Employee Benefits Considerations For Military Reservists

The September terrorist attacks have led President Bush to call up tens of thousands of military reservists, whose employers must now determine what their obligations are under these conditions. The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) provides special requirements that must be met by employers of these individuals.

The purpose of USERRA is to minimize the disruption of the lives of uniformed services personnel by providing for their prompt reemployment upon the completion of their service, and by preventing discrimination against them because of their military service. Essentially, USERRA provides for military service to be treated as a leave of absence.

Among the most important responsibilities of reservists’ employers are:

1. The employer may not discriminate in hiring, retention, promotion or any other benefit of employment, against an employee on the basis of membership in the uniformed services, application for membership, or performance of service.

2. When an employee is called to military duty, he must notify his employer prior to going to duty, unless a military necessity precludes him from doing so.

3. During the separation from service for military leave, the employee’s qualified plan accruals and vesting must continue, but the employer is obligated to provide benefits that are contingent on employee contributions or elective deferrals only to the extent that the employee makes payment of such amounts (as described at (9), below).

4. During the absence for military service, the employee may suspend repayment of an outstanding plan loan from a qualified plan or tax sheltered annuity. Upon resumption of employment, the repayment period is the original term of the loan plus the period of military service.

5. For absences of 30 days or less, any health insurance benefits provided to the employee must continue as if there were no absence. If the absence is 31 days or more, the employee must be offered COBRA coverage for up to 18 months of absence. Benefits must be reinstated when the employee is reinstated, with no waiting period.

6. The employee must return to work within certain time limits, depending on the duration of the military leave of absence. (The limit for service of one to 30 days is the next regularly scheduled workday; for service of 31 to 180 days, within 14 days; for service exceeding 180 days, within 90 days after completion of duty.)

7. Following the employee’s timely return to work, he must be reinstated with the same rights and benefits not related to seniority that the employer gives to other employees on leaves of absence.

8. For purposes of status and seniority in the workplace, the employee must be considered not to have been absent if the only reason for the absence was service in a uniformed service.

9. The employee must be permitted to make any contributions to the employer’s qualified plan that would have been allowable if he had not been absent. Furthermore, upon reemployment, the employee must be provided with three times his length of service (not exceeding five years) to make any such contributions.

10. The protections under USERRA are available for up to a maximum of five years of cumulative military service, including inactive duty training (drills), recalls to active duty, and other training or retraining required for professional development.

The term “uniformed services” means the Armed Forces, the Army National Guard and the Air National Guard when engaged in active duty for training, inactive duty training, or full-time National Guard duty, the commissioned corps of the Public Health Service, and any other category of persons designated by the President in time of war or emergency. Furthermore, “service in the uniformed services” means the performance of duty whether on a voluntary or involuntary basis.

April K. Caudill, J.D., CLU, ChFC, is managing editor of Tax Facts, a National Underwriter Company publication.


Reproduced from National Underwriter Life & Health/Financial Services Edition, November 12, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


Copyright 2001 by The National Underwriter Company. All rights reserved. Contact Webmaster