United States: DOL Clarifies Employers' Retirement Plan Obligations Under USERRA

Last Updated: August 30 2019
Article by Brian W. Barrett

On August 9, 2019, the Department of Labor ("DOL") issued USERRA Fact Sheet 1, providing guidance to employers about their pension obligations to reemployed service members under the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA").

Since its enactment in 1994, USERRA has provided that employees who return to employment with USERRA reemployment rights are entitled to service and certain retirement benefit accruals for their period of absence to perform military service. Generally, the returning employee is entitled to vesting, eligibility, and benefit service credit for the entire period of the absence. The employee is also entitled, upon reemployment, to all benefit accruals that are not conditioned on employee contributions or deferrals and to employer accruals that are conditioned on employee contributions/deferrals to the extent that the employee makes up missed contributions/deferrals upon return from military service.

Because many retirement plan contributions are based on employee compensation, and most employees do not receive pay or full pay during periods of military leave, USERRA requires employers to deem compensation for the military employees' period of absence for purposes of calculating retirement plan accruals attributable to the period of military service. USERRA provides that such deemed compensation must be computed at the compensation rate the employee would have received but for the period of military service, or if that determination cannot be made with reasonable certainty, on the basis of the employee's average rate of compensation during the 12-month period immediately preceding the military leave of absence (or, if shorter, the period of employment immediately preceding the military leave of absence).

This deemed compensation requirement has raised several practical questions for employers seeking to comply with USERRA once an employee returns from military service. For example, what constitutes "reasonable certainty" when calculating the compensation an employee would have earned? Is deemed compensation based on base pay only, or must it include overtime? How should the 12-month lookback rule be applied in the case of multiple periods of military leave—should the employer reach back beyond 12 months to find the last 12 months of employment without military service, use an average of those months in the last 12 months of employment with no military leave, or use only the months since the prior period of military leave as the lookback period?

The Guidance

Through a series of Q&As and examples, the fact sheet provides the DOL's viewpoint on many of these practical issues. For example:

  1. A service member's rate of compensation may not be determined with reasonable certainty where the service member consistently works variable hours or earns various rates of pay (e.g., under a commission scheme).
  2. If an employee who is scheduled to work 40 hours per week consistently worked 40 hours per week prior to the military absence, it is reasonably certain that the employee would have worked 40 hours per week during the period of service. However, if the same employee who was scheduled to work 40 hours per week consistently worked 50 hours per week before military service, it is reasonably certain the employee would have worked 50 hours per week during the period of service. And if the same employee who was scheduled to work 40 hours per week worked varying hours in the period preceding military service, then the employee's compensation cannot be calculated with reasonable certainty, and the 12-month lookback approach should be utilized.
  3. An employee whose compensation varies by month has been employed by the company for six years. The employee returns from a one-year period of military service, works an additional six months, then serves an additional two weeks in the military before returning. To calculate the employee's rate of compensation for the most recent two-week period of military leave, the employer should look at the last 12 months of employment preceding the period of military leave and disregard the 6 months the employee spent on military service. Therefore, the employee's rate of compensation should be based on the average rate of compensation for the six months the employee worked upon returning from the one-year period of military leave.
  4. An employee whose compensation varies has been employed by the company for ten years. Three months ago, the employee returned from a one-week military absence. The employee subsequently performed military service for one month. To calculate the employee's rate of compensation for the most recent one month period of military leave, the employer should look at the average rate of compensation during the last 12 months of employment preceding the one month period of military leave and disregard the 1 week the employee spent on military leave.

Key Takeaways

The ruling provides the DOL's views on several of the more granular questions involved in applying USERRA's requirements for calculating retirement plan contributions upon an employee's return from military leave. Even more importantly, the fact sheet emphasizes that these requirements must be applied to employees on an individual basis and that there likely is no one across-the-board approach that will adequately address each returning service member's individual circumstances. Because USERRA's scheme for retirement plan contributions is complex, full of gray areas, and requires an individualized approach, practitioners will likely want to consult with legal counsel to determine compliance risks for all but the most straightforward situations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions