Military Leave and Employee Benefits
As the military conflict intensifies, more and more of our nation's employees are being called away from their jobs to serve in the armed forces. All employers need to be aware in these exceptional times of the special protections under Federal law for employees who are absent from work while in military service. The Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA") extends reemployment rights to persons who have been absent from a position of employment because of service in the uniformed services. These rights include compensation and seniority commensurate with the position the employee would have had if the employee had not experienced a break in employment due to uniformed service.
USERRA also includes important protections of the retirement and welfare benefits of employees both during military service and upon reemployment. Every employer should keep in mind the following rights of all employees who are away from work for military service:
Continuation Coverage Option: All employers of any size must provide health insurance continuation coverage for employees who are called away for qualified military service. Employees who will experience a loss of coverage may elect to continue their health coverage under an employer's plan for up to 18 months after their absence from work begins.
The continuation coverage provisions of USERRA apply to all employers, even those who are exempt from COBRA. Generally, if the military service is for 30 or fewer days, an employee cannot be required to pay more than the normal employee share of any premium. For service exceeding 30 days, an employee must be allowed to continue health plan coverage for up to 18 months after the absence begins and the employee cannot be required to pay more than 102 percent of the full premium for coverage.
No Break in Service: Upon his or her return from military service, a reemployed member of the uniformed services must not be treated as having incurred a break in service for purposes of an employer's retirement plan. Military service must be considered service with an employer for both vesting and benefit accrual purposes.
Increased Funding: An employer is liable for funding any obligation under a defined contribution plan or a defined benefit plan that may result from crediting service during an absence for military service. For purposes of determining an employer's liability under a retirement plan, the employee's compensation during his or her period of military service is generally based on the rate of pay the employee would have received but for the absence during the period of service. If the employee's rate of pay is not reasonably certain, an employee's compensation during the period of service is determined on the basis of the employee's average rate of compensation during the 12-month period immediately preceding such period.
Special Deferral Opportunity: Reemployed veterans must be given the opportunity to make up missed contributions to an employer's 401(k) plan and receive any related employer matching contributions that would have been made if the employee had made such contributions while in military service.
These protections must generally be extended to all qualifying employees for a period of five years. There are numerous exceptions to this five-year rule, however, including military service during a time of war.
Employers should be informed about the rights under USERRA of employees who are absent for military service.