He created a growth strategy with the help of his mentor, and that small company grew into Enerco Group Inc., a global manufacturer with 100 employees.
Balancing optimism with risk, and investing both his time and money during the past two decades, Haire personally guaranteed EGI’s growth.
He began with a risky plan to maintain the company’s distribution channels while opening a new one to reach the retail market. He guided the marketing and development efforts of a heater line to meet the needs of customers who worked out in the cold, such as dockworkers and outdoorsmen.
That portable heater line propelled the company into the retail market through a combination of product development and repackaging while also targeting both large and small retailers. Today EGI’s products are found in Wal-Mart, Home Depot, Tractor Supply and Lowe’s as well as at smaller, independent stores.
Haire drove product innovation and promoted outstanding customer service in order to make EGI successful in both the distribution and retail venues, but the company soon faced an obstacle.
Many customers were using the outdoor portable heaters inside, which left them at risk for carbon monoxide poisoning. To combat this, EGI developed the Buddy line of heaters, which featured an oxygen depletion shut-off to make them safe for indoor usage.
The company’s diversified customer base has kept the business growing, but it has also allowed Haire to keep operations based in Cleveland, despite pressure to move them overseas.
To continue growing in the future, Haire blends veteran employees with new blood to promote different perspectives and brainstorming new ideas. He also plans to continue addressing the needs and solving the problems of EGI’s customers.
These strategies are paying off, as EGI has grown by about 35 percent each of the past few years, and looks forward to many more successful years to come.
How to reach: Enerco Group Inc., (216) 916-3000 or www.enerco.com
He knew those were the things he needed to get the company back on track, so he chose to invest even more in them and found other areas in which to reduce costs.
“Getting the right people and making sure they have the right resources and environment is the primary way you orient for that growth,” Brewer says.
His strategy paid off, and the company ended 2005 with $56.4 million in revenue, a 49 percent increase over 2002. Smart Business spoke with Brewer about how he invested in his 125 employees to grow Adams Golf, a designer and distributor of premium golf clubs.
How do you prepare for growth?
It’s having the right people in the right places and allocating resources to those areas, because resources are never unlimited. Quality people are never as plentiful as you like, so you cherish every quality employee you can get.
Then you make decisions about how you’re going to allocate resources and what areas you’re going to focus on because you can’t focus on everything. If you do, you’ll be average at a lot of things, and if you chase every opportunity that runs at you, you might not catch any of them.
What do you look for in potential employees?
It’s hard to find good people because that’s such a key resource. It’s a challenge of any growing business, and it’s one of those classy problems that you like to have. We look for passion, integrity, drive, intelligence, a fit with the culture here.
We’re a relatively small business. Friends and friendships have developed, and you don’t want to interfere with that based on the quality of hires. We’ve had some people come through that were clearly bright people and excellent backgrounds, but they didn’t appear to fit with the culture. I wouldn’t support us hiring those individuals because the negative effects would outweigh what they could provide.
We’re better off to keep looking until we get that perfect fit. Getting the right people into the organization is probably the most important thing.
The only thing I know in my heart of hearts that I’ve done a good job at is attracting good people early on and retaining them during the bad years when the business was really struggling. We were able to keep and motivate some good people, so when we got our financial act back together, got our product line back together, those individuals were still here.
They were battling hard by then, and that allowed us to move forward.
How do you retain employees?
It’s about trust treating them well, open environments. In a time of crisis, everybody wants leadership and direction, but you also need to identify and trust the individuals. It was mutual. They knew how highly I felt for them and how much respect I had for them, and trust, even though none of our results were that good at the time.
We would talk openly about the difficulties that we faced and what the other opportunities were for them, both personally and professionally, and we agreed to stay and stick it out together.
How do you differentiate your products from those of the competition?
We play two basic product games in our business. We play leapfrog, which is where there is a clear technological trend in the industry, such as the size of driver heads, and we try to use our size as an advantage to be faster to the market in the next evolution just try to stay one step ahead of the competition.
The other area, which is more exciting and rewarding when you get it right, is delivering true innovation. Being the first to enter that category gives you a significant advantage.
We’ve identified a niche, innovated to deliver better product into that, moved aggressively into it, and we’ve committed fully.
How do you drive innovation?
