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Ignoring your military pay policy may be costly

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in Employment Law,FMLA Guidelines,HR Management,Human Resources

If, like many employers, you honor military service with special pay arrangements for those who serve their country, take note: If you don’t follow your own handbook, you may find a court ready to punish you with big damages.

The Uniformed Services Employment and Reemployment Rights Act (USERRA) does not require employers to pay soldiers during military absences. Nonetheless, many employers do provide some sort of compensation provision in their military leave policies.

That may have been fine back in the days when being in the armed forces reserves meant one training weekend per month and two weeks’ active duty in the summer. Today, however, many reservists serve for months, even years. A pay policy that does not have a limit may produce a huge liability for employers.

Recent case:
Kevin Koehler began working for Pepsi as a route salesman in Cincinnati beginning in 2000. After 9/11, he signed up for an eight-year enlistment in the Army Reserve. The Reserve assigned him to active-duty training for six months. When Koehler returned, Pepsi disciplined him for alleged attendance problems. Koehler claimed some of the absences in question were related to his military service.

Later, after Koehler threatened to publicize how poorly he believed Pepsi treated soldiers, the company agreed to meet with him to review the company’s military leave rules. That’s when Koehler first learned that Pepsi had a “Military Active Leave” policy that included a payment to “bridge the gap” between civilian and military pay, so that employees do “not lose money by going on military duty.”

At the meeting, which included Koehler’s military unit commander and Pepsi HR managers, Koehler learned that Pepsi was going to reverse any disciplinary actions attributable to his military absences. Plus, Pepsi told Koehler it would pay the difference between his military pay and his Pepsi wages. Koehler then withdrew a USERRA complaint he had filed with the U.S. Department of Labor. Pepsi deposited the money in Koehler’s bank account.

But two weeks later, Pepsi reneged on the deal—a representative told Koehler the company had changed its mind and that he should “let your attorney speak to our attorney.” Pepsi argued that its policy was just an internal guideline and did not apply to soldiers in the reserves, just to active-duty soldiers.

That was the wrong approach, as Pepsi soon found out.

Koehler sued, and a judge said Pepsi had willfully violated USERRA when it took back the money promised by the company policy. When a company implements a policy, even one not required by USERRA, it must follow that policy consistently. The court awarded Koehler double his wage entitlement under the policy—plus $50,000 in punitive damages. Pepsi appealed, but the 6th Circuit Court of Appeals upheld the decision. (Koehler v. PepsiAmericas, No. 0703093, 6th Cir., 2008)

Advice: Before making changes to a military benefits policy, contact your attorney.

Final note: In addition, remember that the FMLA now covers some family leave to care for injured soldiers, to prepare for deployment and other exigencies.

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