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There’s a patriotic fervor sweeping much of corporate America. According to federal officials and officers in the U.S. military, a significant number of American companies are going beyond what the law requires in offering pay and benefits to employees activated for the military. Under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), every employer in the United States — regardless of the number of employees — is prohibited from discriminating against any employee who is called up or joins the military. The law states that employees, after being deactivated from the military, are entitled to re-employment in the jobs they would have achieved if their work had not been interrupted by military service. However, the law does not require the employer to pay the employees while in the military; nor does it require the employer to pay for health insurance. But many do so. “Many of America’s employers are responding very well,” said Fred Juarbe, the assistant secretary of labor for veterans’ employment and training. He noted the willingness of some employers to offer full and differential pay, plus health benefits, while employees serve in the military, and added, “It is also important to note that many small companies, for whom it’s even a greater sacrifice, are providing additional benefits above and beyond the requirements of the law.” Leading the pack are Schering-Plough Corp., a New Jersey-based pharmaceutical company; First Data Corp., the Denver-based electronics commerce and payment services company; and W.W. Grainger Inc., an Illinois-based industrial supplier, according to a survey by the Reserve Officers Association of the United States (ROA), a nonprofit advocacy group for retired and current military officers. According to ROA’s annual survey of Fortune500 companies, First Data and Grainger have agreed to pay the full salaries of their employees in the military for up to one year, and Schering has agreed to do it for the duration of the employees’ military service. ( www.roa.org/pdf/home/03_f500_chart.pdf.) The benefits offered by these three companies are unusually generous. More common, said lawyers who specialize in this work, is that companies are offering to pay employees the difference between what they were making in their civilian job and what they will make in the military, referred to as a pay differential. “We are known as America’s paint company and we see the sacrifice employees are making and thought we should show support for those on the front lines,” said Joseph Prekop, a senior labor relations attorney with Cleveland-based Sherwin-Williams Co., which is one of 297 entities listed on a Department of Defense Web site as having gone above and beyond the requirements of the law. The Web site is run by the Employer Support of the Guard and Reserve (ESGR), a Defense Department unit that provides assistance to reservists, national guardsmen and employers on USERRA at http://esgr.org/volunteers/outstandingEmployers.asp. Sherwin-Williams decided after Sept. 11, 2001, to offer employees in the military a pay differential for up to six months, Prekop said. However, following a request by an employee on active duty, Prekop said, the company extended the benefit to one year of military service. The company currently has roughly 10 employees on active duty. Frito-Lay Inc., the Plano, Texas, snack food company, is also on ESGR’s most favored companies list. Frito-Lay, with more than 50 employees serving on active duty, is providing differential pay, plus regular health benefits, for one year. The company will consider extending those benefits if employees’ tours of duty extend beyond the one year, said Michele Thatcher, an assistant general counsel. SO FAR, SO GOOD Thus far, 218,000 reserves and national guard members have been called up, making it, after the first Persian Gulf War, the second-largest call-up of U.S. forces since the all-volunteer military was begun in 1973. The true test of whether companies are complying with USERRA may not come until after the war in Iraq ends and soldiers return to their jobs. As of now, however, the federal government is satisfied. “I believe that the level of compliance is extremely high,” said Nick Dawson, the Labor Department’s lead person on USERRA issues, who monitors complaints. He said the Labor Department received 1,200 complaints of noncompliance in fiscal year 2002, and only 7 percent of those cases were referred to government attorneys for investigation and possible civil prosecution. While the 1,200 complaints is a 30 percent increase from the previous year, and while this year has seen an additional 10 percent to 15 percent rise, given the increased number of call-ups, this is not significant, he said. “I think it’s important to stress that most violations we see are due to a lack of understanding of the law, not because they are bad employers,” Dawson said. Lt. Col. Brian Arnold, a lawyer who is an ombudsman with the ESGR, said his extensive contact with employers has been mostly positive. He said ESGR receives about 200 calls and e-mails a week from employers with questions about USERRA and, it appears to him, most employers are trying to do the right thing. Among