EMPLOYEE BENEFITS/
EMPLOYMENT LAW ALERT
JANUARY 2006
UNITED STATES DEPARTMENT OF LABOR PUBLISHES FINAL
USERRA REGULATIONS
The Department of Labor recently published the long-awaited final regulations that
explain and clarify the Uniformed Services Employment and Reemployment Rights Act
("USERRA"). USERRA, a 1994 federal statute, protects the employment and benefits
rights of civilian employees performing uniformed service. USERRA applies to nearly all
employers, regardless of size, and to all employees, including managerial and professional employees. The final regulations become effective January 18, 2006. For more
background information on USERRA and the regulations as proposed, see our prior
Employment Law Alert, http://www.kennedycovington.com/attachment.html/articles/181/Employment+Alert+January+2005.pdf.
Required Notice to Employees
The final regulations require all employers to conspicuously display a poster in the workplace by January 18, 2006, informing employees of their rights, benefits, and obligations
under USERRA. The Department of Labor has made available a model poster that satisfies the content requirement at its website, www.dol.gov/elaws/userra.htm.
Impact on Uniformed Service Members' Employee Benefits
Health Coverage
Section 4317 of USERRA requires that employees who are absent from work as a result
of uniformed service be allowed to elect continuation of employer-provided heath benefits, for themselves and their dependents. This provision applies to group health plans
even if the employer is not covered by COBRA. An employer must permit an employee
who is currently participating in the employer's group health plan to elect to continue the
coverage for up to 24 months while in uniformed service.
Under USERRA, an employer may charge an employee who is in uniformed service for
more than 31 days up to 102% of the full premium for coverage under the group health
plan. If the employee is in uniformed service for less than 31 days, the employer cannot require the employee to pay more than the regular employee share, if any, for group
health plan coverage.
The final regulations answer employer concerns regarding which uniformed service
employees may elect continued coverage and what procedures may be adopted for the
election, including that:
·
An employer is not required to permit an employee to initiate new group
health plan coverage at the beginning of a period of uniformed service if he
or she did not previously have such coverage.
KENNEDY
COVINGTON
LOBDELL
H I C K M A N , L . L . P . is one of the
&
largest full service law firms in the
Carolinas, with offices in Charlotte,
Columbia, Raleigh, Research Triangle
Park, and Rock Hill. Our lawyers bring
a depth of experience and a knowledge
of the law to bear in solving problems
and leveraging opportunities for clients
in varied industries such as banking,
real estate, technology, and manufacturing. At Kennedy Covington, we give
more than a legal opinion; we provide a
business perspective.
This bulletin is published as a service to
clients and others interested in employee benefits and employment issues.
The information provided herein is general in nature and should not be relied
upon as legal advice as to specific factual situations. Listed below are members of both our employee benefits and
employment law practice groups.
Employee Benefits:
James E. Earle
Allyson B. Lavins
Lee West Movius
Raleigh A. Shoemaker
Mary Turk-Meena
Michel P. Vanesse
Lynne S. Wakefield
704.331.7530
704.331.7573
704.331.7435
704.331.7457
704.331.7590
704.331.7464
704.331.7578
Employment Law:
Amelia Y. Burnette
704.331.7494
Amie Flowers Carmack
919.743.7318
Beverly A. Carroll (Chair) 704.331.7586
Andrew M. Habenicht
704.331.7594
William C. Livingston
704.331.7422
Felicia Washington Mauney 704.331.7466
Daniel J. Palmieri
919.743.7317
Russell F. Sizemore
704.331.7514
·
A group health plan administrator may develop
reasonable requirements addressing how continued coverage may be elected, consistent with the
terms of the group health plan and with USERRA's
exceptions to the notice of uniformed service
requirement.
Protections from Discrimination On the Basis of
Uniformed Service
The final regulations contain explanations and clarifications of
USERRA dealing with anti-discrimination and job protection,
including that:
Pension Plans
·
The final regulations also address reemployed uniformed service employees' rights in employer-sponsored pension plans covered by ERISA and certain pension plans not covered by ERISA,
including state, government entity, or church sponsored plans.
USERRA requires an employer to treat a reemployed uniformed
service employee as though there had been no break in service
for purposes of participation, vesting, and accrual of benefits in
the employer's pension plan.
The definition of "service in the uniformed services" includes a broader group of military services
than prior definitions, such as "funeral honors
duties" and "disaster relief duties."
·
USERRA applies to National Guard members acting under federal authority, but does not apply to
National Guard members acting under a state's
authority.
·
An employer has an affirmative defense to USERRA discrimination claims and bears the burden of
proving that any adverse employment action
against a uniformed service employee would have
occurred despite the uniformed service, such as
the result of an intervening reduction-in-force that
would have eliminated the employee's position.
·
USERRA's provisions prohibiting discrimination
and retaliation in initial employment apply to all
covered employers and positions, including brief
and non-recurrent positions; however, USERRA's
reemployment rights and benefits provisions do
not apply to brief and non-recurrent positions
where the employee would have no reasonable
expectation of continued employment for an indefinite period.
·
An employer may not force a service member to
use accrued vacation time during a uniformed
service absence although the employee may opt
to use accrued vacation time or similar accrued
leave, but not accrued sick leave, to continue his
or her civilian compensation.
·
An employer must reemploy a returning service
member employee even though the employer has
hired a replacement employee and reemploying
the service member requires the employer to terminate the replacement employee.
USERRA covers virtually all types of pension plans, including
defined benefit retirement plans, 401(k) and other defined contribution plans, and executive compensation plans. In the case
of a defined benefit plan, the employee's accrued benefit must
be increased for the period of uniformed service once the
employee is reemployed. In the case of a 401(k) or other savings plan, the employee must be allowed to make up his or her
missed contributions or elective deferrals. If the employee contributes, the employer is required to make any related matching contributions according to the plan's matching contribution
formula.
USERRA and the final regulations provide additional guidance
for determining the timing and amount of contributions, including that:
·
·
Employees participating in 401(k) or other savings
plans have three times the length of their uniformed service to contribute make-up contributions, up to a maximum of five years.
Employer contributions attributable to a period of
uniformed service but not based on employee
make-up contributions, must be made within ninety days of reemployment, unless plan contributions for that period are normally due later.
·
When the employee's rate of compensation is used
to determine benefit entitlement, the calculation
must be made using the rate of compensation the
employee would have received but for the period
of uniformed service.
·
Employees who received a distribution of all or
part of their accrued benefit from a defined benefit plan in connection with his or her uniformed
service must be allowed to repay the withdrawn
amounts, plus interest, upon reemployment.
Kennedy Covington Lobdell & Hickman, L.L.P.
Hearst Tower, 47th Floor
214 North Tryon Street
Charlotte, NC 28202
www.kennedycovington.com
Notice: This communication (including any attachment) is being sent on behalf of Kennedy Covington Lobdell & Hickman, L.L.P. and
may be considered a "commercial mail message" for purposes of the CAN-SPAM Act.
© Copyright 2006 Kennedy Covington Lobdell & Hickman, L.L.P.