Be Prepared For Reservist Deployment
Posted on Monday, April 01, 2019 Share
The mobilization of National Guard members and reservists has increased the likelihood that some of your employees might be called up or are returning from active duty. If that happens, federal law requires certain steps to be taken to protect their jobs and benefits. (State military leave laws may provide additional rights.)
Low-Interest Loans for Firms Hurt by Reservist Call-Up
Companies with "essential employees" who are called to active military duty may be eligible for financial relief from Uncle Sam.
Under a law passed in 1999, companies may qualify for low-interest loans from the Small Business Administration (SBA).
The law is designed to help companies meet necessary operating expenses that are difficult to cover because a key employee is called up to active duty. An essential employee is defined as "an individual whose managerial or technical expertise is critical to the successful day-to-day operations of a small business."
The most a company can borrow is generally $1.5 million. Interest rates fluctuate, depending on economic conditions, but is capped at four percent.
For more information about the Military Reservist Economic Injury Loan program, go to the Small Business Administration website by clicking here.
The purpose of the Uniformed Services Employment and Reemployment Rights Act (USERRA) is to ensure that people who serve their country aren't discriminated against in the workplace. Of course, this call to duty can create some hardship at your company. Those deployed could receive only a couple days notice so you need a contingency plan to continue operating smoothly during their absence.
Your obligations are triggered when an employee is called up to active duty or training in the uniformed services. Here's a brief look at what the law requires.
To be protected, employees must pass five tests:
1. Job status. Employees must hold a permanent job in the private or public sector. Unlike some laws, USERRA provides no exceptions for small businesses with less than a certain number of employees.
2. Notification. Staff members must tell their employers in advance -- verbally or in writing -- that they're volunteering or being called for duty, unless notification is impossible because of a military emergency.
3. Duration. Employees must generally return to work within five years.
4. Discharge. An employee must be honorably discharged. Protection ends if he or she is dishonorably discharged or dismissed for reasons such as bad conduct.
5. Prompt return. After returning home, service members must report to work within a specified period of time. The exact time varies with the time spent in active duty.
If an employee passes these tests, your company's responsibilities kick in. Here are the three top duties:
1. Rehiring. You must immediately return employees to their jobs with no change in seniority, status, retirement credit or pay. In addition, your company may be required to refresh their skills and provide any training they have missed. If the staff members are gone longer than 90 days, you can give them other jobs, as long as they don't lose seniority, status or pay.
2. Benefits. Although you aren't required to pay their salaries while employees are away, you must continue health benefits if the service members elect to retain coverage. You can charge them the normal employee share for 30 days. After that, you can charge up to 102 percent of the premium. When the service members return to work, they are entitled to immediate coverage for themselves and any previously covered dependents.
You must also continue retirement benefits. The time served can't be considered a break in service, so vesting and benefit accruals must continue. Companies are generally required to allow employees to make up lost contributions for a certain period of time and match any contributions or deferrals.
3. Leave policy. You must give employees any earned vacation time, in addition to leave for military training. You cannot force someone to use annual vacation or personal leave for military service, although an employee can choose this option.
If any of your staff members leave to serve the country, discuss the issue thoroughly with your professional advisors.
Posted in Tax Topics For Individuals, Tax And Accounting Topics For Business
Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.