the companies offering full salary, followed by differential pay, for various periods of time are Coca-Cola Co., General Electric Co. and R.J. Reynolds Tobacco Co. Among the companies providing pay differential are the Tennessee Valley Authority, Pfizer Corp., Lucent Technologies Inc., Exxon Mobil Corp. and Bank One Corp. However, no one suggests there is full compliance. In perhaps the most high-profile lawsuit involving USERRA, Pep Boys — Manny, Moe & Jack, the large Philadelphia-based auto repair and auto parts retail chain, is accused of firing a former district manager on June 27, 2002, for reporting to naval reserve training. In a complaint filed in U.S. District Court in Tucson, Ariz., on March 25, Erik Balodis accuses Pep Boys of repeatedly threatening him for taking time off for his military reserve duty, including sending him correspondence demanding that “he ‘choose’ his job over his military service.” Balodis v. The Pep Boys Manny Moe & Jack, No. CV-03-022 (D. Ariz.) Pep Boys denies the allegations. In a letter to the plaintiff’s attorney, Pep Boys’ outside counsel, Todd E. Hale of the Tucson office of Phoenix’s Lewis and Roca, said Balodis’ termination was due to poor performance, not because he was in the military reserves. The letter outlined three instances when Balodis was told in writing that his work performance was deficient. This culminated with Pep Boys, in February 2002, demoting Balodis from district manager to store manager, and then, ultimately, firing him. Pep Boys is seeking to have the case arbitrated. Even if Pep Boys resolves the matter in its favor, the case highlights the potential pitfalls of firing an employee who is also a member of the military during a time of heightened awareness about the issue. The case received national attention, with a story in USA Todayand a report on CNN. Pep Boys took the offensive and hired a law firm, Philadelphia’s Sprague & Sprague, to hold “those in the media who have falsely accused the Company of such a deed accountable,” according to Pep Boys’ Web site. The Web site also states that Pep Boys has at least 30 employees who have been called up because of the war with Iraq and that it fully supports these employees. Marc D. Katz, a senior associate with Dallas’ Jenkens & Gilchrist who specializes in employment law and advises clients on USERRA, said, given the potential public relations impact of firing someone in the military today, “It may be an area where an employer would think twice about it — even if they would normally terminate the employee.” However, he said that under the law, an employer is not required to treat an employee in the military any better than an employee not in the military and that he has told clients, generally, that sometimes the worst thing a company can do is retain an undeserving employee just because they are afraid of being sued. TRICKY ISSUES Katz, among others, said there are certain gray areas in the law that will require appellate court interpretation to make clear what’s allowed. He points to a section of the law that permits companies to deny re-employment after an employee is discharged from the military because of “undue hardship on the employer.” “What constitutes an undue hardship?” he asked. Courts have defined the term under the Americans With Disabilities Act, but Katz is unsure if the same interpretation applies under USERRA. Captain Sam Wright, the ombudsmen for ROA and a Washington attorney in his civilian life, helped draft a document that became the basis for USERRA. He acknowledges that there are ambiguities in the law. He pointed to the so-called “escalator clause,” which requires re-employment in a job as if the person had not gone into the military, with like pay. Wright said he knows of a situation where a brigadier general in the Army reserves was called up for a year of service after Sept. 11, 2001. When he returned to his job as an insurance company executive, Wright said, he was told that because the company could not evaluate his work for the previous year, he would receive no raise, not even for cost of living. Although Wright said he believed the individual was entitled to a raise, he added that he thought it was open to interpretation: “How do you apply this escalator principle where [pay] is all based on individual performance and you weren’t there to perform?” he asked. Wright and other attorneys say it is the escalator clause that will likely be a hot-button issue when the tens of thousands of reservists and national guard return to civilian life after the war. A factor sure to compound any ambiguity is the poor economy because, as Wright pointed out, the “escalator can go down,” meaning a company can make an economic decision regarding a person’s job, such as eliminating it, as long as the reason was not related to the person’s military duty. This could affect a fair number of people, given that the country’s major airlines, which employ a large number of people called up to active duty, are either in bankruptcy or teetering on the brink. “I think we are going to have cases like this, particularly if the economy remains soft,” Wright said. Michael Ravnitzky and Sue Reisinger contributed to this story.

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