AD97-05 Issued 8-7-97 Compliance with the Federal Uniformed Services Employment and Reemployment Rights Act of 1994

Administrative Directive

 

This directive has been superseded by Employer Directive 17-02.

TO:

All County Superintendents of Schools
District Superintendents of Schools
Community College Districts and
Other Employing Agencies

FROM:

EXECUTIVE OFFICE

SUBJECT:

Administrative Directive 97-05
Compliance with the Federal Uniformed Services Employment and Reemployment Rights Act of 1994

PURPOSE

The purpose of this directive is to inform employers of the enactment of SB 1877 (Chapter 680, Statutes of 1996). This legislation amended Section 22807, added Chapter 14.5 to Part 13 of Division 1 of the California Education Code, and added Chapter 16 to Part 14 of Division 1 of the California Education Code, effective January 1, 1997.

SCOPE

This directive applies to all county superintendents of schools, school districts, community college districts, and other employing agencies that employ individuals in positions covered by the State Teachers’ Retirement System (STRS) Defined Benefit Plan or the STRS Cash Balance Plan.

DISCUSSION

Defined Benefit Plan

Chapter 680, Statutes of 1996, amended subdivision (b) of Section 22807 of the Education Code to require that the crediting of service in the uniformed services be in compliance with the federal Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). This legislation also added Chapter 14.5 to Part 13 of Division 1 of the Education Code to specify the rights of a member of the STRS Defined Benefit (DB) Plan to retirement benefits when the member returns to employment with the same employer by which the member was employed immediately prior to his or her eligible period of service in the uniformed services that began on or after October 13, 1994.

Section 22850 provides that “service in the uniformed services” means the performance of duty on a voluntary or involuntary basis in a uniformed service and includes active duty, active duty for training, inactive duty training, and a period for which the member is absent from employment for the purpose of determining fitness to perform any duty. This section further provides that “uniformed services” means the Armed Forces of the United States of America, the Army National Guard, and the Air National Guard when engaged in active duty for training, inactive duty training, or full-time National Guard duty, the commissioned corps of the Public Health Service, and any other category of persons designated by the President in time of war or emergency.

Under the provisions of Section 22851, the member must return to employment with the employer that had employed the member immediately prior to his or her eligible period of service in the uniformed services. If the member was absent from a position of employment covered by the DB Plan to perform service in the uniformed services for a period in excess of five years, he or she is not entitled to credit for plan vesting or service credit unless the period of uniformed service exceeded five years for one of the reasons specified in Section 22854.

Upon reemployment pursuant to the provisions of Chapter 14.5, the member must be treated as if there had been no break in service during the eligible period of uniformed service, and each eligible period of service in the uniformed service is considered service with the employer toward vesting in the STRS DB Plan. The member is entitled to receive service credit for an eligible period of uniformed service by contributing to the DB Plan the amounts that would have been contributed under Section 22901 for creditable compensation that would have been earned if the member had continued to perform creditable service in the position or positions in which he or she was employed immediately prior to the eligible period of uniformed service. The member is not entitled to any benefits in excess of that which the member would otherwise have been entitled if he or she remained continuously employed to perform creditable service.

Pursuant to the provisions of subdivision (e) of Section 22850, no benefit will accrue during the period of service in the uniformed services if the member does not return to employment with the same employer by which he or she was employed immediately prior to the eligible period of service in the uniformed service. In addition, Section 22855 specifies that the member who returns to employment after a period of uniformed service has no right to benefits provided under Chapter 14.5 if the member was discharged from the uniformed services under other than honorable conditions.

The employer is required to notify STRS of the reemployment of a member following an eligible period of service in the uniformed service. The employer must submit the information required by the Teachers’ Retirement Board on the form provided by STRS. If the member chooses to pay the member contributions for the eligible period of uniformed service, the employer must calculate the amount of member and employer contributions required for the eligible period of uniformed service and remit the required employer contributions within 60 working days after the date STRS is notified of the member’s reemployment.

The member may defer the payment of member contributions for the eligible period of uniformed service for a period of up to three times the member’s eligible period of uniformed service, but not to exceed five years from the date of reemployment. If the member does not complete payment of the required member contributions within that period, the member will not receive service credit for the period of uniformed service. In the event the member fails to complete Administrative Directive 97-05 payment of the required member contributions, the employer contributions will be returned to the employer pursuant to the provisions of Section 23008.

Cash Balance Plan

Chapter 680, Statutes of 1996, added Chapter 16 (sections 28000 through 28006) to Part 14 of Division 1 of the Education Code to require that the crediting of service in the uniformed services be in compliance with the federal Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). These sections specify the rights of a participant in the STRS Cash Balance (CB) Plan to retirement benefits when the participant returns to employment with the same employer by which the participant was employed immediately prior to his or her eligible period of service in the uniformed services.

Section 28000 © provides that “service in the uniformed services” means the performance of duty on a voluntary or involuntary basis in a uniformed service and includes active duty, active duty for training, inactive duty training, and a period for which the participant is absent from employment for the purpose of determining fitness to perform any duty. This section further provides that “uniformed services” means the Armed Forces of the United States of America, the Army National Guard, and the Air National Guard when engaged in active duty for training, inactive duty training, or full-time National Guard duty, the commissioned corps of the Public Health Service, and any other category of persons designated by the President in time of war or emergency.

