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Industry Answers The Call to Patriotism

January 2002
By Maryann Lawlor
E-mail About the Author

Companies seek best ways to support employee members of the National Guard and Reserve.

Despite a shaky economy, businesses are contributing to homeland security and the war against terrorism by backing their workers who are guardsmen or reservists. Although it is still too early to determine how an extensive call-up may affect human resources, many firms are researching their legal requirements in terms of pay, benefits and re-employment. Several are then going beyond the mandatory to the extraordinary to ensure that their employees can serve their country without worrying about their families or civilian jobs.

After reviewing mission requirements, the services recommended a call-up of 35,000 guardsmen and reservists. President George W. Bush authorized a call-up of 50,000. The service members will conduct port operations missions; provide medical, engineering and general civil support; and participate in homeland defense operations.

The Quadrennial Defense Review, released on September 30, addresses the key role that these troops will play in homeland security. This task will be taken up in large part, but not entirely, by the Guard and the Reserve. Some mix of guardsmen, reservists and active duty personnel will be responsible for providing the seamless defensive capabilities that extend from efforts abroad to active defensive actions in the United States, a senior defense official says. Currently, guardsmen and reservists make up half of U.S. uniformed military forces.

Many companies have been contacting organizations that support both the military and industry in dealing with private sector employment issues of military personnel. During the weeks immediately following the terrorist attacks, these groups fielded numerous questions from both military members and companies. Overwhelmingly, the inquiries from firms have been for information about how best to support the national effort.

The National Committee for Employer Support of the Guard and Reserve (ESGR), Arlington, Virginia, is one of the key organizations established by the U.S. Defense Department to ensure that both employees and companies understand the legal requirements. The agency operates within the Office of the Assistant Secretary of Defense for Reserve Affairs and consists of 35 full-time military personnel and 4,500 volunteers nationwide. Primarily, it promotes cooperation and understanding between Reserve component members and their civilian employers.

One of the primary missions of the ESGR is to help resolve conflicts that arise. Of the 10,000 inquiries received by the organization last year, between 90 and 95 percent were settled by ESGR and only about 8 percent had to be referred to the U.S. Department of Labor.

ESGR representatives say that companies have given tremendous support to their employees who have been called to serve. Many others are searching for information about legal requirements; many more are asking for guidance about how other firms are supporting employees and inquiring about legal restrictions on how much they are allowed to do for their reservists and guardsmen. Since the September 11 attack and the call-up, hits on the ESGR Web site have increased from 6,000 a week to more than 40,000 a week.

“We’ve fielded more than 500 calls this month from employers. By far, most want to know what they can do to help their guardsmen and reservists. They want to know what they can do to enhance their insurance benefits or pay above what is required by the Uniformed Services Employment and Reemployment Rights Act [USERRA],” Lt. Col. Matthew Tittmann, USA, division chief, employer operations, ESGR, relates.

According to a study of Fortune 500 companies conducted by the Reserve Officers Association (ROA), Washington, D.C., policies vary substantially from one company to another. For example, some companies pay the reservist’s or guardsman’s full salary for several weeks or even months; others pay the difference between the military and the civilian salaries. Some companies provide the differential pay for a designated number of days, while others continue through the duration of service. Thirty of the companies that responded to the survey provide neither full nor differential pay. The federal government falls into this category; however, discussions on the subject are ongoing in the Office of Personnel Management.

Health plan and life insurance benefits also vary in both coverage and duration. Most companies provide coverage for the employee and dependents, but length of coverage differs. The majority of firms that participated in the survey apply the same policies regardless of whether the military service is voluntary or involuntary.

The recent call-up has prompted many companies to re-evaluate their policies and amend them. For example, Col. Tittmann relates that Morgan Stanley in New York has changed its leave policy to allow full pay and benefits for six months. The previous policy called for full pay for only two weeks.

The colonel reports that he has heard other amazing stories. For example, immediately after the September 11 attack, the Campbell Soup Company reviewed its benefits policies regarding guardsmen and reservists. Although only one employee has been called to active duty to date, the company has changed its policy from two weeks to one full year of differential pay and benefits.

Maj. Jayson Spiegel, USAR, executive director of ROA, indicates that the calls his organization is receiving from firms also reflect an eagerness to help reservists and guardsmen. “We have found that since the call-up was announced a number of companies have increased the benefits they are providing. Some are going to keep their employees on the payroll for the duration of the call-up. Some are providing differential pay. This was rare during the Gulf War. Many companies are also continuing to pay for life insurance,” Maj. Spiegel explains.

At the announcement of the call-up, several firms began taking stock of the number of reservists and guardsmen among their employees. This action gave rise to urban legends that these workers were going to be fired or laid off. “But in actuality, the companies were just trying to do the right thing and find out how many people the call-up could affect so that they could determine what benefits to offer,” Maj. Spiegel says.

According to Col. Tittmann, many of the calls his organization is receiving from firms are about what benefits other companies are providing. “They want to know if there are standards other than the law [USERRA]. We tell them that there are trends but not standards. In general, companies are providing differential pay or continued pay as well as continued health care benefits for dependents,” the colonel says.

Health insurance is a concern for dependents. Although the military provides health care benefits, changing plans can cause a hardship for family members. By continuing coverage through the employer, dependents can stay with the same health care professionals and file the same forms as if the military family member were still at the civilian job.

