Soldiers and Sailors Civil Relief Act and Uniformed Services Employment and Re-employment Rights Act
Unfortunately, world events continue to keep our military personnel on active duty, and many times overseas. Over the last few weeks, we have noticed an increase in questions from employers and employees regarding the rights, duties and obligations set forth in the Soldiers and Sailors Civil Relief Act and the Uniformed Services Employment and Re-employment Rights Act. Hopefully the information below answers some of your questions.
Those members of the military on active duty are afforded special protections under the Soldiers and Sailors Civil Relief Act of 1940. The purpose of the Act is to protect the national interests and those of service members so that they can fight wars without worrying about problems that may arise at home, and to help service members with financial issues since they are not well paid. The Uniformed Services Employment and Re-employment Rights Act protects the employment rights of members of the armed forces who have been called to active duty. I want you to be aware of the protections afforded to active members of the military so as to avoid the penalties imposed by these Acts when violated.
LEGAL ACTIONS
The heart of the Soldiers and Sailors Act is the stay provision. This provides that a civil action may be stayed, or stopped, if the ability of the plaintiff to prosecute or the defendant to defend is materially affected by reason of the military service. The stay may be requested by the military personnel or someone acting on their behalf, or by the court on its own motion. Whether to grant a request for a stay is within the sound discretion of the judge, but in order to be granted there must be a finding of a "material affect" on the ability to prosecute or defend the action. Any such stay can remain in place for up to the entire period of military service and three months thereafter, or whatever terms may be just under the circumstances.
While the stay is in place, if an action for compliance with the terms of a contract is pending, no fine or penalty can accrue during the period of such stay. For example, if a lawsuit is filed for non-payment on a promissory note, default interest cannot accrue during the period of the stay. Additionally, a court can stay execution of any judgment or garnishment, and any other execution against the debtor to collect a judgment. Further, the Soldiers and Sailors Act does not allow a period of active military service to be included in computing any statute of limitations.
One feature of the Soldiers and Sailors Act that many of you are familiar with relates to default judgments. The Act requires that before a default judgment can be entered, an Affidavit must be filed which sets forth facts showing that the defendant is not in military service. Many of you have seen or signed such affidavits. If such an affidavit is not filed, then no default judgment can be entered without prior order of the court. Further, if the defendant is in active military service, before default judgment can be entered, the court must appoint an attorney to represent the defendant and protect his interest.
If a judgment is rendered against a person in active military service, or within 30 days thereafter, and it appears that the defendant was prejudiced by reason of the military service in making a defense to the claim, then the judgment may be re-opened and the defendant allowed to present a defense. However, application to re-open the judgment must be made within 90 days after termination of active service and it must appear that the defendant has a meritorious or legal defense.
FINANCIAL TRANSACTIONS
One of the major problems faced by persons who have been placed on active military duty is that their military pay does not match what they made when working at their regular jobs. If a service member can show a material affect, then they can cap the interest rate on credit cards, installment loans and mortgages at 6 percent. A material affect can be shown simply by showing that their monthly take home pay from the military is less than in their civilian job. The decrease in interest rate is not automatic. The request for the decreased interest rate must be made in writing and must include proof of the mobilization and placement on active duty status, and documentation of reduced income. Look for a copy of the person's military orders and a "leave and earnings statement." In some instances orders are classified, but they should be able to produce orders in some form without the classified information that will allow you to verify their active duty status.
To further protect the financial status of active members of the military, the Soldiers and Sailors Act provides that there can be no repossessions for failure to make payments under an installment contract during the period of such military service, unless a court order is obtained first. The court then has discretion to order payments or partial payments, or to stay the proceedings as previously discussed. Generally speaking, if the collateral is decreasing in value (such as a vehicle) and no payments are being made, a court order can be obtained to allow repossession. With respect to mortgages and foreclosure proceedings, the courts have the same powers to stay actions, or they may "make such other disposition of the case as may be equitable to conserve the interests of all parties." A foreclosure is not valid, even if obtained pursuant to a cognovit provision, unless a court order has previously been obtained and a return thereto made and approved by the Court. It is important to note that a court ha the power to stay payments on an obligation for the entire period of military service, and longer under certain circumstances.
Invoking the stay provided by the Soldiers and Sailors Act cannot be used against a person in military service in future financial transactions as the basis for denying or revoking credit, changing credit terms, refusal to grant future credit, refusal to insure that person and adverse reporting to any credit bureau.
Finally, it is important to realize that secondary obligors, such as guarantors and sureties, can invoke the rights of the Act if they too can show a "material affect."
LANDLORD-TENANT
The Soldiers and Sailors Act allows the stay of evictions of members of the active military service during the period of service and for three months thereafter, except upon leave of court. This provision only applies to a rental unit used as a dwelling by the wife, children or other dependents of a person in military service, and where the rent does not exceed $1,200.00 per month. Once again, application can be made to the court for the stay, or the court can put the stay in place at its discretion. The Soldiers and Sailors Act also allows a lease for a dwelling, professional, business, agricultural or similar purpose to be terminated by notice in writing delivered to the lessor, or the lesson's agent at any time following the date of the beginning of the active military service.
DOMESTIC RELATIONS
As stated previously, the pay of active military members is usually less than their regular rate of pay. While the Soldiers and Sailors Relief Act does not specifically provide that child support and alimony obligations must be changed to reflect these changes in income, this changed income is routinely used to ask for temporary reductions in support obligations for those on active military duty.
EMPLOYMENT RIGHTS
The Uniformed Services Employment and Re-employment Rights Act (USERRA) applies to all employers in the public and private sector. It requires that uniformed services members must be re-employed in the same or similar jobs after a period of active duty. This includes being restored to the same seniority status, pay and benefits as if the employee had not been absent for military service. In certain circumstances, this obligates the employer to promote or retrain an employee who is returning from active duty. Seniority status must be calculated using the time of military service as service to the company. Most importantly, just because another employee is occupying the job, the service member left does not mean that the returning employee's position is not available.
An employer cannot require the use of vacation time or leave time for military service. However, an employee can choose to do so to get the additional pay while they are on active duty. An employer is not required to pay an employee during active duty, but can voluntarily do so, or can voluntarily pay the difference between their regular pay and the pay the service member receives while on active duty.
BENEFITS
An employer is required to allow a service member to continue health care benefits that would terminate due to absence for military service. Coverage can be continued for up to 18 months under a COBRA like plan for military service. When the employee is reinstated, coverage must be reinstated without a waiting period or pre-existing condition exclusion.
If your company has a 401K plan or pension plans, special rules also apply. USERRA allows an absent employee to make up contributions that they would have made to a 401K plan and requires the employer to make any matching contributions that would have otherwise been made. Additionally, the employer must continue to make any pension plan contributions that would have been made i the employee had not been absent for military service.
CONCLUSION
The provisions of these Acts are very technical and the rules very specific. This letter is intended only to give a brief outline and make you aware of things to watch out for. Please feel free to contact our office if you have any questions regarding how to handle the affairs of those on active military duty, and your obligations with respect to those persons.