Under the provisions of Section 28001, the participant must return to employment with the employer that had employed the participant immediately prior to his or her eligible period of service in the uniformed services. If the participant was absent from a position of employment covered by the CB Plan to perform service in the uniformed services for a period in excess of five years, he or she is not entitled to contribute for the period of uniformed service unless the period of uniformed service exceeded five years for one of the reasons specified in Section 28004.

Upon reemployment pursuant to the provisions of Chapter 16, the participant must be treated as if there had been no break in service during the eligible period of uniformed service. The participant has the right to contribute to the CB Plan the amounts that would have been contributed under Section 26501 for salary that would have been earned if the participant had continued to perform service during the period of uniformed service. If the participant elects to contribute to the plan for the eligible period of uniformed service, the employer must pay the contributions required under the provisions of Sections 26502 and 26503. The participant is not entitled to any benefits in excess of that which the participant would otherwise have been entitled if he or she remained continuously employed to perform creditable service.

Pursuant to the provisions of subdivision (e) of Section 28000, no benefit will accrue during the period of service in the uniformed services if the participant does not return to employment with the same employer by which he or she was employed immediately prior to the eligible period of service in the uniformed service. In addition, Section 28005 specifies that the participant who returns to employment after a period of uniformed service has no right to benefits provided under Chapter 16 if the participant was discharged from the uniformed services under other than honorable conditions.

The employer is required to notify STRS of the reemployment of a participant following an eligible period of service in the uniformed service. The employer must provide the information required by the Teachers’ Retirement Board on the form provided by STRS. If the participant chooses to pay the employee contributions for the eligible period of uniformed service, the employer must calculate the amount of employee and employer contributions required for the eligible period of uniformed service and remit the required employer contributions within 60 working days of the date the participant elects to make employee contributions for the period of uniformed service. If the participant fails to complete payment of the employee contributions for the eligible period of uniformed service, the employer contributions must remain with the plan pursuant to the provisions of Section 28002 (b).

The participant may defer the payment of employee contributions for the eligible period of uniformed service for a period of up to three times the participant’s eligible period of uniformed service, but not to exceed five years from the date of reemployment. If the participant does not pay the required employee contributions within that period, the participant may not contribute for the period of uniformed service at a later date.

Action

Defined Benefit Plan

An employer who reemploys a member of the STRS DB Plan following an eligible period of service in the uniformed services, must notify the member of his or her right to plan vesting for the period of service in the uniformed services. The employer must also inform the member that he or she has the right to receive service credit for the eligible period of uniformed service by paying the member contributions that would have been required if the member had remained continuously employed during the period of uniformed service. (Please refer to Exhibit A for a list of key provisions of Chapter 14.5.)

The employer must calculate the amount of member and employer contributions that would be required for the member to receive service credit for the eligible period of uniformed service. The contributions are to be based upon the creditable compensation that would have been earned by the member if he or she had been continuously employed in the position or positions in which he or she was employed immediately prior to the eligible period of service. In the event the member’s creditable compensation is not reasonably certain, the contributions are to be based on the member’s average compensation earnable during the 12-month period immediately preceding the eligible period of service in the uniformed services. (Please refer to Exhibit B for a sample calculation.)

The employer must complete a “Reemployment Notification” form (MR-664). (Please refer to Exhibit C for a copy of the form and instructions for completion.) If the member chooses to pay the member contributions, the employer must remit the full amount of required employer contributions within 60 working days of the date the reemployment notification is sent to STRS.

Upon receipt of the “Reemployment Notification,” STRS Cash Receipts will send an acknowledgment form (MR-665) to the employer verifying that the System has received the information relative to a member who has been reemployed after an eligible period in the uniformed services. (Please refer to Exhibit D for a copy of MR-665.)

Questions regarding application of this Administrative Directive to a member of the Defined Benefit Plan should be directed to your STRS Reporting Section Analyst.

Cash Balance Plan

An employer who reemploys a participant in the STRS CB Plan following an eligible period of service in the uniformed services, must inform the participant that he or she has the right to contribute for the eligible period of uniformed service by paying the employee contributions that would have been required if the participant had remained continuously employed during the period of uniformed service. (Please refer to Exhibit E for a list of the key provisions of Chapter 16.)

The employer must calculate the amount of employee and employer contributions that would be required for the participant to receive credit for the eligible period of uniformed service. The contributions are to be based upon the salary the participant would have received if he or she had been continuously employed in the position in which he or she was employed immediately prior to the eligible period of service. In the event the participant’s salary is not reasonably certain, the contributions are to be based on the participant’s average salary earned during the 12-month period immediately preceding the eligible period of service in the uniformed services. (Please refer to Exhibit F for a sample calculation.)

The employer must complete a “Reemployment Notification” form ( CB-583). (Please refer to Exhibit G for a copy of the form and instructions for completion.) If the participant chooses to pay the employee contributions, the employer must remit the full amount of required employer contributions within 60 days of the date the participant elected to pay employee contributions.

Upon receipt of the “Reemployment Notification,” STRS Cash Receipts will send an acknowledgment form (CB-583A) to the employer verifying that the System has received the information relative to a participant who has been reemployed after an eligible period in the uniformed services. (Please refer to Exhibit H for a copy of CB-583A.)

Questions regarding application of this Administrative Directive to a participant in the Cash Balance Plan should be directed to your STRS Cash Balance Plan Analyst.

Signed,

JAMES D. MOSMAN
Chief Executive Officer


For accessible versions of files on this page, contact ADACoordinator@CalSTRS.com.