Department of Labor's New Guidance Helps Employers of Uniformed Service Members Manage Pension Obligations
The Department of Labor's Veterans Employment and Training Services (VETS) issued a new fact sheet to help employers better manage their pension obligations under the Uniform Services Employment and Reemployment Rights Act (USERRA). USERRA creates certain rights and protections for uniformed service members. For example, under USERRA, service members who were reemployed after a uniformed services-related absence are treated as though they did not have a break in civilian employment for purposes of participation, vesting and accrual of pension benefits.
The fact sheet addresses how USERRA applies to employers that pay pension benefits as a percentage of an employee's total earnings. Specifically, the fact sheet explains that:
- 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 reemployment or recovering from an illness incurred or aggravated by military service.
- If a pension plan is contributory, the employer must make contributions that are contingent on the service member's contributions only to the extent that the service member makes the contributions to the plan.
- To determine the service member's pension entitlement in plans that pay pension benefits as a percentage of an employee's total earnings, an employer must determine the rate or rates of compensation the service member would have received but for the military-related absence.
- To determine the rate of compensation mentioned above, the employer must determine how many hours of service the member would have likely worked and how much the service member would have earned based on the service member's previous work history.
- If the rate of compensation cannot be determined with reasonable certainty, the employer must look at the average rate of compensation the service member received during the preceding twelve months (the "12-month look-back").