Some U.S. business owners and their benefits advisors are starting to think more than they had ever expected about the hardship clause of the Uniformed Services Employment and Reemployment Rights Act.

The act, which replaced the Veterans Reemployment Rights Law in 1994, requires employers to take back reservists, Guard members and other employees who have been away on active military service for periods of 5 years or less.

The act also requires an employer to give employees who are out on military leave a chance to continue civilian health benefits. The employer and its insurers can charge only 102% of its health benefits costs for the continuation coverage.

When the employees return from military leave, the employer must give them a chance to make up missed retirement plan contributions and must ensure that they receive all the other benefits that they would have received if they had never left.

Both the law and the government are firmly on the side of the returning service member.

USERRA excuses employers from their legal obligations to returning service members only “when doing so would be of such difficulty or expense as to cause undue hardship,” according to the text of the law.

Litigation focusing on USERRA hardship exemptions has been rare because “if the employer is on any shaky ground at all, they probably back down,” says David Powell, a lawyer with the Groom Law Group, Chartered, Washington.

Unless employers have liquidated their operations or can prove other clear-cut cases of hardship, in most cases, “their lawyers are going to tell them theyve got the short end of the stick,” Powell warns. “[USERRA] is very pro returning employee.”

But some reservists and Guard members now have been on active military duty for a year or more, and the military appears to be extending the tours of some members of the Guard and Reserves in ways that could keep them away from their civilian jobs for many more months than they originally had expected.

In some cases, employers might have suffered massive layoffs or shut down entirely since their citizen soldiers went to war.

Sen. Olympia Snowe, R-Wash., announced in October 2003 that her agency had asked the Congressional Budget Office to conduct a survey to see how service members' extended absences are affecting small employers, and whether there might be any ways to lighten employers' burden without weakening the U.S. military.

If an employer believes it has a valid reason to draw on the USERRA hardship clause, it should seek advice from an experienced labor lawyer as early as possible for help with interpreting USERRA and documenting the need for the exemption, Powell says.

Guidance on what constitutes a clear-cut need for an exemption and how to document that need is scarce.

Because USERRA litigation is so rare, “USERRA is a law that still has a lot of gray areas in it,” Powell adds.

The Department of Labor's Veterans' Employment and Training Service has tried to help by putting out a “non-technical resource guide” for employers facing questions about USERRA.

The guide is “not legally binding,” according to a VETS disclaimer that accompanies the guide.

The Labor Department says it is developing more authoritative guidance.

But Powell says a cautious employer should assume that the courts will construe USERRA in favor of the returning service member.

Even if a company has shut down the division that employed the returning service members or liquidated entirely by selling out to a competitor, service members still might have a right to get their jobs back, Powell says.

Before a company that has shut down a division can fire returning service members and deny them benefits, it should be able to show that the returning service members are not qualified to hold any of the remaining jobs in surviving company divisions, Powell says.

Powell adds that an acquirer that has bought the service members' former employer may inherit a legal obligation to reemploy the service members.

Reproduced from National Underwriter Edition, April 19, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.