When military reservists are called to active duty, there are many questions that arise that add to the worry and anxiety the reservists already feel about leaving their homes and families. Among the issues that usually arise are questions about whether they will be able to return to their civilian jobs when they return home, and how their families will survive and fulfill financial obligations if their military salary is only a fraction of their civilian pay. Fortunately, there are laws in place that provide security for the reservist’s civilian job as well as protection and financial relief for military members actively involved in the defense of the United States.

THE UNIFORMED SERVICES EMPLOYMENT AND
RE-EMPLOYMENT RIGHTS ACT OF 1994 (USERRA)

The Uniformed Services Employment and Re-employment Rights Act of 1994 (USERRA) provides job protection and reinstatement rights to members of the uniform services who are called to active duty. USERRA defines “uniformed services” as the Armed Forces (including the Coast Guard), the Army National Guard and 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 national emergency. 38 U.S.C.A. § 4303(16).

What jobs are covered?

All civilian employers are covered, including private employers, state and federal governments. Unlike other discrimination statutes, there is no “small business” exception. USERRA defines “employee” as any person employed by an employer covered under the statute. The employee is also any person who is a citizen, national, or permanent resident alien of the United States employed in a workplace in a foreign country by an employer that is any entity incorporated or otherwise organized in the United States or that is controlled by an entity organized in the United States. Employers should be aware that all civilian jobs are covered, unless the employer can prove that the job was truly a temporary positions. Employers should also note that this coverage applies whether the employee is voluntarily or involuntarily called to duty.

What are the employee’s obligations to invoke coverage?

Employees who are called to duty must give advance notice to the employer before leaving for active duty. Either the employee or the employee’s responsible officer may give the notice, either written or oral. However, notice is not required if military necessity prevents it or if it is unreasonable or impossible to accomplish. Notice should be effected by certified mail, which provides documentation and protects the employee by having the employer acknowledge receipt.

Cumulative leave must be less than five years total with the same employer. However, some categories of military service do not count, such as periodic and special reserve and National Guard training, most service in time of war or emergency, and involuntary extensions on active duty. Only veterans who receive an honorable or general discharge are covered.

Covered employees must promptly return to work, with time limits depending on the length of their absence:

• Less than 31 days: Employee must report to work at the beginning of the first regularly scheduled workday that occurs either hours after the person returns home.
• More than 30 days but less than 181: Employee must submit an application for re-employment no later than 14 days after completion of service.
• More than 181 days: Employee must submit an application no later than 90 days after completion of military service.
• These deadlines can be extended for up to two years for veterans who are hospitalized or recovering due to a service-connected illness or injury. 38 U.S.C.A. § 4312.

What are the employer’s obligations to the returning employee covered under the Act?

The employer is required to promptly reinstate the returning employee once the employee has complied with the requirements listed above. Veterans who were gone 30 days or less are must be immediately reinstated, and those who were away longer must be reinstated within a few days.

The employee must be promptly reinstated to the job they would have had if they had remained continuously employed. This is referred to as the “escalator principle.” In other words, if peers received promotions and raises while the veteran was away, upon his return the veteran must also be given the same promotions and raises. This applies as long as the person is qualified for the position or can become qualified after reasonable efforts by the employer.

There is no “at will” employment for the returning covered employee. The protection from discharge without cause lasts for a period of time depending on their absence following the employee’s reinstatement:

• Less than 30 days: no special protection.
• More than 30 days but less than 181: the protection lasts for six months.
• More than 181 days: the protection lasts for a year.

The Act also provides protection against discrimination. Employers may not discriminate based on past, present, or future military obligations. This applies to all employment actions and decisions such as hiring, promotions, re-employment, termination and benefits. Moreover, an employer may not take adverse actions against an employee because they assert their rights under USERRA, testify or assist in a USERRA investigations, or take enforcement action under USERRA. 38 U.S.C.A. § 4313.

In sum, the employer’s responsibility to the employee during military leave requires continuation of benefits even though compensation is not required. The employee’s seniority may continue to accrue while the employee is gone, subject to the conditions stated above. Finally, the employee’s pension rights may be uninterrupted during the leave, as indicated below.