We’re relatively aggressive. We will take some risks. We will push. We don’t want to take a lot of time and come out with a product that matches others. That isn’t the key to success. Each product we do has to have a clear reason why it exists in the world because the world doesn’t need another me-too product.
You have to make sure you put the resources in the right area. Product is a key area that we try to differentiate our business, and if you look at how we’ve spent our money, R&D is the primary area where we’re constantly funding.
How does investing in people and resources help you grow the business?
Happy consumers and market share, which then turn into top line and bottom line growth for the business. You can feel inside the organization when we’re getting stronger organizationally. You can tell when you’re on the right direction the quality of people, what they’re working on, their attitudes.
Sooner or later, that turns into product and tour count growth. That turns into e-mails coming in from people who are using your product, and from there to market share, and from there to financial metrics.
How to reach: Adams Golf, www.adamsgolf.com
Know where you want to go.
To start a company and grow it, you have to have a vision and you have to know where you’re trying to take the company. But the world has a way of not working out exactly the way you plan it, so you have to have that vision, that passion, that goal for what you’re trying to do, but I think you also have to let the real world intrude on that.
You have to learn from what you’re doing, from your successes and your mistakes. You have to have a vision, but you have to temper that vision with real data from the world.
Try to do the best you can by your customers, by your employees, by your investors, by your vendors the people that have a real vested interest in your franchise, the people that you have great relationships with. You do the best you can with each of those groups. If you do that well and conduct yourself as honestly and truthfully as you can, then you’re going to have a pretty good company.
Grow with a purpose.
You don’t want to ever grow for the sake of growth. You want to grow because you’re filling a market niche that exists. The best way to grow is because you’re answering or fulfilling a market void out there.
The first thing to look at is, are you really growing because there is something you’re doing better for the consumer than some other way he could get that good or service? If you are, that’s pretty healthy growth. If not, you have to scratch your head and ask why you’re trying to grow.
The second thing I think is equally important is you have to be able to manage that growth. There are all sorts of companies that had great ideas, that expanded too fast and couldn’t really manage the growth. When we grow, we look at two things. We look at new units, but we also look to get better and better performance out of our existing units so that we’re growing internally. You have to be able to manage that growth well and not just put up new units.
Managing growth is difficult because, by definition, you’re taking on more and more responsibility. Your people have to do more and more. You’re still looking outside to bring people into your organizations, so managing that process is not easy.
Success brings success. We’ve had all sorts of people come to us and want to join our company because they like what we’re doing and see what we’re doing in the markets. They say, ‘You do whatever it is better than my company, and I’d really love to be a part of the team.’
The better you did, the more people want to be a part of that process. I love getting e-mails from people saying, ‘I lived in Pensacola and I moved to Destin or Cincinnati or Fort Wayne, and I loved your theaters and I’m so happy to find you have a theater in the market I’m going to.’
Create a strong corporate culture.
We started from scratch. We started very small. We tried to grow internally as much as we can, but we’ve also tried to look around our industry at businesses that are similar in some way ways and try to attract the best people we can and bring them into the company.
We have to do a good job of training our people, helping them all step up to the next level but also looking around from time to time for people from the outside.
We try to recruit smart, aggressive, active people that really want to be a part of a great company. We provide them with terrific managers, with different seminars and management meetings during the course of the year, and then we have a group of senior managers that travel to all our theatres on a very regular basis.
We try to do as well as we can every day. We want to make this a great place to work. We want to make this a great place to go to the movies. We want to create the best environment that we can, so we try and create a really wonderful place to work.
Nobody has to come to work for us, or anybody else, every day, but that’s the difference between a really good company and a not so good company they keep, they get and they retain really good people.
What we try to do is attract the best people we can and create the best working environment we can so the best people want to stay here and don’t want to go somewhere else. This is a great place to work if you want to be the best. It’s a lousy to place to work if you don’t.
It starts with the way you treat them. We try to treat everyone here with respect, with understanding, with compassion you want a place where you feel good about coming to work every day. Beyond that, bonus programs, benefits programs, equity in the company, good working environment.
This is a great place to work if you want to be the best. It’s a lousy to place to work if you don’t.
How to reach: Rave Motion Pictures Inc., www.ravemotionpictures.com
That caught the attention of the Dallas Mavericks, which brought him into its game nine years ago with one purpose to lead change. And that he has done.
