Articles :: Legal Protection of Military Reservists

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Legal Protection of Military Reservists

BY MAJ DAVID R. LAWSON & LTC BARRY BERNSTEIN
South Carolina Lawyer
Published November 2002

Since September 11, 2001, America has been on a wartime posture. At first blush our personal lives have changed little. Professionally it is necessary to revisit the laws protecting military members. Fifty years ago such provisions were common knowledge among practitioners because of the vast number of veterans and reservists following World War II. The same basic protections are in place today, and attorneys should be aware of the laws available to service members and legal burdens placed on others.

There is a wealth of statutes pertaining to military members and the law. Previously only those practicing near military bases were cognizant of these unusual protections. Since the Cold War's end and military downsizing, reservists and guardsmen fill roles previously left to the active components. Our military response today now touches every community in America . No longer a follow-on or augmentation force, reservists and guardsmen are integrated in operations and expect to be deployed at the initiation of hostilities. This provides no early warning and overseas deployment in a matter of days.

Reserve military forces in the United States include the National Guard (Army and Air) organizations of each state, and the Reserve of each military branch. Entire units or individuals may be mobilized. Each county in South Carolina has a National Guard unit while some also have reserve centers. All military branches maintain bases in the state. Units with little history of activation are now performing non-standard missions. In a nutshell, today's American military and current operations ensure that people around South Carolina will be activated.

Mandates provide special protection for the military. These place burdens on employers, creditors and the courts. The ability to place these on the public is constitutional under Article I, § 8 (power to raise and support military forces). The majority of case law centers on the Soldier's and Sailor's Civil Relief Act (SSCRA) of 1940 and the Uniformed Services Employment and Reemployment Act (USER-RA) of 1994. 50 U.S.C. 501-592 and 38 U.S.C 4301-4333 respectively . The U.S. Supreme Court determined such laws should "be liberally construed to protect those who have been obliged to drop their own affairs to take up the burdens of the nation." Bonne v. Lightner, 319 U.S. 561,575 (1943). See also LeMaistre v. Leffers, 333 U.S. 1, 6 (1948). "[T]he act must be read with an eye friendly to those who dropped their affairs to answer their country's call."

Soldier's and Sailor's Civil Relief Act (SSCRA) Continuances

A member shouldn't have to defend oneself while on military duty away from the locale of the court. This federal protection is not absolute since it is an affirmative defense and must withstand a court analysis. There is a greater protection under state law for National Guardsmen where no analysis or duty is required. State law expands the protection from the soldier to the client's attorney if the attorney is activated. State law provides:

"It shall be the duty of any judge of the courts of this state to continue any case in the court on or without motion when any party thereto or his leading attorney is absent from court when the case is reached by reason of his attendance on active duty as a member of the National Guard."
- S.C. Code of Laws § 25-1-2260. (emphasis added)

In some default cases federal law requires a statement verifying whether the defendant is in the military service. 50 U.S.C. § 520 . Clearly, the attorney should know the military status of a defendant in any action.

Creditor-debtor issues

The SSCRA allows the interest rate on loans to be reduced to six percent during activation provided the contract was executed before mobilization. 50 U.S.C. § 526. A high-risk credit lender could lose 15 percent or more from the contract. Most self-financing businesses, such as used car dealerships, borrow at a higher rate than they can charge under the SSCRA. Although the creditor can challenge this, it is the creditor's burden to prove no material effect on the debtor's ability to pay. Even a slight effect sustains the reduction. To complicate matters, the interest not only applies to first-party debtors, but guarantors, joint-obligees and third parties with liability.

Previously, some interpreted this to consumer transactions alone and challenged whether a private cause of action existed. A Federal District Court held the SSCRA interest provisions applied on a business loan where the soldier was a guarantor. Cathey v. First Republic Bank et al, Civil action No. CV00-2001-M, U.S. District Court (W.D. La. 2001). The soldier was a guarantor for a business loan of $835,000 at 11.5 percent interest. The creditor refused the reduction, the soldier defaulted, the creditor foreclosed on two convenience stores and $4.7 million in damages were alleged. The court granted partial judgment holding the SSCRA applied to any loan with the member as a guarantor. The parties later settled for an undisclosed sum. Clearly, creditors denying the interest rate deduction are subject to severe damages. Unique, but unsuccessful attempts have been made to circumvent this provision. As a practical matter the creditor must defend an expensive federal action, face adverse publicity and be subjected to damages.

Landlord/tenant issues

A military member leasing property for residential, professional, business or agricultural purposes may terminate a lease executed prior to being into active service. The person ordered to active service must provide written notification of termination, and the landlord must return unearned rent paid in advance and not refuse to refund the deposit except to pay for damages and repairs. 50 U.S.C. §§ 530-536. A person ordered to active duty or his dependent is protected from residential eviction by the SSCRA. 50 U.S.C. § 530. If the court finds the military duties have materially effected the service member's ability to pay, the judge may order a stay or postponement of the eviction proceeding for three months.

Other provisions

The 1991 Amendment to the SSCRA provides protection to health care professionals and others with liability (malpractice) coverage in force prior to activation. 50 U.S.C § 592. This provides for the suspension of policies while on active duty, refund of premiums for this period and reinstatement upon completion of service. Basically, it creates a stay on the policy and extends coverage. This is logical since court actions may be stayed during the deployment under other provisions of the Act.

