other
grounds, 392 F.3d 758 (5th Cir. 2004). But see Akhdary v. City of
Chattanooga, 2002 WL 32060140 (E.D. Tenn.). In addition, if an
individual unreasonably delays asserting his or her rights, and that
unreasonable delay causes prejudice to the employer, the courts have
recognized the availability of the equitable doctrine of laches to bar
a claim under USERRA. Accordingly, individuals asserting rights under
USERRA should determine whether the issue of the applicability of the
Federal statute of limitations has been resolved and, in any event, act
promptly to preserve their rights under USERRA.
Sec. 1002.312 What remedies may be awarded for a violation of USERRA?
In any action or proceeding the court may award relief as follows:
(a) The court may require the employer to comply with the
provisions of the Act;
(b) The court may require the employer to compensate the individual
for any loss of wages or benefits suffered by reason of the employer's
failure to comply with the Act;
(c) The court may require the employer to pay the individual an
amount equal to the amount of lost wages and benefits as liquidated
damages, if the court determines that the employer's failure to comply
with the Act was willful. A violation shall be considered to be willful
if the employer either knew or showed reckless disregard for whether
its conduct was prohibited by the Act.
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(d) Any wages, benefits, or liquidated damages awarded under
paragraphs (b) and (c) of this section are in addition to, and must not
diminish, any of the other rights and benefits provided by USERRA (such
as, for example, the right to be employed or reemployed by the
employer).
Sec. 1002.313 Are there special damages provisions that apply to
actions initiated in the name of the United States?
Yes. In an action brought in the name of the United States, for
which the relief includes compensation for lost wages, benefits, or
liquidated damages, the compensation must be held in a special deposit
account and must be paid, on order of the Attorney General, directly to
the person. If the compensation is not paid to the individual because
of the Federal Government's inability to do so within a period of three
years, the compensation must be converted into the Treasury of the
United States as miscellaneous receipts.
Sec. 1002.314 May a court use its equity powers in an action or
proceeding under the Act?
Yes. A court may use its full equity powers, including the issuance
of temporary or permanent injunctions, temporary restraining orders,
and contempt orders, to vindicate the rights or benefits guaranteed
under the Act.
Signed at Washington, DC, this 8th day of December, 2005.
Charles S. Ciccolella,
Assistant Secretary for Veterans' Employment and Training.
[FR Doc. 05-23961 Filed 12-16-05; 8:45 am]
BILLING CODE 4510-79-P
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