In his first year, he led the funding campaign and secured naming rights for American Airlines Center. Since his arrival, the franchise has grown to $117 million in annual revenue, according to Hoover’s Online, and increased its corporate sponsorships, ticket sales, television revenue and community activity.
On top of that, he and Mavericks owner Mark Cuban started HDNet, the nation’s first high-definition television network, of which he also serves as CEO. Ussery spoke with Smart Business about how to lead change and succeed in business.
On leading change: The most important thing to recognize when there is change is that it cannot be dictatorial because automatically, there’s going to be a lot of anxiety among staff. Change, by definition, brings anxiety because everyone wants to know, when the paradigm shifts, what does it mean for me?
Communication is critically important in letting people know, honestly, what the purpose of the change is, what the goals and objectives are, and how that person may or may not fit in, and then giving them the opportunity to show that they want to fit into the new paradigm. You really have to spend time talking to people, communicating with people, reassuring people, and for those that have a different agenda, getting them out before they create too much damage internally.
We’ve seen some of that, where people are not happy with change so they want to, in some ways, sabotage change, and that happens in different ways. It’s just being vigilant about knowing who your staff is and knowing people who are really trying to get after it and knowing those who aren’t happy about the change and are going to be disruptive.
On hiring and managing employees: Hire the best people that you can and give them as much room to run and do what they need to do. Multiple tasks require folks with multiple talents.
Instead of looking for people with an expertise in one area who can only operate in that area, you look for people who are extremely bright and agile, who may have his own expertise but have the ability to learn quickly and do other things you need. It’s more hiring people who are bright, that are passionate, who have the ability to go across zones if you need them to.
I don’t believe too much in micromanaging. It’s important to empower smart people so that they have a sense of accomplishment, of fulfillment, so we try very hard to let the people that are in this company run the company. We’re more of a forgiveness organization than a permission organization.
We’re not a company that sits around, has a lot of meetings, spends a lot of time betting whether or not this is or isn’t a good idea. If someone comes to the table with a good idea that we think is going to be impactful, we move pretty quickly. And if it fails, we can always ask for forgiveness, but we don’t want to stifle people’s creativity.
Bottom-line focus is fine, but at the end of the day, you want people who are fulfilled by their jobs because those people are going to do the best. When people aren’t being paid, when the 40 hours is up, are people still buzzing about what they’re doing? Are they still happy to be at work? Are they still trying to get their jobs finished, not because they’re going to be graded down or they’re going to get overtime, but because they’re enjoying what they’re doing and they’re excited?
It’s more than a bottom-line focus. It’s really enjoying having a sense of purpose and feeling as though you’re making a contribution to something larger than yourself that’s meaningful to people.
On balancing life and work: You can get so caught up in what it is you’re doing professionally that you forget about the other side. Something has usually happened that has jarred me and made me realize the importance of trying to have balance.
I try to stay cognizant of the fact that you’ve got to stay healthy, and not just physically but emotionally and psychologically, to be the best you can at work. I think I’m pretty good about telling guys to get away, to get out of the office, go take a long weekend, go do whatever to refresh yourself. Trying to remind them keeps me aware, as well.
When I was at Princeton, my first year there, myself and a couple guys pulled an all-nighter to prepare for an exam that was a badge of honor, right? But I didn’t do well on the exam. One of my roommates, who had a different methodology of studying, which was just to study consistently, was doing a lot better than me, and it dawned on me that this whole idea of cramming and going til you can go no more is not a good thing.
In the workplace, it’s the same thing you can work until you burn yourself out, but then you’re doing nobody any good.
On succeeding: The second you believe that there is some unalienable right to exist, it’s the second that the clock is ticking to your demise and ultimate downfall. Every day, one of the things we try to instill in people is a sense of urgency.
The second we start believing because we’re winning or because we’re good and it doesn’t matter the industry the second you start reading your own press and buying into it is the beginning of the end. You lose your competitive edge. You lose your ability to be flexible. You lose your ability to listen to your customers and what they’re saying.
It’s waking up every morning and being in an attack mode as opposed to a passive mode aggressively going after the things that you need to get done that day to be successful, and when you get into that kind of pattern, it makes it easier to multitask. It’s trying to be better today than you were yesterday.
