Regulations Under the Uniformed Services Employment and Reemployment
Rights Act of 1994, as Amended; Proposed Rule [09/20/2004]
Volume 69, Number 181, Page 56265-56301
[[Page 56265]]
-----------------------------------------------------------------------
Part II
Department of Labor
-----------------------------------------------------------------------
Veterans' Employment and Training Service
-----------------------------------------------------------------------
20 CFR Part 1002
Regulations Under the Uniformed Services Employment and Reemployment
Rights Act of 1994, as Amended; Proposed Rule
[[Page 56266]]
-----------------------------------------------------------------------
DEPARTMENT OF LABOR
Veterans' Employment and Training Service
20 CFR Part 1002
[Docket No. VETS-U-04]
RIN 1293-AA09
Regulations Under the Uniformed Services Employment and
Reemployment Rights Act of 1994, as Amended
AGENCY: Veterans' Employment and Training Service, Department of Labor.
ACTION: Proposed rules.
-----------------------------------------------------------------------
SUMMARY: The Veterans' Employment and Training Service (``VETS'' or
``the Agency'') is issuing proposed rules that would implement the
Uniformed Services Employment and Reemployment Rights Act of 1994, as
amended (USERRA). 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 is proposing these rules under that authority
in order to provide guidance to employers and employees concerning
their rights and obligations under USERRA. The Agency invites written
comments on these proposed rules, and any specific issues related to
this proposal, from members of the public.
DATES: Comments regarding this proposal, including comments on the
information-collection determination described in Section V of the
preamble (``Paperwork Reduction Act''), must be received by the Agency
on or before November 19, 2004. Please see the sections below entitled
ADDRESSES and SUPPLEMENTARY INFORMATION for additional information on
submitting comments.
ADDRESSES: You may submit comments, identified as ``Docket No. VETS-U-
04,'' by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov. Follow the
instructions for submitting comments.
Electronic mail (email): vets-public@dol.gov. Include ``Docket No.
VETS-U-04'' on the subject line of the message. You can attach
materials that are in Microsoft Office formats such as Word, Excel, and
Power Point. Attachments may also be made using Adobe Acrobat, Word
Perfect, or ASCII/text documents. You cannot attach materials using
executables (.exe, .com, .bat) or any encrypted zip files.
Facsimile (fax): VETS at 202-693-4754.
Mail, Express Delivery, Hand Delivery, and Messenger Service:
Submit an original and three copies of written comments and attachments
to the Office of Operations and Programs, Docket No. VETS-U-04, Room S-
1316, U.S. Department of Labor, 200 Constitution Ave., NW., Washington,
DC 20210; telephone (202) 693-4711. If possible, provide your written
comments on a computer disc. Contact Mr. Bob Sacoman at (202) 693-4721
with any formatting questions. Normal hours of operation for the VETS
Office of Operations and Programs and the Department of Labor are 8:15
a.m. to 4:45 p.m., Eastern Time, Monday through Friday (except Federal
holidays).
Note that security-related problems may result in significant
delays in receiving comments and other written materials by regular
mail. Contact Mr. Charles Dawson, VETS Office of Operations and
Programs, at (202) 693-4711 for information regarding security
procedures concerning delivery of materials by express delivery, hand
delivery, and messenger service.
Docket Access: All comments and submissions will be available for
inspection and copying in the VETS Office of Operations and Programs at
the address above during normal hours of operation. Contact Mr. Charles
Dawson, VETS Office of Operations and Programs, at (202) 693-4711 for
information about access to the docket submissions. Because comments
sent to the docket are available for public inspection, the Agency
cautions commenters against including in their comments personal
information such as social security numbers and birth dates.
FOR FURTHER INFORMATION CONTACT: For information, contact Charles
Dawson, Office of Operations and Programs, Veterans' Employment and
Training Service (VETS), U.S. Department of Labor, Room S1316, 200
Constitution Ave., NW., Washington, DC 20210. Telephone: 202-693-4711
(this is not a toll-free number). Electronic mail:
dawson.charles@dol.gov.
For press inquiries, contact Michael Biddle, Office of Public
Affairs, U.S. Department of Labor, Room S-1032, 200 Constitution
Avenue, NW., Washington, DC 20210. Telephone: 202-693-5051 (this is not
a toll-free number). Electronic mail: biddle.michael@dol.gov.
