Since September 11, 2001, almost 530,000 citizen soldiers have been mobilized, and of these more than 390,000 National Guard and Reserve members have been returned to civilian life. In December 2004, President Bush signed into law the Veterans Benefits Improvement Act, which requires all employers, regardless of size – public and private – to notify all employees annually of their legal rights under USERRA. Since then, the U.S. Department of Labor promulgated new regulations which became effective on January 18, 2006. See 20 CFR §§ 1002 et seq. These regulations explain reemployment rights for service members wanting to return to the jobs they held prior to service and specify the seniority, promotion, health care, pension and other benefits to which they are entitled.

Unlike other statutes which simply require reinstatement, USERRA requires that a service-member properly returning from a qualified leave be reemployed, not necessarily in their pre-service, but in a position known as an "escalator position." This is the position they would have been in had they had no break in service. They are to enjoy the same seniority, status and pay, as well as other rights and benefits determined by seniority as they would have had, with reasonable certainty, if not for their absence for military duty. The law provides for alternative reemployment positions if the service member cannot qualify for the "escalator" position. If no escalation would have occurred, or if the person is not qualified to perform the duties of the escalator position after reasonable efforts by the employer to train the person upon return from leave, re-employment into the position the person held at the time he or she left for military service is required.

The USERRA regulations address the use of the escalator principle. Many employers use seniority-based bidding systems to award jobs and other perquisites of employment to employees. The regulations require an employer to award a job or other perquisite of employment to the returning service member, if it is reasonably certain that he or she would have received it but for the time in military service. An employer may not require that a returning employee wait for the next regularly occurring opportunity to bid in order to seek promotions and other benefits tied to the escalator position. If he or she would have been able to bid into that position had he or she remained employed, the employer must provide the ability to have that position upon return. The returning service member may not, however, be entitled to a promotion, if the promotion depends not simply on seniority or some other form of automatic progression, but on the employer's discretion. The regulations require the application of a case-by-case analysis in order to make this determination.

Employees laid off with recall rights (either prior to taking the leave for military service or during the leave) are entitled to reemployment upon return if the employer would have recalled the employee but for the military service. Even where a returning employee was subject to a disciplinary review at the time of the onset of service, or where the employer discovers conduct prior to reemployment that may subject the service member to disciplinary review upon reemployment, the employer still has a reemployment obligation. The employer may resume the disciplinary review upon reemployment, or may initiate such review based on conduct discovered prior to reemployment. In addition to promotions and pay increases, the "escalator principle" may also lead to adverse consequences to the returning employee resulting from restoration on the seniority ladder. For instance, if the employee’s seniority would have resulted in a layoff during the period of service, and the layoff continued after the date of reemployment, reemployment would reinstate the employee to layoff status with their pre-service date of hire for all purposes. Depending on the length of the leave, the regulations also prohibit an employer from discharging an employee following reemployment for a period of time. Leaves of 31-180 days require "just cause" for termination for a period of six months. Leaves greater than 180 days require "just cause" for termination for a period of one year. "Just cause," however, is not defined in USERRA or in the USERRA regulations.

The position of DOL, reflected in the introduction to the final rules, provides that if an apprentice or probationary position is bona fide, not simply a time-in-grade requirement, a returning service member should be restored as an apprentice at a level that reflects both the experience and training he or she received pre-service. Upon completion of the apprenticeship post-service, the employee is entitled to "journeyman" seniority plus any seniority that would have accrued during military service had the journeyman status been attained during the period of service. Similarly, if a probationary period is a bona fide period of observation and evaluation, the returning service member must complete the remaining period of probation upon reemployment. Once the employee completes the apprenticeship probationary period, the employee's pay and seniority should reflect both the pre- and post-service time in the apprenticeship or probationary period, plus the time served in the military.

The escalator principle also preserves seniority benefits governed by statute, including a service member's right to leave under the Family and Medical Leave Act (FMLA). Time spent on military duty is essentially counted as employment by the pre-service employer, so that 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 employer, together with the number of months and number of hours of work for which the service member would have been employed by the employer during the period of military service in the qualifying year meet FMLA's eligibility requirements.

The regulations also require employers to ensure that injured service members who are unable to perform their previous jobs are retrained and provided a position as equivalent as possible to the one that person originally left. Employers must provide training or retraining to enable returning service members to refresh or upgrade skills that help them qualify for reemployment. 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. 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 the circumstances of such person's case. The regulations set forth the priority of reemployment positions for which the disabled service member should be considered.

The regulations also implement the statutory requirement for reasonable accommodation of the returning service member's disability, such as placing the reemployed person in an alternate position, or on "light duty" status, modifying technology or equipment used in the job position, revising work practices, or shifting job functions. The position must be one that the person can safely perform without unreasonable risk to the person or fellow employees. A service member who incurs a temporary disability may be entitled to interim reemployment in an alternate position as well.

The escalator principle also determines the returning service member's rate of pay after an absence from the workplace due to military service. 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. These include pay increases, differentials, step increases, merit increases, periodic increases or performance bonuses.

Employers are prohibited from permanently hiring new employees to replace those who have gone on military duty, or promoting existing staff to fill the spot vacated by the military personnel. These positions may be filled on a temporary basis. Violations of these new USERRA regulations exposes an employer to potential liability to the prevailing returning service member for reinstatement, lost pay and benefits, doubled as liquidated damages in the case of a willful violation, and attorney fees and court costs. These are some highlights of the new regulations. There is much more, and the regulations are very specific as to the employer obligations and the rights of departing and returning service members. Be sure to check the regulations at www.dol.gov/vets/regs/fedregs/final/2005023961.htm before taking any action impacting a departed or returning service member.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.