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May 08, 2003
Policies Vary on Military Duty

While major combat in Iraq has ended, U.S. employers still are affected by the large numbers of their employees who have been called to active duty as National Guard members and Reservists. A new survey from Mercer Human Resource Consulting looks at the impact of these call-ups on employers, as well as employer practices regarding compensation and benefits for these members of the military.

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Mercer's web-based survey, conducted in late March and early April, includes responses from 201 employers across the country. The survey found considerable variation in military leave and pay policies, beyond what is mandated by the Uniformed Services Employment and Reemployment Rights Act (USERRA).

USERRA protects an employee's rights to continued benefits during a leave for military duty, to reemployment after the leave, and to full seniority and retirement plan credits or contributions upon reemployment. The law also protects individuals from discrimination in hiring, promotion, benefits, and retention on the basis of present and future membership in the uniformed services. It applies to virtually all employers in the private sector, as well as the federal government, state and local government entities, and church organizations. Employees are entitled to USERRA protection if they take leave to perform voluntary or involuntary duty in a "uniformed service."

Key findings of Mercer's survey include the following:

- The military call-ups have had virtually no effect on the executive ranks of the responding companies and minimal effect on management employees. The employee group most affected was professional/technical employees, followed by nonexempt clerical/technician and nonunion hourly employees.

- In light of the current situation in Iraq, more than one-third of the companies surveyed (37 percent) changed their pay practice for military leave by increasing pay provided under current military leave plans for those called to active duty. The majority of companies (62 percent) made no recent changes to their military pay practices.

- Most of the companies surveyed (68 percent) pay Reservists the difference between their civilian and military pay while on active duty status. However, 23 percent provide no pay to Reservists on active duty. A small minority (8 percent) provides full civilian pay in addition to any military pay. There is no "paid leave" requirement under U.S.ERRA – the law does not require employers to continue regular pay during an employee's period of uniformed service.

- Of the companies surveyed, one-fifth (21 percent) provide eight weeks or less of pay for military leave. At the other extreme, 46 percent provide pay for a year or more, including 27 percent who provide military leave pay for an unlimited amount of time.

- Employers take many different approaches to providing medical benefits coverage for Reservists and their families. The most popular approach, used by 40 percent of the respondents, is to continue the employer-sponsored coverage at existing levels/contributions indefinitely. About one-quarter (27 percent) allow Reservists to maintain existing coverage through COBRA, and 5 percent terminate employer coverage upon the Reservist's eligibility for TRICARE, the health benefits program provided by the U.S. government to military members and their families. The remainder (27 percent) take other approaches, such as allowing the continuation of employer-sponsored coverage for a limited amount of time (e.g., 180 days) before switching to COBRA or TRICARE coverage.

- Military call-ups have created many staffing vacancies and shortages among U.S. employers. Most (69 percent) have responded by increasing overtime for remaining workers or redistributing the workloads of absent employees, while others (21 percent) are hiring temporary workers to fill the vacancies. The remainder (10 percent) say they are using a combination of these approaches.

- Employers are providing a range of special support services to families and work groups affected by the military call-ups. Common actions include information hotlines (an action taken by 19 percent of the responding companies), loans to Reservists' families (11 percent), and transportation, education, and assistance (6 percent). Other actions include support groups, care packages, and special efforts by company-sponsored employee assistance programs (EAPs) to serve the needs of military families.

"As our survey indicates, many employers choose to provide pay and benefits above and beyond the U.S.ERRA-mandated protection," says Steve Gross, one of Mercer's thought leaders on employee pay issues. "While costs vary widely based on the number of reservists called up in any given organization, it is likely that the goodwill generated by these actions among employees and the community at large provides significant returns to the organization. This can include both hard measures, such as the ability to attract and retain employees, as well as effects that are more difficult to quantify, such as customer retention and shareholder value."

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