A Reserve and National Guard call-up of this magnitude affects large and small companies in different ways. For example, The Boeing Company, headquartered in Chicago, has 198,000 employees worldwide, and approximately 3,000 of them are reservists or guardsmen. According to Ken Mercer, a spokesman for Boeing, a number of these employees have already been called to active duty, and the firm expects that additional workers will be called.

“The company will follow the policy that it has followed in the past, which is 90 days of differential pay, health and life insurance coverage. After 90 days, decisions are made on a case-by-case basis,” Mercer explains. Boeing established the Guard and Reserve Network, a group of reservists, guardsmen and senior company management that has helped standardize policies throughout the company and resolve issues. “The ultimate objective is to better facilitate the employee transition between their military and corporate responsibilities,” he notes.

As a result of its efforts, Boeing was one of five companies to receive ESGR’s Freedom Award for 2001. The award, the organization’s most prestigious, is presented annually to employers by the secretary of defense.

The ESGR recognizes outstanding company effort with several other awards, including the “My Boss is a Patriot” certificate of appreciation and the Pro Patria Award.

ROA also has a similar awards program called the “Good Guy List.” Maj. Spiegel explains that the list has grown so large that the organization is now stratifying it into gold, silver and bronze levels. “Bronze companies may be inspired to increase their efforts even more,” he offers.

Although many large companies are able to offer substantial support to their reservists and guardsmen employees, some organizations are not in a position to provide extensive benefits. Lt. Cmdr. Mark C. Shelley, USNR, who was called to active duty in 1999 and currently serves as a national ombudsman at ESGR, points out that law enforcement agencies and airlines are two categories of employers that could be strapped by extensive call-ups. For instance, a small police force that has only four members would find itself in a predicament if two of them were called up for active duty. “A small town would have to find the funds to hire replacements. These are schedule-intensive jobs where someone has to be there to stand a watch,” Cmdr. Shelley notes.

Maj. Spiegel points out that small businesses face the same type of challenge. “Reservists are guaranteed their jobs when they return from active duty, but if the employer doesn’t exist, they don’t have a job to go back to. If an employer goes under because you’re gone, you’re in trouble,” he explains.

Michael Beirne is one entrepreneur who is facing this issue boldly. His company, NovaForge, Arlington, Virginia, opened its doors last year. The firm offers comprehensive information security solutions, which puts Beirne in a unique position as the United States ramps up homeland security, including in cyberspace.

But even as Beirne sees his company growing at a much faster pace than he had envisioned, he has decided to volunteer for active duty. He is transitioning from a position in the Army Reserve to the Army National Guard and will use his expertise in information security to mobilize business and Guard leaders to coordinate homeland defense.

As for his civilian job, everyone at NovaForge, including Beirne, immediately made changes to operate as if he had already reported to active duty. He turned over the reins for business operations to other individuals and started hiring more personnel. The increase in information security requirements is likely to benefit his company. “The goal was to have a $250 million to $300 million year. Now we could be up to $500 million because the demand has gone up,” he says.

Not every small business will find itself in such a favorable position. To address this specific issue, the U.S. Small Business Administration manages the Military Reservist Economic Injury Disaster Loans program. The program provides funds to eligible small businesses to cover operating expenses that cannot be met because an essential employee has been called to active duty.

Small businesses may apply for loans of up to $1.5 million if they have been financially affected by the loss of a key employee. These working capital loans may be used to pay fixed debts, payroll, accounts payable and other bills. The interest rate is 4 percent with a maximum term of 30 years. The filing period begins the date the essential employee is ordered to active duty and ends 90 days after the date the employee is discharged from active duty.

Col. Tittmann recommends that all companies review their current policies and communicate with their reservists and guardsmen. “Be proactive. You don’t want to alarm your employees but express your support. If someone is working in a competitive job, they may be concerned about job security. So a company that wants to help needs to communicate its support,” he emphasizes.

Additional information on the National Committee for Employer Support of the Guard and Reserve is available on the World Wide Web at http://www.esgr.org and on the Reserve Officers Association at http://www.roa.org.

 

It’s the Law…

The Uniformed Services Employment and Reemployment Rights Act (USERRA), enacted in 1994 and updated in 1996 and 1998, is the key law governing the private-sector employment rights of guardsmen and reservists and the responsibilities of their employers.

USERRA protects employees from discrimination based on military affiliation. Employers must allow employees to attend scheduled drills or annual training; however, the amount of voluntary military leave an employee can use and still retain re-employment rights is limited to five years of cumulative service. Excluded from this five-year total are drills, annual training, involuntary recall to active duty and additional training requirements. Prior notice to the employer is required for a leave of absence for military duty, and employers, not service members, are responsible for finding a replacement worker to assume job duties.

The law specifies that returning employees must be promptly re-employed after returning from service, but a time frame is not specified. The reservist or guardsman must be reinstated in the job the person would have held had the employment not been interrupted by military service. This includes any promotions that would have occurred providing the person is or can become qualified for the new position. Reinstatement rights are applicable for both voluntary and involuntary orders. Seniority also continues to be accrued as if the employee had not been away.

USERRA does not require companies to pay an individual’s salary or offer differential pay benefits. In addition, while an employee may continue to contribute to a pension plan, the employer is not required by law to do so while the worker is on active duty. Health insurance benefits must continue to be provided for 30 days after an individual has been called to active duty and must be reinstated immediately after return to work without a waiting period.