SUPPLEMENTARY INFORMATION:
I. Introduction
The Department of Labor proposes to issue regulations to implement
the Uniformed Services Employment and Reemployment Rights Act of 1994,
as amended (USERRA), 38 U.S.C. 4301-4333. Congress enacted USERRA to
protect the rights of persons who voluntarily or involuntarily leave
employment positions to undertake military service. 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 proposes these regulations under that authority in order
to provide guidance to employers and employees concerning the rights
and obligations of both under USERRA. The Department invites written
comments on these proposed regulations from interested parties. The
Department also invites public comment on specific issues.
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), 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 proposed 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
[[Page 56267]]
court decision in this preamble is not intended to indicate the
Department's approval or disapproval of the reasoning or holding of
that case.
II. Plain Language
The Department wrote this proposed rule in the more personal style
advocated by the Presidential Memorandum on Plain Language. ``Plain
language'' encourages the use of:
Personal pronouns (we and you);
Sentences in the active voice; and,
A greater use of headings, lists, and questions.
In this proposed rule, ``you,'' ``I,'' and ``my,'' refers to
employees because they are the primary beneficiaries of USERRA rights
and benefits. 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 benefits. The Department would
appreciate comments and suggestions from all parties on this proposed
rule and on language that would improve the clarity of this regulation.
III. Electronic Access and Filing
You may submit comments and data by sending electronic mail (E-
mail) to: vets-public@dol.gov. Include ``Docket No. VETS-U-04'' on the
subject line of the message. You can attach materials that are in
Microsoft Office formats such as Word, Excel, and Power Point.
Attachments may also be made using Adobe Acrobat, Word Perfect, or
ASCII/text documents. You cannot attach materials using executables
(.exe, .com, .bat) or any encrypted zip files.
IV. Summary of Proposed Regulations
Subpart A--Introduction to the Regulations Under the Uniformed Services
Employment and Reemployment Rights Act of 1994
General Provisions
Proposed 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. Proposed Section 1002.1 sets out the purpose of these
regulations. See 38 U.S.C. 4301. Proposed Sections 1002.2 through
1002.4 provide additional background on USERRA, its effective date, and
its purposes. Proposed section 1002.5 defines the important terms used
in the regulation. See 38 U.S.C. 4303. Proposed 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 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.
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 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. Proposed section
1002.22 explains who has the burden of proving that certain action
violates the statute. The Department requests comment on the
application of the anti-discrimination provisions of the Act to
potential employers.
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). Section 4311(c) sets out an
evidentiary scheme like that followed by the National Labor Relations
Board in interpreting the National Labor Relations Act, as explained by
the United States Supreme Court in NLRB v. Transportation Management
Corp., 462 U.S. 393, 401 (1983). See Gummo v. Village of Depew, NY, 75
F.3d 98, 106 (2d Cir. 1996) (citing S.Rep. No. 158, 103d Cong., 2d
Sess. 45 (1993), and H.R. Rep. No. 65, 103d Cong., 2d Sess. 18, 24
(1993). The initial burden of proving discrimination or retaliation
rests with the person alleging discrimination (the claimant). The
burden then shifts to the employer to prove that it would have taken
the action anyway, without regard to the employee's protected status or
activity. If the employer successfully establishes such an affirmative
defense, the claimant can prevail only by showing that the employer
would not have taken the action, but for the claimant's protected
activity.
A person alleging discrimination under USERRA must first establish
that his or her protected 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 status was
the sole cause of the employment action; the person's 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
[[Page 56268]]
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). If the
employer fails to counter this evidence, the claimant's proof
establishes that the adverse employment action was more likely than not
motivated by unlawful reasons.
After the employee establishes the elements of a violation, the
employer may avoid liability by proving that the claimant's military
status was not a motivating factor in the adverse employment action.
See Gummo, 75 F.3d at 106. The employer must demonstrate that it would
have taken the same adverse action for legitimate reasons regardless of
the claimant's protected status. If the employer satisfies this burden
of proof, then the employee can prevail only by demonstrating that the
employer would not have taken the action but for the prohibited motive.
This burden may be satisfied either directly by proving that a
discriminatory reason more likely motivated the employer, or indirectly
by persuading the adjudicator that the employer's explanation is not
credible. Aikens, 460 U.S. at 716.
