The U.S. Department of Labor (DOL) released a fact sheet Aug. 8 addressing employers' responsibilities under the Uniformed Services Employment and Reemployment Rights Act (USERRA) to re-employed veterans who participate in an employer's retirement plan. The guidance is provided in the VETS USERRA Fact Sheet 1: Frequently Asked Questions-Employers' Pension Obligations to Reemployed Service Members under USERRA.
USERRA seeks to eliminate or minimize the disadvantages returning service members and veterans could face in their civilian careers and employment. Under USERRA, employees are entitled to all accrued pension benefits they would have received had their civilian employment been continuous. This requirement applies to defined benefit pensions, defined contribution plans and profit sharing plans, as well as to single-employer and multiemployer plans.
"Ensuring our servicemen and servicewomen enjoy the appropriate rights and benefits of their civilian employment on their return from duty encourages future service and provides for the security of our nation," said Deputy Assistant Secretary for Operations Sam Shellenberger of the Veterans' Employment and Training Service (VETS), in announcing the fact sheet's release.
Generally, USERRA requires an employer to return an employee to the same position held prior to military leave. The fact sheet serves as reminder that if before their deployment employees participated in a contributory plan with both employer and employee contributions, then the employer must treat time deployed as time worked with regard to vesting periods.
USERRA states that "employers are required to determine a re-employed service member's eligibility for participation in a pension plan and the vesting and accrual of the service member's pension benefits as if the service member had not left for military service."
Lisa Rippey, an attorney at Stinson in Kansas City, Mo., wrote, "The service member's entire period of absence from employment 'due to or necessitated by' military service must be treated as continuous employment, which includes the time spent preparing for military service and the post-service time that the individual spent applying for re-employment or recovering from an illness incurred or aggravated by military service."
[SHRM members-only how-to guide: How to Administer Military Leave Benefits Under USERRA]
Matching Makeup Contributions
As for limits on a service member's ability to make up plan payments that were missed during a military-related absence, the DOL fact sheet highlights the following:
- Re-employed service members may make up all or part of their missed contributions or elective deferrals. However, they are not required to do so.
- No makeup payment may exceed the amount service members would have been permitted or required to contribute had they remained continuously employed.
- A re-employed service member's makeup payments may be made starting on the date of re-employment for a period that is three times the duration of the service member's military service, but not to exceed five years.
Regarding employer-matching contributions, the fact sheet states that:
- An employer is required to make contributions that are contingent on a re-employed service member's contributions or elective deferrals only to the extent that the service member makes up payments to the plan that were missed during the employee's deployment.
- Any employer contributions that are contingent on or attributable to the service member's makeup contributions or elective deferrals must be made according to the plan's requirements for employer-matching contributions.
Varying Hours and Overtime
Because USERRA requires an employer to continue pension contributions as if the employee were still performing work, "this can present challenges for employers whose employees work varying hours or shifts or significant overtime," wrote Jeffrey Rhodes, an attorney with Doumar Martin in Arlington, Va.
He advised employers to calculate employee hours as well as rates of pay for pension contributions using averages from the last 12 months to avoid potential claims.
The VETS USERRA Fact Sheet 1 provides examples of how to handle overtime calculations for plans in which employee compensation determines the amount of the employee's contribution or the retirement benefit to which the employee is entitled.
Related SHRM Articles:
Uniformed Services Employment and Reemployment Rights Act, SHRM NextChat, July 2018
Claim of Miscalculated Military Leave Pension Contributions Can Go to Trial, SHRM Online, June 2017