Cafeteria Plan
Issues for Employees on Military Leave
Johnston Barton Proctor
& Powell LLP
Birmingham, AL
As a general rule, an employee on a military leave of absence must be treated the same as employees on a leave of absence for nonmilitary service reasons. Any rights afforded by an employer to employees on a leave of absence must also be afforded to employees on military leave, whether or not such rights are required under USERRA. If rights vary based on the type of leave, the employer should consider applying the most favorable leave treatment to those on military leave.
Cafeteria plans should be examined for treatment of employees on a leave of absence with respect to rights to benefits as well as the circumstances under which benefit elections may be changed. The most common cafeteria plan issue may simply be whether military leave constitutes a change in status for which the cafeteria plan permits an election change during the plan year. Under applicable regulations, an unpaid leave of absence is a permitted change in status event, while a paid leave is not. Keep in mind that the cafeteria plan must state the change in status events it recognizes – just because a change is permitted by law does not mean it is permitted by the plan. Additionally, medical flexible spending accounts appear to be health plans under USERRA and, as such, continuation coverage under USERRA would apply.