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). Proposed section 1002.19 addresses the elements of a case
of retaliation.
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.
Proposed section 1002.32 sets out these general eligibility
requirements. Proposed 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).
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 Sec. 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).
The Department agrees with the district court decisions in
Brumbaugh and Jordan that sections 4311 and 4312 of USERRA are separate
and distinct. Proposed section 1002.33 provides 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 disagrees with the decision in Curby v. Archon discussed
above, insofar as it interprets USERRA to the contrary. The Department
invites comments regarding the proper interpretation of the statute
regarding the burden of proof for relief under section 4312.
Coverage of Employers and Positions
Proposed sections 1002.34 through 1002.44 list the employers and
employment positions that are covered by USERRA. Proposed section
1002.33 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 remaining proposed provisions
address various aspects of the employment relationship subject to the
Act. Proposed section 1002.35 defines the term ``successor in
interest.'' Proposed section 1002.37 addresses the situation in which
more than one employer may be responsible for one employee. Proposed
sections 1002.38 and 1002.42 discuss hiring halls, layoffs and recalls.
Proposed section 1002.39 covers States and other political subdivisions
of the United States as employers.
Proposed section 1002.40 makes clear 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. Temporary, part-time, probationary,
and seasonal employment positions are also covered by USERRA. Proposed
section 1002.41 addresses the limited exception for positions that are
for a brief, non-recurrent period and for which the employee has no
reasonable expectation of continued employment indefinitely or for a
significant period. Proposed section 1002.42 explains that USERRA
covers employees on strike, layoff, or leave of absence. Proposed
section 1002.43 makes clear that persons occupying professional,
executive and managerial positions also are entitled to USERRA rights
and benefits. Proposed section 1002.44 addresses the distinction
between an independent contractor and an employee under USERRA.
Coverage of Service in the Uniformed Service
Proposed sections 1002.54 through 1002.62 explain the term
``service in the
[[Page 56269]]
uniformed services,'' list the various types of uniformed services, and
clarify that both voluntary and involuntary duty are covered under
USERRA. Proposed 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.
Proposed 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. Proposed
section 1002.57 clarifies when service in the National Guard is covered
by USERRA, and proposed section 1002.58 addresses service in the
commissioned corps of the Public Health Service, a division of the
Department of Health and Human Services. Proposed section 1002.59
recognizes coverage for persons designated by the President in time of
war or national emergency. Proposed 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.
Absence From a Position of Employment Necessitated by Reason of Service
in the Uniformed Services
Proposed section 1002.73 addresses the issue of 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, Part I, at 25 (1993).
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
recognizes 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 (1st Cir. 2002).
Requirement of Advance Notice
Proposed 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. 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). 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).
Proposed 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).
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.
Proposed 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, Part 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).
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
[[Page 56270]]
five years, and retain the right to reemployment by his or her pre-
service employer. 38 U.S.C. 4312(c). Proposed sections 1002.99 through
1002.104 implement this statutory provision. Section 1002.99 implements
the basic five-year period established by the statute. Proposed 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. Proposed 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 a particular position of employment 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). Note, however, that
under these proposed regulations a hiring hall out of which an
individual may work for several different employers is considered to be
a single employer. See proposed section 1002.38.
Proposed 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 invites comments as to whether
this interpretation best effectuates the purpose of the Act. See
proposed section 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. Proposed 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 Secretary seeks comments on whether an
exception to the five-year limit based on the service member's
mitigation of economic loss furthers the purposes of the statute.
Proposed 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, Part 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). Proposed 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, however, proposed 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.
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) establishes varying time periods for requesting
reinstatement based on the length of the individual's military service.
This provision also addresses the time periods for reporting to the
employer or applying for reemployment by a person who is hospitalized
for, or convalescing from, an injury or illness incurred in, or
aggravated during, the performance of service. Section 4312(f)
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. The proposed regulations
implement these documentation requirements at 1002.121 to .123.
Proposed section 1002.115 explains the three statutory time periods
for making a request for reinstatement, depending 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
proposed regulation 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 at 29 (1993). The Department also understands the term
``next'' in the clause ``next first full calendar day'' in section
4312(e)(1)(C) to be superfluous. The Department invites comments as to
whether these interpretations best effectuate the purpose of this
provision. See proposed section 1002.115.
