March 1, 2003
Avoiding Lawsuits is a service of the employment law training and consulting firm of Counsel Consulting Group LLC and the law firm of Powell, Trachtman, Logan, Carrle & Lombardo, P.C.
DEALING WITH EMPLOYEES IN THE MILITARY: WHAT TO DO WHEN
(AND BEFORE) JOHNNY COMES MARCHING HOME
As the threat of war with Iraq looms, many employers have lost, and will continue to lose, key employees to the military, ranging from volunteers to members of activated reserve or National Guard units. Inevitably, as is always the case during war, many employers will suffer key losses in their work forces.
This reality raises difficult issues, involving the clash between patriotism and practicality: you support the people fighting for our country; but at the same time you have a business to run. Should you fill a position vacated by an employee called to active duty? What happens when the war ends and the employee returns?
Some of these decisions are purely personal. But in considering your options, you need to understand that the law has dictated certain requirements that must be respected, no matter your personal views. Unfortunately, the time has come to review those requirements.
Two federal statutes define this landscape - the Uniformed Services Employment and Reemployment Rights Act ("USERRA") and the Consolidated Omnibus Reconciliation Act ("COBRA"). Many states have enacted their own statutes as well - for instance, Pennsylvania employers (especially public employers) must also be mindful of the Pennsylvania Military Leave of Absence Act ("PMLAA"). We have tried to synthesize the most important aspects of these laws below. Obviously, there are details and exceptions, and you should consult with counsel in specific situations.
What Does The Employer Have To Do While The Employee Is Gone?
Fundamentally, these statutes try to strike a balance between business practicality, and the real world needs of service men and women.
Start with the proposition that you cannot discriminate against the "weekend warriors" who serve in reserve and National Guard units, even though their time away from work could be disruptive and expensive. This protection is extremely broad, and includes prohibitions against discrimination in hiring, pay, promotion, and other privileges of employment. Most business people find it easy to accept and understand the rationale for this mandate. Were the law otherwise, the military would have a difficult time filling its ranks, and, however burdensome this obligation may be, it is, after all, limited in scope - it generally applies to employees who miss no more than occasional weekends and, perhaps, a few weeks in the summer.
But what about now, when an employee might be gone for a year or more? What legal obligations do you owe to the employee while he or she is at war? When do the demands of your business trump the understandable concerns of the military?
Here are some of your key obligations:
You must allow your employee to take "leave" for all aspects of military service, including active duty and training. The leave is in the nature of time off without pay; you do not have to pay employees on military leave (although surveys show that many employers have a policy of making up the difference between the employee's military pay and normal salary, at least for some period of time);
If you choose not to pay an employee on military leave, the employee has the right to use (or not use) some or all of his "banked" paid time off. Unlike the Family and Medical Leave Act ("FMLA"), this is entirely up the employee;
If you choose not to maintain in effect the employee's health coverage while he or she is on military leave, the employee (and his or her dependents) has the right to keep their health coverage in force at their expense for up to 18 months, and you must provide a COBRA notice of this right, similar to that provided to terminated employees. If you decide to cover the employee's health care coverage during military leave, you have the right to require that the employee contribute toward the premium in accordance with your normal policies;
Seniority based benefits continue to accrue while the employee is on military leave. For instance, if an employee's vacation pay is based upon years of service, those years of service continue to accrue during military leave.
What Does The Employer Have To Do When The Employee Returns?
Here is the more difficult part. Joe got called to active duty, and was on military leave for a year. He held a key position that you had to fill in his absence. You hired Sally, who did a great job while Joe was away. Sally is entrenched in the position, she has the most current knowledge and has the most current business relationships on which your company depends. Joe stops by, tells you that he needs a job, and thinks it is only fair that he be permitted to pick up where he left off. Now what?
The law imposes requirements that will, no doubt, cause substantial economic prejudice to many employers (and, for that matter, replacement employees). Obviously, the purpose of the law is to protect the economic interests of those who serve their country, but in the process some employers, particularly small companies, could suffer economically. The highlights:
Based on what is often called the "elevator principle," the general rule is that you are required to re-hire your returning employees to the position they would have attained if they had been continuously employed during the period they were on military leave. If the returning employee is truly unqualified for the promoted position, then you must make reasonable efforts to train the employee. If that is not possible, the employee must be returned to his or her former position, or to another position with equivalent status, seniority and pay;
There are exceptions to the general rule, some of which are subjective and difficult to apply in a predictable way. For instance, an employer may not have to re-hire an employee for military leave in the following instances: the employer's circumstances have changed to the extent that it is impossible or unreasonable to re-hire the employee; the employee could not be re-trained or otherwise re-qualified despite the employer's efforts; the employee's original job was temporary and there was no reasonable expectation that it would continue indefinitely;
When an employee returns from more than six months active duty, he or she cannot be fired without good cause, for a full year. Among other things, good cause includes threats against the employer, interference with employer's business, charges of illegal conduct and conflicts of interest such as establishing a rival company;
If your company undergoes a change of control while the employee is on military leave, the successor employer has the same obligations to the returning employee;
Upon return from military leave, you must reinstate the employee to your retirement plan, make your contribution and allow the employee up to three times the period of leave to make the contributions that would have been ordinarily made but for the period of military service;
Employees who are dishonorably discharged do not receive these legal protections.
Generally speaking, under USERRA, in order to be entitled to re-employment rights, the employer must be given advance notice of the employee's impending military service, either from the employee or an appropriate military officer, unless it is not practical or reasonable to give such notice. Employers may ask to be notified as soon as possible after the employee receives military orders and may request copies of any official papers with regard to the military service. Also, if the employee has the option of choosing when to carry out the military duty, the employer may ask the employee to take the employer's business needs into account when planning leave. However, the employer may not penalize the employee for not complying with the employer's wishes. In addition, there are statutory time limits that define when the employee must apply for re-employment after completion of military service.
Make Your Own Battle Plan
One of the mantras we find ourselves repeating in Avoiding Lawsuits is this: that which should be simple is usually complicated. Even if your patriotic instincts impel you to help an employee called to military service, you still might find yourself in technical violation of the law's requirements, despite your best intentions. Get your battle plan set up now.
Powell, Trachtman, Logan, Carrle & Lombardo, P.C. is a full service law firm with offices in suburban Philadelphia, PA, Harrisburg, PA and Cherry Hill, NJ. Powell Trachtman represents a variety of commercial enterprises, entrepreneurs and business executives in respect to their litigation, litigation avoidance planning, business formation, business transactions, estate and tax planning, and other needs. We are also approved defense counsel for numerous insurance carriers in matters pertaining to professional malpractice, products liability, employment practices, directors and officers liability, and many other fields. For more information, contact us at info@powelltrachtman.com and visit our website at www.powelltrachtman.com.