If you can do that, if you can slice your life that thinly, then it helps keep you going. I don’t look out six, seven months and say, ‘I have to get this done.’ I say, ‘How good was I today? What can I do to get better tomorrow?’
No one stands at the base of Everest, starts climbing it and stares at the top all the way up. They’d never make it. You come up with an effective plan and focus on execution.
Keep your head down and focus on taking great steps because any one misstep can cost you your life. Focus on executing every day the best you can, and eventually, the air gets thinner and it gets cooler, and one day you’re going to take that next step and it’s not there, and you’ve made it to the top.
Advice for new CEOs: Start off the job by doing nothing but listening. Spend the first few weeks just listening the secretaries, the senior management, the middle management, your customers, all the constituents that are going to impact your life.
Just listen to what their concerns are, what their issues are, what their goals and objectives are. What are the issues? Are you having fun? Are we delivering the way you thought we would?
Then distill that information, and from there, start talking about planning for the future. You’d be surprise at some of the stuff you hear.
How to reach: Dallas Mavericks, www.dallasmavs.com
It needed to improve its effectiveness, profitability and efficiency. To do so, the company began a new continuous improvement program called Business Excellence, which focuses on reducing waste in both the company’s business and manufacturing processes.
During a weeklong Business Excellence “boot camp,” the team focused on lean manufacturing, problem-solving and statistical data analysis techniques. The program provided one common, structured method for improvement and generated a clear bias for action and results. It also gave all leaders clear, simultaneous communication of expectations to eliminate miscommunications.
The teams applied the knowledge they learned in a series of kaizen events on both the shop floor and in the front office, including Quick Changeover SMED, Value Stream Mapping, Lean Office and 5-S Workplace Organization. Following the activities, the teams were able to better identify root causes of waste and inefficiency and eliminate those sources.
Thomas Steel Strip did not want the Business Excellence Program to stop there, though. It has become an ongoing endeavor for the company, which has three full-time coaches to oversee and monitor the day-to-day progress. These coaches also work to continue driving the initiative forward, and the company has seen a great impact since implementing the program. It has cut the number of line stops it experiences by 50 percent and capacity on key bottleneck units in its nickel plating line has increased by 13 percent,both without investing in any capital costs.
One of the most significant impacts has been in Thomas Steel Strip’s work with customers. Before the Business Excellence program, it took the company approximately 30 days to respond to customer inquiries. After implementing the program, the company now responds in about three days.
When all of these improvements meshed, it created a $500,000 savings in the first year of the program, and nearly $900,000 in savings to date. Thomas Steel Strip looks toward the future to continue developing the Business Excellence program and improving its processes.
How to reach: Thomas Steel Strip, (330) 841-6222
Exposure to these international risks does not require a company to have an international location. Employees traveling abroad or simply sending faxes or other correspondence overseas can create an international exposure for a company.
Regardless of the degree of the exposure, a company may be uninsured or underinsured with a domestic insurance policy. Even the worldwide endorsement used by many U.S. insurers can leave gaps in your coverage.
Companies should thoroughly review their current insurance programs and make sure prospective carriers fully understand the nuances of the global market and provide a broad range of products and services to address the unique exposures of international business.
Four key areas where due diligence should be performed before going global include the following.
Does the insurance carrier understand the local market? This includes legal jurisdictions, economic climate and the language.
Various countries have unique nuances and insurance requirements that range from environmental impairment in Germany to natural catastrophe pools throughout Europe. The insurance carrier should also be able to keep you abreast of any major changes in the legal and economic climate.
The foreign landscape opens a box of exposures rarely considered.
Currency devaluation, political risk and tax liability are all issues. An insurance carrier should be able to offer a wide array of products to meet your needs as overseas expansion occurs. Ideally, a company should be able to grow with their insurance carrier from the early beginnings in international operations to full manufacturing and service operations based overseas.
A routine overseas business trip may not be as simple as it first appears. As an employer, you must consider workers’ compensation issues, automobile liability and property theft exposures. Purchasing these lines of coverage individually may be costly, but many insurance carriers can package these programs to ensure adequacy in coverage along several lines.
This simple package may later require local admitted insurance policies (those recognized and required by local countries) as your company grows. This requires an insurance carrier that understands the local insurance market and legal requirements imposed on business owners.