[[Page 56271]]
If it is impossible or unreasonable for the employee to report
within the above time period, he or she must report to the employer as
soon as possible after the expiration of the eight-hour period.
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. 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.
Proposed section 1002.116 addresses the situation where 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.
Proposed 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). The employer
may subject the employee to the workplace rules, policies and practices
that ordinarily apply to an employee's unexcused absence from work.
Proposed 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. Proposed section 1002.120 makes
clear 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.
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. Proposed 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. 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.
Proposed 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.
Employer Statutory Defenses
USERRA provides three statutory defenses with which an employer may
defend 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, 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, 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, 709 (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, 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''
[[Page 56272]]
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 proposed sections 1002.5(m) (``undue hardship''), 1002.5(h)
(``reasonable efforts''), and 1002.5(g) (``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.
Subpart D--Rights, Benefits, and Obligations of Persons Absent From
Employment Due to Service in the Uniformed Services
Furlough or Leave of Absence
Proposed section 1002.149 implements 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, Part 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 returning 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 invites comments as to whether this
interpretation best effectuates the purpose of section 4316(b).
Reference should be made to 38 U.S.C. 4316(a) and proposed sections
1002.210 through 1002.214 for the provisions addressing seniority-based
rights and benefits.
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 (1993) at 58. The
Department also does not interpret the second use of the term
``seniority'' in section 4316(b)(1)(B) as a limiting factor in
determining what non-seniority rights must be provided to the service
member during the absence from the employment position. The Department
invites comments as to whether this interpretation best effectuates the
purpose of this provision. See proposed section 1002.149.
Proposed 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 invites comments as to
whether this interpretation best effectuates the purpose of this
provision.
Proposed section 1002.153 clarifies that an employer may not
require the employee to use his or her accrued 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. However, sick leave is not
comparable to vacation, annual or similar types of leave; entitlement
to sick leave is conditioned on the employee (or a family member)
suffering an illness or receiving medical care. An employee is
therefore not entitled to use accrued sick leave solely to continue his
or her civilian pay during a period of service.
Health Plan Coverage
Section 4317 of the Act 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. Section 4317 also requires that the employee and
eligible dependents must, upon reemployment of the service member, 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 the Act dealing
with rights and benefits of service members who are absent from
employment. See 38 U.S.C. 4316(b)(5).
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. ``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
[[Page 56273]]
services for individuals are provided, or the expenses of such services
are paid. Proposed Section 1002.5(d); 38 U.S.C. 4303(7). However,
because USERRA's continuation coverage provisions only apply to health
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 coverage obtained under another family member's policy or
separately obtained by an individual.
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.
Proposed section 1002.164 addresses the length of time the service
member is entitled to continuing health plan coverage. Section
4317(a)(1) provides that the maximum period of continued coverage is
either 18 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), whichever occurs first.
Under section 4317(a)(2), implemented by proposed section 1002.166,
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 amount of the full premium is determined
in the same manner as for COBRA under section 4980B(f)(4) of the
Internal Revenue Code of 1986. 26 U.S.C. 4980B(f)(4). 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 require that any particular type of health plan
coverage be provided. The statute requires only that the employer, and
hence the plan, permit the service member to continue the coverage that
he or she already has obtained through the employment relationship,
including family and dependent coverage. USERRA does not provide
specific guidance regarding how or within what time period the
continuing coverage is to be elected. Proposed section 1002.165
provides that plan administrators and fiduciaries may develop
reasonable requirements and operating procedures for the election of
continuing coverage, consistent with the Act 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 invites 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. Alternatively, the Department
requests comments on the question whether these USERRA regulations
should establish a date certain by which time continuing health plan
coverage must be elected. Moreover, should a service member be
permitted to delay electing continuation health plan coverage under
some circumstances? Finally, 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 invites 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).
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 the Act. For example, some employers
do not require the service member to pay more than the ordinary
employee premium for continuation health coverage during an extended
period of service in the uniformed services.
Proposed sections 1002.167-1002.168 explain the rights of a
reemployed service member whose health plan 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
or aggravated during service 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.
USERRA provides for the continuation of health coverage available
to the service member in connection with his or her employment, so,
generally, if the employer cancels health 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. Under
USERRA, the treatment of multiemployer health plans provides an
exception to this result. Special rules for multiemployer plans are the
focus of proposed section 1002.169. This provision 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 the
sponsor maintaining the plan provides. If the sponsor does not provide
for an allocation of responsibility under these circumstances, 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.