Except for the IRS, the statute of limitation is tolled while the reservist is serving with the active military forces. 50 U.S.C. § 527. This applies to both civil and administrative proceedings. It is noteworthy that this applies regardless of whether the service member is plaintiff or defendant, potentially increasing the member's liability.

Uniformed Services Employment and Reemployment Act (USERRA)

USERRA increased the employment protection of non-career and reserve military members considerably. 38 U.S.C. 4301-4333. This was a response to problems found in the Veterans Reemployment Rights Act during Desert Storm. USERRA clarifies, modernizes and strengthens the prior Act, minimizing obstacles for returning to prior employment and burdens employers. There is a provision for "undue hardship" exceptions, but this is a high burden with narrow application. Provided the character of service is honorable, employers bear the entire burden. USERRA also addresses health plans and employee pension plans. USERRA applies to virtually all employers with no exemption for small businesses, and may even include temporary jobs if a "reasonable expectation that employment will continue indefinitely or for a significant period of time." Employment law specialists and general counsel should review USERRA thoroughly.

Employers cannot discriminate in hiring, employment, reemployment, retention, promotion or any employment benefit because of military service. These protections extend to employees who are currently members of the reserves as well as former members. Peterson v.Department of Interior, 71 M.S.P.R. 227 (1996) Employers cannot require an employee to use vacation time to perform military duty. Graham v. Hall-McMillen Company, Inc., 925 F. Supp. 437 (N.D. Miss. 1996). South Carolina provides a criminal sanction for pecuniary injury on account of membership in the National Guard.

"A person who, either by himself or with another, (a) wilfully deprives a member of the National Guard of South Carolina of his employment, (b) prevents such member from being employed, (c) obstructs or annoys a member or his employer in his trade, business or employment because he is such a member or (d) dissuades or attempts to dissuade any person from enlisting in such National Guard by threat of injury to him in his employment, trade or business shall be guilty of a misdemeanor and, on conviction thereof, shall be fined in a sum not exceeding one hundred dollars or imprisoned in the county jail not more than thirty days."
- S.C. Code of Laws § 25-1-2190. (emphasis added)

Employers should also be made aware of this provision before attempting creative interpretations of USERRA.

Notice and reinstatement

A reservist activated should give employers notice. A narrow exception exists where "military necessity" precludes notice or it is unreasonable under the circumstances. Therefore, minimal or no notice to the employer is possible. USERRA protects an employee for a cumulative total of five years. To apply, an employee must report back to work and timely apply for reemployment. When the employee has served in excess of 30 days, the employer may demand proof of honorable service. 38 U.S.C. § 4304. The proffered re-employment position must be of the same status as the previous position. USERRA also addresses seniority issues in detail.

Health insurance, pension plans and benefits

For pension plans, an employee is protected for vesting and contribution. 38 U.S.C. § 4318. See IRS Revenue Procedure 96-49. If the pension plan does not involve employee contribution, the employer must credit the employee as if he never left. If requiring employee contributions, provisions provide time to make contributions. If a pension depends on a variable element (commissions/credits) earned by the employee, the employer may look to the 12 months prior to mobilization to determine benefits.

Employee health insurance must be reinstated immediately upon return. The employer cannot require a waiting period or impose exclusions except for a service-connected injury. Upon request, the employer must provide health insurance coverage for the employee and family members for the first 30 days of military service at the normal contribution. On request, the employer must provide coverage up to 180 days or the end of military service, but may pass along that cost to the employee. 38 U.S.C. § 4317.

If an employee returns to the job after a long military absence and requires refresher training or training for new technology, the employer must make a reasonable effort to requalify the employee. "Reasonable effort" depends on factors found in the statute. If unable to accommodate the employee, the employer must find a position for the employee that is approximate in previous seniority, status and pay. For the first year upon return, the employer may bear the burden of showing that discharge was for cause.

Enforcement

The Department of Labor is charged with formal investigation of USERRA violations. If the investigation establishes a violation of USERRA occurred, the case is referred to the Department of Justice. The DOJ may provide counsel for representation at no cost to the employee. Employees may retain private counsel and recover attorney's fees and litigation costs under appropriate circumstances. 5 C.F.R. § 1201.202 and Graham v. Hall-McMillen Company, 925 F. Supp. 437 (N.D. Miss. 1996).

Summary

The events of September 11, 2001 will cause many of us to brush up on laws pertaining to the military. The nature of the current force structure and operations guarantees all areas of this state will be impacted in our response to those events. Operations Enduring Freedom and Noble Eagle have required activating reservists and guardsmen. There is no known end date, with clear notice by the President of a long-term commitment. Most communities, courts, creditors and employers will feel this strain. The SSCRA and USERRA are the most common Acts litigated in the protections for the military. Many of these protections provided the military are uncompensated mandates on the public. When an issue arises for a reservist or guardsman, attorneys should review these protections. Attorneys should be familiar with the nuances of the law as it pertains to reservists, guardsmen and their dependents.

Lieutenant Colonel Barry Bernstein is counsel for the South Carolina Military Department in Columbia . Major David Lawson is in private practice in Charleston. Both are judge advocates in the Army National Guard and members of the Military Law Section of the South Carolina Bar.

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