| EXECUTIVE SUMMARY | 
THE UNIFORMED SERVICES EMPLOYMENT AND Reemployment Rights Act of 1994 (USERRA) gives employees who take a leave of absence for active military service certain statutory rights—not only to reemployment but to specific coverage for retirement and wellness benefits.
THE LAW APPLIES TO ALL EMPLOYERS in the United States, regardless of their size, and it protects part-time positions, unless the employment was brief and nonrecurring.
USERRA REQUIRES THAT IF A MILITARY LEAVE of absence is less than 91 days, returning employees must be reinstated to the position they held or would have held if they had been continuously employed without interruption for military reasons. If the leave of absence is more than 90 days, the law says the employer must reinstate a returning employee to the position he or she would have had if no service call-up had occurred.
UNDER LIMITED CONDITIONS EMPLOYERS CAN REFUSE to hire back an employee following discharge from military duty—for example, a downsizing that eliminated the employee’s position might be a legitimate reason for denying reemployment.
THE RIGHTS OF THE RETURNING EMPLOYEE SUPERSEDE the rights of anyone hired to replace him or her, even if the replacement ends up with no position as a result.
USERRA REQUIRES EMPLOYERS TO OFFER ACTIVATED reservists and their dependents medical, hospital, dental and prescription drug coverage that conforms to the optional continuation provisions of the Consolidated Omnibus Budget Reconciliation Act (COBRA). A firm cannot discontinue medical coverage just because the employee is receiving health coverage as an active member of the armed services. | | JOHN LEWISON is director of human resources for a New York-based company and is assistant professor of management at the graduate human resources development division of the University of Bridgeport in Connecticut. He was previously the executive director of the New York State Society for Human Resource Management. | 
s a result of the war in Iraq and the nation’s increased vigilance against terrorism, tens of thousands of reservists have been and are being called to active military duty. Most will return to civilian life and their jobs. CPA firms and their clients whose employees have been called to serve need to understand their obligations under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). Signed into law nine years ago by President Clinton, USERRA was designed to give employees who take a leave of absence for active military service certain statutory rights—not only to reemployment, but to specific coverage for retirement and wellness benefits.
Recognizing they have a duty to reinstate returning reservists, many firms and companies are asking what the exact obligations are. Their questions include
What job entitlements or protections does USERRA offer?
When reservists return home, do we have to give them their old jobs back?
What are my obligations as an employer if the employee volunteers?
Must our firm continue to provide coverage under our group health and pension plans?
Employees returning after active duty have questions, too, among them
Am I covered under USERRA?
How does USERRA affect health and retirement benefits for me and my family?
What protections do I have against employment discrimination?
If a problem arises, what are my remedies? To avert misunderstanding resulting from poor communication between firms and their employees or from a lack of knowledge about the rights and responsibilities of each as defined by law, here are some answers. JOB SECURITY
USERRA requires that if their military leave of absence is less than 91 days, returning employees must be reinstated to the position they held or would have held if they had been continuously employed without interruption for military reasons. According to Jackson Lewis Schnitzler & Krupman, a national law firm representing management in workplace legal matters, upon return to work, employers must offer employees called to military duty the same seniority, rights and benefits they would have been entitled to had they remained continuously employed. USERRA applies to all employers in the United States, regardless of their size, and it protects regular part-time positions, unless employment was brief and nonrecurring, as in a summer job or defined project, for example. It does not protect independent contractors, and as a general rule, it excludes those employed in temporary positions prior to being called to active duty. If a leave of absence has lasted more than 90 days, the law says the employer must reinstate a returning employee to the position he or she would have had if no service call-up had occurred. It’s equally valid under the act to provide “a position of like seniority, status and pay” that the employee is qualified to perform. | Under limited conditions employers can refuse to hire back an employee following discharge from military duty. These may apply when employers’ circumstances have changed to such a degree as to make reemployment “impossible” or “unreasonable,” or when placing the veteran in a comparable job would impose an “undue hardship” on the business—for example, a downsizing that eliminated the employee’s position might be a legitimate reason for denying reemployment. | When Honor Calls
As of last February, 140,635 reservists and National Guard members, or 16% of a total of 881,983, had been called to active duty. Source: Gannett News Service. | | However, verifying such exceptions to the rule can be difficult, and public sentiment in favor of veterans may make pressing a case tricky. USERRA is not very forgiving of firms that already have filled a returning veteran’s job with someone else. The rights of the returning employee supersede the rights of anyone hired to replace him or her, even if the replacement ends up with no position at all.
