Military leave pitfalls.

As the ongoing war on terror approaches its third anniversary, the number of California employees who enlist in military service or are called to active duty from the reserves continues to grow on a weekly basis. Additionally, many service people who have been on tours of duty in the Middle East have either had their tours extended or have been quickly redeployed. In light of these continuing developments, it is important for California businesses to familiarize (or in some cases re-acquaint) themselves with the statutory obligations placed on employers with respect to workers taking, returning from or on temporary military leave.

California employers are subject to two different military leave statutes, the federal Uniformed Service Employment and Reemployment Rights Act (also known as "USERRA") and California Military and Veterans code section 394 et seq., which generally tracks the provisions of the USERRA. Both statutes provide employees who give proper advance notice with the right to take a temporary leave for military service.

Employees are allowed to take a cumulative total of up to live years of unpaid leave and still retain a right to reemployment. They must be permitted to continue coverage under employee health plans, at their own expense, for the first eighteen months of a military leave and to retain their full pension rights. Employees are also protected against discrimination for membership or service in the armed services, including protection against disqualification from a position because of such membership or service.

Employers are not under any obligation to pay employees for temporary military leave. However, there may be wage and hour considerations related to the timing and pay for employees who take their leave in the middle of a pay period. In an April 28, 1997 Opinion Letter, the California Division of Labor Standards Enforcement outlined circumstances under which an employee may lose his/her status as an "exempt" employee by going out on unpaid leave such as a temporary military leave. In order to qualify for certain exemptions under California (and federal) law, the employee must meet minimum compensation requirements.

An exemption issue arises, however, when an employee goes out on an unpaid leave that begins part-way through a week or lasts for a period less than a week. In such a situation, the portion of the pay the employee receives may not meet the threshold required for the exemption and the employee may lose his/her exempt status. Moreover, if a company fails to pay the full weeks salary, this could be construed as an indicator that the employee is really non-exempt.

The analysis is different for whole-week absences. An employer has no duty to pay compensation for any week in which an employee performs no work. Such periods of time are not taken into consideration when determining the salary basis for classification of an employee as exempt. If an employer chooses not to pay an exempt employee for a week-long military have absence, this is not a "deduction" from wages because the employee has not earned any wages that week.

In short, while it may not be illegal not to pay employees for week-long military leave absences, the best practice is to compensate for partial week leaves.

Gregory Wong is an associate in Greenberg Traurig LLP's Los Angeles office and a member of the firm's labor and employment practice.