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Protect the Rights of Reservists

As we have seen on the news, military reservists are being called to action. It is possible one or more of your employees or customers may be among the men and women called to action.

Most employers are generally aware that employees called to active duty are entitled to resume their job when they return. Some of these employment rights will be discussed briefly below. What may come as a surprise to some business people, however, is that your customers, renters or borrowers that are also reservists may qualify for housing and financial benefits under the Soldiers and Sailors Civil Relief Act of 1940.

1. Housing & Financial Benefits

Rental Rights. If you rent residential, agricultural or business property to a reservists, you need to know that when called to active duty, your tenant can terminate any lease with written notice. If the tenant has paid a security deposit or prepaid rent in advance, those payments are refundable in most cases. You cannot evict a reservist from a residence with rent of $1,200 a month or less without a court order. That court order can be stayed for three months during your tenant's active service.

Credit Purchases. If you sold a car, furniture or other personal property on credit to a reservist called to active duty, you cannot repossess the item sold or terminate the installment contract without a court order. Once again, that order can be stayed for three months. Also, if your customer can show that the inability to pay was "materially affected" by deployment, you may lose the court action.

Interest Rates. If you have loaned money to a person called to active duty for a mortgage, the interest rate drops to 6% while the borrower is on active duty. The borrower must contact you and notify you of the deployment, however, in order to qualify for this benefit.

Legal Proceedings. If you are involved in a court action and an opposing party is called to active duty, the court action can be stayed by the opposing party showing his or her ability to prosecute or defend the case is "materially affected" by the party's deployment. If a case is filed against a deployed reservist, there are protections against a default judgment that will apply.

Credit Reporting. If you report to credit bureaus, you need to be aware there is a provision that forbids adverse credit reports for reservists during the time of deployment.

Insurance Coverage. Life and professional disability insurance coverage for reservists on active duty are protected, even if the premiums are not paid on schedule.

College Tuition. If you serve on the board of a college or university, you may be interested to know that the Department of Education has asked institutions to refund tuition and other charges to students called to active duty.

Educational Loans. After the September 11th terrorist attacks, the Department of Education granted loan relief to military personnel called to active duty. This includes deferments and grace periods during and after the duty.

2. Employment Rights

The employment rights of reservists are set out in the Uniform Services Employment and Redeployment Rights Act. These rights include:

Reemployment Rights. Reservist are entitled to resume their temporary or permanent jobs, upon their return from service. They must be reinstated to the same level of privilege and status they would have enjoyed had they never been called to active duty.

Employment Benefits. You do not need to continue your contribution to the pension plan of an employee called to active duty but you may elect to do so. You do not need to continue health insurance benefits beyond 30 days. COBRA like coverage, however, must be offered to cover any gaps in health insurance. Full health insurance must be reinstated upon the day the employee returns without a waiting period. Vacation and sick days do not need to accrue.

FMLA. If you are subject to the Family Medical Leave Act (50+ employees), employees that have worked for you for at least one year and at least 1,250 hours in the previous 12 months may be eligible for up to 12 weeks of unpaid leave. The Department of Labor interprets the Uniform Services and Employment and Reemployment Rights act to require that the hours reservists spend in service must be counted towards the 1,250 hour requirement.

Qualified Benefits Plans. If you sponsor a qualified plan, you must count reservists' military service as time of employment for purposes of eligibility, vesting and benefit accruals. Military leave must not be considered a break in service.

Salary Deferrals & Matching Contributions. When military employees return to work, they may catch up on their 401(k) contributions by contributing the amount they could have contributed during their military service. They have 5 years or three times their period of service, whichever is shorter, to make these additional contributions. Employers are required to make matching contributions.

Loans. You may, but are not required to, suspend employees' obligation to repay loans from your retirement plan while the employees are on active duty. The employees may continue to repay their loans. In addition, as discussed above, military personnel cannot be charged more than 6% interest while on active duty.

Men and women serving in our armed forces during this perilous time deserve our support. It is important that you be aware of their rights so that you do not unknowingly violate the rights of an employee, customer or borrower serving our country.

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