Employers can’t simply decide to fire an employee returning from military service, either. The act protects such workers from discharge, except for cause, for a period of time depending on the length of military service. For example, if the military leave was for 180 days or less, the law protects the employee against discharge for a period of six months. If the military leave was for more than 180 days, this protection runs for a year. Companies cannot require employees to use earned vacation time while performing military duty, although reservists may do so if they prefer to lessen the burden to their employer. Note: To activate the law’s protections, a reservist called to active duty must give timely notice—a few weeks if possible—to an employer of his or her need to perform service. The time frame may be cut short by military necessity—a classified call-up or national emergency, for example. To see a commanding officer’s sample letter, scroll down to “Notice” on the home page of the Employer Support of the Guard and Reserve (ESGR) Web site at www.esgr.org/employers/thelaw.asp . Reservists sending notification to their employers should use certified mail and retain a copy of the letter along with the green postcard showing receipt. TIMING REEMPLOYMENT
USERRA requires employees discharged from military service to submit an application for reemployment or report to their jobs within a specified period of time. For example, if the military leave was between 31 and 180 days, the employee has 14 days in which to return to work or to submit an application to his or her employer. For military service of more than 180 days, the individual has up to 90 days to apply for reinstatement. Employers may ask a worker whose military service has been more than 30 days to submit documentation that the application for reemployment is being made in a timely manner and that his or her discharge from active duty was honorable or general. However, such employers can’t refuse reemployment just because documentation is not readily available. | | If the veteran is hospitalized as a result of military service, the act extends the deadlines for applying for reemployment up to two years. Exceptions may apply in such cases, and the ESGR may be able to offer clarification as can local offices of the Department of Labor Veterans’ Employment and Training Service (VETS) (see “ To Resolve Mix-Ups ,” at right).
USERRA generally places a five-year limit on the cumulative length of time a person may serve in the military and remain eligible for reemployment rights with a preservice employer, but in some states longer leave for military reasons may be available. For example, New York state says employers must reinstate employees performing federal or state military service if certain conditions are met, none of which involve a limitation on the length of service, says Jonathan Segal, a partner with Philadelphia-based law firm WolfBlock LLP. The best thing to do is to check the act for details and your state’s labor laws for exceptions. WELLNESS BENEFITS
If a company or firm has a medical benefits plan (such as hospital, major medical and prescription), it must provide it to those persons on military leave for 31 days or less under the same terms and conditions that apply when reservists are actively employed. When a call-up to active duty lasts more than 31 days, the employer must provide military persons on leave the same benefits it generally provides employees of similar status on an approved nonmilitary leave. For example, if the firm provides 12 weeks of medical coverage to employees on a personal leave of absence, then it must provide the same coverage for reservists on a military leave of absence. If the employee has not returned from duty by the end of the maximum leave period, coverage then may be dropped. If the firm or business’s policy is to provide coverage to eligible dependents during an employee’s personal leave of absence, it also must extend the same to dependents of those called to active military duty. BENEFITS AND COBRA
According to Gallagher Benefit Services, an insurance agency and employee benefits consulting firm based in Itasca, Illinois, USERRA requires employers to offer reservists and their dependents medical, hospital, dental and prescription drug coverage that conforms to the optional continuation provisions of the Consolidated Omnibus Budget Reconciliation Act (COBRA). This means an employer needs to provide the same COBRA 60-day election-window notices it normally provides to qualified beneficiaries. | Activated reservists and dependents who elect to may continue their health coverage under a group medical plan, at their own expense, for up to 18 months under USERRA. However, according to attorneys Dean Silverberg and Richard Schwartz of Epstein Becker & Green in New York, the fees are limited to the cost of the plan plus a 2% administration charge—that is, 102% of the full premium under the plan(s), terms identical to COBRA’s. If a qualified beneficiary does not elect COBRA during the 60-day election period, then rights to continue health insurance will end. Plans exempt from COBRA under the small employer exception don’t have to follow notification requirements, although it’s a good idea to keep employees informed anyway. At companies and firms not covered by COBRA, reservists and their dependents still are entitled to the lesser of 18 months of coverage or until the day following the date on which the reservist fails to apply for or return to employment after completing active military duty. | 
RESOURCES Web-based CPE
AICPA InfoBytes. Summarizes the armed forces relief tax act in the Quarterly Tax Update (# BYT-XXJA for a new one-year electronic subscription). Web-based resource
e-MAP: Management of an Accounting Practice Handbook. Offers practice management guidance on many topics including human resources issues (# MAP-XXJA for a one-year electronic subscription). For more information, go to www.cpa2biz.com or call the Institute at 888-777-7077. | | CHAMPUS
Under the Civilian Health and Medical Program of the Uniformed Services ( CHAMPUS ), reservists receive immediate medical coverage through the military, and presuming active duty continues for at least 30 days, the spouse and eligible dependents also receive immediate coverage. However, a firm or business cannot discontinue medical coverage just because the employee now is receiving health coverage as an active member of the armed services. RETIREMENT BENEFITS
Under USERRA the company must credit the time a veteran serves in the military for vesting and for benefit accrual in defined benefit and defined contribution retirement plans. However, this applies only if the veteran is reemployed within the time period allowed under the law (see above). Where employees are required to make deferred contributions to their 401(k) plans to receive a firm’s matching contribution, the returning veteran has up to three times his or her total service period (not to exceed five years) after being reemployed to make up missed employee contributions, says Steve Bernstein, an attorney with Fisher & Phillips, a law firm in Atlanta. The company needs to match contributions only to the extent that the reemployed military member makes up the missed employee contributions to the plan, says Bernstein. SALARY ON ACTIVE DUTY
USERRA makes no distinction between employees who volunteer for military service and those ordered to serve, and the law does not require firms to pay employees their regular wages while on military leave. However, Watson Wyatt Worldwide, a benefits consulting firm with corporate offices in Washington, D.C., says about 60% of employers recently surveyed said they intended to provide full pay to those serving in the military, minus their service pay; and many companies have leave policies that make up part of the difference between military pay and the employee’s regular salary. | A number of states impose mandatory salary continuation on public employers, Segal says. In Massachusetts, for example, public (but not private) employees generally receive 17 days of paid military leave for service in the reserves, or 34 days of paid military leave if they serve in the state armed forces. THE “ESCALATOR PRINCIPLE”
Finally, CPAs, their employers and their clients should consider what the law calls the “escalator principle,” a key concept in federal veterans’ reemployment legislation. It requires that a returning service member be admitted back onto the firm or company’s “seniority escalator” at the point he or she would have achieved if continuously employed. According to the Department of Labor, the position doesn’t have to be the same job the person previously held. For example, if the returning veteran would have been promoted (with reasonable certainty) had he or she not been called to active duty, then he or she is entitled to that promotion upon reinstatement. These are the main features of the USERRA requirements that firms, their business clients and the employees of both need to understand as military service personnel start returning to civilian life. Given the complexities of the law, and the varying kinds of benefit plans and employment policies that firms and other companies have, it’s wise to check with an Employee Retirement Income Security Act authority or legal expert to be sure that any specific actions your firm or client takes are in compliance with USERRA.
|  | PRACTICAL TIPS TO REMEMBER | 
To activate USERRA’s protections, a reservist called to active duty must give timely notice—a few weeks if possible—to an employer of his or her need to perform military service.
Reservists sending notification to their employers should use certified mail and retain a copy of the letter along with the green postcard showing receipt.
Under USERRA employers must provide 60-day notices to reservists and their dependents to elect continuation of medical, hospital, dental and prescription drug coverage; costs to the employees may not exceed 102%.
To qualify to receive a firm’s matching contribution to a 401(k) plan, a returning veteran has up to three times his or her total service period (not to exceed five years) after being reemployed to make up missed employee contributions.
Check with an Employee Retirement Income Security Act authority or legal expert to be sure that any specific actions your firm or client takes are in compliance with USERRA. | | |