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(2). Section 4313 requires that a returning service member
who meets the
[[Page 56274]]
eligibility requirements of section 4312 be ``promptly reemployed'' in
the 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, Part I, at 32 (1993); S. Rep. No. 103-158, at 54 (1993).
Proposed 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. The Department invites comments as to
whether allowing the employer two weeks to reemploy the service member
returning from a period of service of more than thirty days best
effectuates the purpose of this provision of USERRA. [Note: 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
anticipate that such a person will be immediately reemployed.]
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 embedded in early
protections provided for veterans, which was to become a bedrock
concept of all future similar 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 implemented in section 4313 of
USERRA. 38 U.S.C. 4313.
Proposed sections 1002.191 and 1002.192 implement general
principles related to a returning veteran's right to reemployment in
this escalator position. Proposed sections 1002.193 and 1002.195
clarify that seniority, status, pay, length of service, and service-
related disability may affect the service member's reemployment
position. Proposed 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 work place. Proposed 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, proposed 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.
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 (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. Proposed section 1002.193 implements
these requirements. The Department invites comments 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 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 requests comments on whether this
interpretation is proper.
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 proposed section 1002.196.
The service member returning from a period of service longer than
90 days is
[[Page 56275]]
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 proposed 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 preservice 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 proposed sections
1002.196(c) and .197(c).
Depending on the circumstances, section 4313 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,
Part I, at p. 31 (1993). 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. Proposed sections 1002.193 and .194 implement these
provisions of the Act.
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
proposed section 1002.198. USERRA defines ``qualified'' as ``having the
ability to perform the essential tasks of the position.'' 38 U.S.C.
4303(9). 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 invites comments as to whether this
interpretation best effectuates the purpose of this provision.
Proposed section 1002.198 describes the employer's obligation to
assist a returning service member for civilian 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 4303(15) defines ``undue
hardship'' as ``actions [taken by an employer] 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). 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 proposed
regulation 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.
Proposed section 1002.199 implements 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
[[Page 56276]]
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, Part I, at 33 (1993). Proposed 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. 2601-2654 (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. 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.
Proposed section 1002.211 makes clear that 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.
Proposed 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 (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''). Proposed 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. Accordingly, proposed 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.
Proposed 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 would have occurred during the period of service.
Proposed section 1002.214 emphasizes 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. That the employer did not offer the particular benefit
until after the individual began the service is not a justification for
denying the benefit to the returning service member. Similarly, if a
benefit is modified or eliminated, the change would affect the
returning service member. This requirement flows from the fact that the
returning service member must be restored to the seniority rights and
benefits that he or she would have attained with reasonable certainty
if he or she had remained continuously employed during the period of
service.
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 (S.D. Ohio
1984).
Proposed 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, at 31 (1993); S. Rep. No. 103-158, at
53 (1993).
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
[[Page 56277]]
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. Proposed sections
1002.225 and .226 implement USERRA's requirements regarding disabled
employees.
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. Proposed
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 compose
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 invites 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.
What is critical is not how the employer characterizes the
compensation, but whether it would have been attained with reasonable
certainty if not for the service in the uniformed services. 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 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 proposed sections
1002.18-.23. Proposed 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.
[[Page 56278]]
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. Proposed section 1002.248
provides general guidelines for establishing just cause to discharge a
reemployed service member during the protection 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).
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. 4316(b)(6). The Act 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
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 according to the statute, 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.
Proposed 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).
As proposed 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 of 1986 (IRC)) under the plan. 38 U.S.C. 4318(a)(2)(B). As
a result, for purposes of calculating these pension benefits, or for
making contributions or deferrals to the plan, the reemployed service
member is treated as though he or she had remained continuously
employed for pension purposes.
Proposed sections 1002.261 and 1002.262 clarify who must make the
contribution and/or deferral attributable to a particular period of
military service and the timeframes within which payments are to be
made to the plan. 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). 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 provides 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 uniform service through a match of after-tax
contributions.
USERRA is silent with respect to the amount of time allowed the
employer to pay to the plan the contributions attributable to a
reemployed service member's period of military service. It is the view
of the Department that employer contributions to a pension plan that
are not contingent on employee contributions or elective deferrals must
be made no later than thirty days after the date of the person's
reemployment. Interested parties are requested to comment on this
proposed requirement, implemented in proposed section 1002.262.
