January 11, 2006
Uniformed Services Employment and Reemployment Rights Act (USERRA)
– New Regulations Released
– USERRA Notice Deadline Approaching
“USERRA protects the job rights of individuals who voluntarily or involuntarily leave employment positions to undertake military service or certain types of service in the National Disaster Medical System. USERRA also prohibits employers from discriminating against past and present members of the uniformed services, and applicants to the uniformed services.”
– US Department of Labor.
Employers Must Post USERRA Notice by January 18, 2006
The US Department of Labor has published new Notices explaining rights under USERRA which must be posted by January 18, 2006. The new Notices are issued in two versions: one for private sector and state government employers, and one for federal government employers. You may find copies of the notice posters at www.dol.gov/vets/programs/userra/poster.htm.
Employers may satisfy the USERRA notice requirement by posting the appropriate notice where other notices to employees are customarily placed. Employers may also provide the notice by alternate means, including hand-delivery, mail or e-mail.
Final USERRA Regulations Released
The US Department of Labor has issued final regulations implementing USERRA. Some of the key changes are as follows:
- Cancellation of Coverage for Failure to Elect Continuation Coverage –
- You may cancel coverage for an employee’s failure to give advance notice of service and failure to elect continuation coverage. However, if the departing employee was excused from giving advance notice of service under USERRA, then upon the employee’s election to continue coverage and payment of all amounts due, the coverage must be retroactively reinstated. Administrative reinstatement costs cannot be charged.
- You may cancel coverage if an employee leaves for a period of service exceeding 30 days and gives advance notice of service but fails to elect continuation coverage. If the employee later elects to continue coverage, the scope of his or her reinstatement right depends upon whether the plan has developed reasonable rules regarding the period within which employees may elect continuation coverage. The default rule allows for retroactive reinstatement of coverage upon the employee’s election and payment of all unpaid amounts at any time during the maximum coverage period under USERRA. This is potentially a much longer period than the plan could have selected by establishing its own rules.
- Cancellation of Coverage for Failure to Make Payments – If timely payment is not made, plans may adopt reasonable rules allowing cancellation of coverage.
- COBRA-Compliant Rules Allowed – If your health plan is also covered by COBRA, it may be reasonable to adopt COBRA compliant rules regarding election of and payment for continuing coverage, so long as those rules do not conflict with USERRA. Using COBRA-compliant rules whenever possible can lead to more efficient health plan administration. This rule allows coordination of COBRA and USERRA obligations, and reduces prior uncertainty under the USERRA notice provisions.
- New Definition of “Employer” – The definition of “employer” listed in the final regulations excludes entities to which employers or plan sponsors have delegated purely ministerial functions.
- Dependents and Retirees – USERRA’s continuation coverage and reinstatement provisions do not apply to service members who are retirees or dependents of covered employees.
- Cafeteria Plans – Cafeteria plan rules regarding paying for health plan premiums and health FSA coverage on a pre-tax basis will not be violated if a plan “provides for a new election either upon leaving employment for military service or subsequent reemployment.”
- 401(k) Plans –
- A reemployed service member’s right to repay a previous distribution now applies only to defined benefit plans. In the proposed regulations, this right applied to defined contribution plans as well.
- Deleted from the final regulations is a provision that would have required plans to allow returning service members who are no longer employed by the plan sponsor to make up missed contributions on an after-tax basis.
- Under the final regulations, employers making contributions attributable to a reemployed employee’s period of uniformed service generally have until the later of 90 days after the date of reemployment or the date that plan contributions are normally due for the year in which the uniformed service was performed. This does not apply to employer matching contributions.
If you have any questions, please contact us.