By: Matthew J.Hammer, Daley Mohan Groble. P.C.

Hiring Service Members?  Have Employees In the Armed Forces or National Guard?

The Uniformed Services Employment and Reemployment Rights Act (“USERRA”) is a broad federal statute that establishes reemployment rights for service members returning from duty and protects vets and present service members, as well as those who have applied for service, from discrimination and retaliation in employment and in hiring.

It applies to all – yes, all – public and private employers, including foreign employers with workplaces in the United States and American employers that do business in foreign countries.

While most employers are aware of the law’s general objectives, compliance can be challenging. Indeed, in FY 2016, the Department of Labor reviewed more than 1,100 USERRA claims made against employers.

Here are three common pitfalls to avoid and two tips.

Pitfall No. 1 – USERRA Covers Job Applicants and Interviewees, Not Just Employees

Employers may be unaware that USERRA’s protections apply even to reviewing employment applications, screening, interviewing, and hiring job candidates.  Employers cannot deny initial employment due to past, present, or future service or service obligations.  This provision, for example, precludes employers from taking a pass on hiring a service member out of concern for the individual’s service and obligations, including concerns regarding time the individual may spend away from the office or jobsite for training, deployment, or other service-connected leave.

Pitfall No. 2 – The “Escalator Principle” Controls Employee Reinstatement

Once an employee returns from leave, one of the biggest challenges employers face in USERRA compliance lies in understanding and implementing its reinstatement provisions.  USERRA’s “escalator principle” generally requires employers to reinstate a returning employee to the position and pay to which the service member would have advanced, but for service-connected leave of absence.  The seniority, status, rate of pay, and other terms and conditions of this “escalator position,” as it is known, must be determined as if the service member had been continuously employed during his or her period of leave – that is, had the employee continued to ride the employment escalator.  What is more, if the returning employee is not qualified for the escalator position, USERRA requires his or her employer to expend “reasonable efforts” to train the employee to become qualified.  As the name suggests, the escalator also may stop or move downward such that an employer, in some cases, lawfully may transfer, lay-off, or eliminate an escalator position while an employee is on service leave.

The escalator principle can be complicated, and is particularly tricky to apply to non-union employees, employees who are not subject to seniority-based advancement, and employees who earn compensation and bonuses other than, or in addition to, a straight salary.

Pitfall No. 3 – The “Safe Harbor” Provision Precludes Termination of Returning Employees, Except for Cause

While much attention is paid to reinstatement requirements, and rightfully so, USERRA also has a “safe harbor” provision that protects returning employees from discharge, except for cause, for a certain time based on the period of service from which the employee returned.  Under the law, if the employee’s period of service lasted longer than 180 days, the employee is protected from discharge for one full year.  If the period of service lasted more than 30 days, but less than 180 days, the employee is protected from discharge for 180 days.  Employees who return from a period of service of less than 30 days do not qualify for the safe harbor provision, but remain protected by USERRA’s other provisions.

Obviously, these Pitfalls – and USERRA provisions in general – can lead to protracted and expensive litigation if a claim makes it into court.  Fortunately, there are a few tips employers can use to avoid court cases, and to resolve potential claims through quicker and more cost-effective processes.

Tip No. 1 – Employers Can Require Arbitration of USERRA Claims

Despite its numerous protections and requirements, USERRA does not prohibit employers from including USERRA claims in mandatory arbitration agreements – provided that such agreements do not alter USERRA’s substantive rights.  Standards for enforceable arbitration agreements generally include, but are not necessarily limited to, provisions that provide for discovery and appropriate relief and remedies under USERRA and that provide for the employer to cover the costs of arbitration. Employers that have such agreements in force are likely to be successful in avoiding costly and public court battles by compelling arbitration of USERRA claims.

Tip No. 2 – Review and Update Employment Procedures and Arbitration Agreements

Of course, the best way to stay out of court is to comply with the law.  From time to time, and as recently as 2016, bills have been introduced to clarify, and even to expand, USERRA’s breadth.  Moreover, penalties already are stiff and sundry.  In addition to actual and liquidated damages, attorneys’ fees, and expenses, employers can be subject to penalties that include returns to work, back pay, lost benefits, lost promotional opportunities, retroactive seniority, pension adjustments, and personnel file corrections.  Accordingly, employers should periodically review and update their application, reinstatement, and termination procedures, as well as their arbitration agreements, to ensure compliance with USERRA, and maximize the effectiveness of those procedures and agreements.