Specifically, the Department requests public comment on whether the
proposed thirty-day period is too long or too short.
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); proposed section 1002.262. 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 also invites comments
as to whether this interpretation best
[[Page 56279]]
effectuates the purpose of this provision.
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 often 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 contributions or elective deferrals. See proposed section
1002.262. 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.
Under proposed section 1002.264, 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 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; 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 applies to defined benefit plans and
defined contribution plans. The Department invites comments on whether
or how this section should apply to defined contribution plans.
Section 4318(b)(3) 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). Proposed section
1002.267 provides that the compensation rate the reemployed service
member would have earned had he or she remained continuously employed
provides the usual benchmark. If that rate cannot be determined with
reasonable certainty (for example, where the 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 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 accrued earnings and forfeitures to the reemployed service
member. 38 U.S.C. 4318(b)(1).
Special rules apply to multiemployer plans. 38 U.S.C. 4318(b)(1).
Proposed 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. As
long as the 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. Proposed 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,
[[Page 56280]]
allocations to the accounts of returning service members not be
accomplished by reducing the account balances of other plan
participants.'' Id.
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 notification requirement is
implemented by proposed section 1002.266.
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, Part 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 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. Proposed 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.
Investigation and Referral
Proposed section 1002.288 implements 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, 981 F. Supp. 529 (W.D. Mich. 1997). 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. 2002). 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). See proposed sections 1002.288 and
1002.303. 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.
Proposed 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. The proposed
regulation also contains the procedures for processing a complaint.
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. Proposed 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.
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. Proposed
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 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
[[Page 56281]]
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). Proposed 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
proposed 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); proposed 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);
proposed 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). Proposed
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, 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. 38 U.S.C. 4323(g); see H.R. Rep. No.
103-65, at 39 (1993). Proposed section 1002.309 implements this
restriction.
No fees or court costs may be imposed on the claimant. In addition,
a prevailing claimant may recover his or her attorney's fee, expert
witness fee, and other litigation expenses. 38 U.S.C. 4323(h); proposed
section 1002.310.
No State statute of limitations applies to a USERRA proceeding. 38
U.S.C. 4323(i). Proposed 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, at 39 (1994). 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, at 39. Recently,
a Federal district court 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, No. Civ. A. SA-
99-CA-1110, 2003 WL 1566502 (W.D. Tex. Mar. 4, 2003). The Rogers
decision is on appeal to the Fifth Circuit Court of Appeals. City of
San Antonio v. Rogers, No. 03-50588 (5th Cir.) 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., No. 02-1205, 2004
WL 936488 (U.S. May 3, 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 continues to believe
that no statute of limitations applies to USERRA claims but invites
comments on the validity of this view in light of the conflicting court
decisions.
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, at 38 (1994), 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). Proposed section 1002.312 lists
the possible remedies allowed under section 4323(d). Proposed 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); proposed section 1002.314.
Effective Date and Compliance Deadlines
These regulations impose no new legal requirements but explain
existing ones, in some cases for the first time. The Department
proposes that these regulations be effective 30 days after publication
of the final rule, and requests comment on whether this allows adequate
time for covered parties to come into full compliance. We expect that
most employers are currently in full compliance. However, to the extent
that these regulations clarify USERRA's requirements and require
adjustments in employer policies and practices, the Department wants to
allow a reasonable amount of time for the transition to take place.
V. Procedural Determinations
A. Paperwork Reduction Act
This rule involves information collection, recordkeeping, or
reporting requirements, as described in the chart below. As required by
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501, et seq.), these
requirements have been submitted to the Office of Management and
Budget. Send comments regarding this burden or any other aspect of this
collection of information, including
[[Page 56282]]
suggestions for reducing this burden, to: Office of Information and
Regulatory Affairs (Attention: Katherine Astrich, Desk Officer for
VETS), 725 17th St., NW., Washington, DC 20503. In addition to regular
mail, OIRA will accept comments via electronic mail to
KAstrich@omb.eop.gov, or by Fax at (202) 395-6974. Please include
``Docket No. VETS-U-04'' on the subject line of the email, fax or
letter. Note that security-related |
