How must benefits be reinstated for an employee returning from a long-term military leave?

Basically the employee should be reinstated with the same benefits rights the employee had prior to his or her military leave and any additional benefits rights the employee would have attained if he or she had remained continuously employed.

Paid Time Off

For paid-time-off (PTO) plans (e.g., vacation, sick), employers have three different issues to consider: balance prior to leave, accrual during leave and new accrual rate upon reinstatement.

• The employer must carry over any PTO balances the employee had accrued prior to his or her military leave and has not used.

• If the company has a policy or practice of allowing employees to continue to accrue PTO while on any other unpaid leaves of absence (e.g., unpaid Family and Medical Leave Act leave or on personal leaves), then an employee would accrue additional PTO for the time he or she was on unpaid military leave. If the company does not accrue PTO for any employee on any unpaid leave of absence, then the employer would not be obligated to accrue additional PTO for the time the employee was on unpaid military leave.

• Upon reinstatement, the employee will immediately begin to accrue new PTO benefits. Employers must include military service time when determining any seniority-based accrual rates. For example, ABC Company provides a seniority-based increase from two weeks of vacation to three weeks of vacation time after five years of service. Mike worked at ABC Company for three years and then went on military leave for two years. Mike would be considered to have five years of seniority and would be eligible for three weeks of vacation a year.

Health Care Plans, Life Insurance/Accidental Death and Dismemberment, and Disability Income Plans

Coverage for any of these insurance plans that were terminated during military leave must be reinstated effective on the date of the employee’s reemployment. Additionally the employee will be eligible to enroll in any new insurance benefits that the employee would have been eligible for had he or she been continually employed. An employer cannot wait until the beginning of the month after the employee’s reinstatement to add him or her back onto the plan; this will be a legally required exception to many benefit plan documents that allow adding enrollees only at the beginning of the month.

Defined Benefit Retirement Plans

Employers must be reinstated on the date of return in the plan for participation. There should be no break in service, and all military leave time should be counted for seniority in regard to vesting and benefit accrual. However, when an employee is required to contribute to the cost of the defined benefit plan, the employer can require the employee to make any contributions that would have been required before full benefit accrual is granted.

Defined Contribution Retirement Plans

Employers are required to make contributions to the plan for an employee on military leave once the employee is reemployed and must allow the employee to make up contributions or elective deferrals to the plan over a time period of three times the length of the military leave, with the repayment period not to exceed five years.

For the relevant Uniformed Services Employment and Reemployment Rights Act (USERRA) regulations, see A Guide to USERRA: Employee Rights and Benefits.