Employee pension plans and other benefits

Employers are not relieved from contributing to a service member’s pension plan while the member is serving on active duty. Moreover, employees must be made “whole” when it comes to pension plans.

THE SOLDIER’S AND SAILOR’S RELIEF ACT

The Soldier’s and Sailor’s Relief Act was enacted in 1940 to provide an umbrella of protection for military service members called to active duty and adversely affected by such duty. This Act provides protections designed to postpone various civil obligations and afford service members the opportunity to serve their country free from worry about financial responsibilities and judicial proceedings. The Act covers several areas such as rental agreements, leases, mortgages, credit card interest rates and income tax payments. Specifically, it acts to:

• Stay a legal civil action or avoid default judgment in civil actions if the service member cannot attend court due to military duties and obligations
• Protect state citizenship and provides immunity from certain state taxes
• Reduce interest rates on certain pre-service debts under limited conditions;
• Protect against mortgage foreclosure; and
• Help terminate a lease if certain conditions are met and protect against eviction.

Title 50, Appendix, U.S.C.A., §§ 501-593.

Court proceedings

All civil actions (not criminal or administrative proceedings) such as bankruptcy, foreclosure actions, garnishment proceedings, breach of contract or domestic proceedings are delayed and all applicable statute of limitations are stayed. A service member may request a stay of court proceedings by submitting a “stay letter” signed by someone in the chain of command. The stay will remain in effect for the duration of the service member’s duty and for 60 days afterwards. The Act only protects the service member from the obligation to appear in a civil court proceeding and is not a device to provide immunity from lawsuits. Also, the protection under the Act is within the discretion of the Court and will never relive a member of the obligation to pay his or her just debts. The Court may decide that the service member’s ability to prosecute or defend the action is not materially affected by military duties, in which case the action will not be stayed.

Residency and Taxes

If the service member is on active duty, the Act guarantees that the member’s state residency will not change because of military orders. Thus, state taxes will be due only in the member’s home state unless residency is voluntarily changed. Tax protections do not apply, however, to non-military income earned in the non-domiciliary state. For example, if the service member has a second, part-time job, that income is openly taxable by the local state. Also, the Act does not protect spouses, so the spouse will be subject to all the normal state residency and tax rules.

Reduction in interest rates

Service members entering active duty are entitled to a reduction in interest rate to 6% per annum. This applies to debts incurred before joining the military for obligations such as mortgages, car loans and credit cards. It does not apply to federal Guaranteed Student Loans or to any debt acquired after joining the military.

Eligibility for this protection is based on the debt occurring before joining the service, and the ability to pay the debt must have been “materially affected” by military service. The burden is on the creditor to prove a lack of “material effect” and, therefore, most creditors will grant the reduction if properly requested.

Protection from mortgage foreclosure

The following conditions must be met in order for the Act to provide protection against foreclosure of mortgages:

(1) The relief must be sought on financial obligations secured by real or personal property (i.e., security agreements on automobiles or mortgages on real estate);

(2) The obligation must have originated before active duty by the service member or dependents;

(3) The property must still be owned by the service member or dependents; and

(4) The member’s/dependent’s ability to make the loan payment must be “materially affected” by the service member’s military obligations.

The Court may either stay the foreclosure proceedings or issue other equitable relief, such as extension of the loan maturity date or reduction in payments.

Lease termination and protection from eviction

A service member called to active duty may terminate a lease for a family dwelling, a business, agricultural or other similar purpose if the lease was entered into prior to entering active duty. Additionally, the service member or dependents must have occupied the leased premises and the military service must have a “material effect” on the ability to keep the lease.

Written notice must be provided to the landlord after entry on active duty or receipt of orders for active duty, a copy of which must be included with the notice. The service member is entitled to the return of any security deposit to which he or she would be otherwise entitled. Additionally, any rent paid in advance must be returned, the amount to be determined by the unearned portion.

While the service member is serving on active duty, his or her dependents may not be evicted from a dwelling for rent which does not exceed $1200, except upon a court order. This does not apply to business leases. Courts may order a stay of eviction for a period of 3 months or any other “just” order if the tenant’s ability to pay is materially affected by military service.