While it is important that your insurance partner provide a wide array of international insurance products, it is equally important that they support their products with an experienced global network of service providers.
Your carrier should provide local claims handling ability and medical assistance programs to help in the event of an injury or sickness overseas. Examples of incidents that might require global services include:
- A business traveler has a car accident and the doctor does not speak English
- A business traveler is robbed and needs help re-establishing identification
- A business traveler gets arrested and jailed for a seemingly minor infraction
In 2003, nearly 25 insurers went insolvent. In addition, many carriers left the international insurance arena, or decided to reduce their global services, which adversely affected the value of their product.
Carriers should have the financial stability and commitment to fulfill their obligations and be a long-term competitor in the international market. It is crucial that the carrier have the financial strength to make good on its promise to pay and be there in the hour of need. Common insurance carrier financial strength rating benchmarks are provided by A.M. Best, Standard & Poor’s and Moody’s.
John Sence has more than 10 years of experience in the insurance industry. Since joining Schiff, Kreidler-Shell, the Midwest’s leading independent insurance agency, he has developed key areas of expertise in international insurance and construction. For a review of your current insurance program, contact Sence at (513) 977-3198 or email@example.com.
American Jobs Creation Act
AJCA ushered in the largest business-tax reform since 1986. The tax act began as a phase-out of the export subsidy, but it eventually mushroomed into a major tax law benefiting most businesses and some individual taxpayers.
- Take advantage. Congress devoted a portion of AJCA to a new deduction for manufacturers. The term manufacturer has been broadly defined to cover more businesses than just traditional manufacturers, so the deduction is available to businesses engaged in activities such as construction, engineering, architectural services, computer software production and agricultural processing. The deduction applies to domestic production activity, but contains no export requirement.
Plan now to maximize your benefit from this new deduction. Determine whether your business qualifies, if there are ways to maximize your deduction and how to capture the necessary information from your accounting system.
- Keep an eye on deferred compensation. Another significant portion of this legislation involves compensation plans that are defined as nonqualified deferred compensation. These arrangements are a promise to pay executives and key employees sometime in the future for services they currently perform, and include phantom stock plans, certain stock appreciation rights and other programs in which income is delayed.
If a plan fails to meet the provisions and new requirements, it will result in loss of the tax deferral. The result is taxability on all amounts previously deferred, plus charged interest and a penalty tax of 20 percent.
Nonqualified compensation can still be an effective way to compensate employees. However, you need to determine whether your plans are covered by the new rules and then map out how to bring them into compliance by December 31, 2005.
- Expense when you can. Generally, equipment with a useful life of beyond the taxable year must be capitalized. AJCA extends the increased Section 179 expensing deduction amount and allows for faster depreciation on qualified leasehold improvements.
The Section 179 expensing election allows for a current deduction for assets that would otherwise be subject to normal depreciation rules. In 2005, the Section 179 deduction is $105,000, but for tax years beginning after 2007, this amount is scheduled to drop back to $25,000.
So it may be appropriate to schedule major capital asset purchases in the next couple of years, when the greatest tax benefit may be available. And if you have more than the maximum $105,000 limit in 2005, choose those assets for expensing that would have had the longest life under normal depreciation rules. If total asset acquisitions exceed $420,000, the expensing election begins to phase out.
- A choice for individual taxpayers. Congress couldn't resist the opportunity to further tweak individual itemized deductions. An election, similar to 2004, allows for a taxpayer to choose between deducting state and local income taxes, and state and local sales or use taxes. A review of major taxable purchases should take place to see if the sales or use tax paid in 2005 may benefit you. Also, a review of prior year purchases (2004) could result in an opportunity to amend that return.
Working Families Tax Relief Act
WFTRA extends a number of individual tax breaks, including the $1,00-per-child tax credit, the expanded 10 percent tax bracket and the increased alternative minimum tax (AMT) exemption amount. Increasing the 15 percent tax bracket range and standard deduction amount on jointly filed returns provides marriage penalty relief for a while longer.
Although such breaks may not make a significant dollar difference individually on a tax return, they will benefit millions of taxpayers across our nation. Moreover, WFTRA also extended some business credits.
James P. O'Rilley is a Certified Public Accountant and director of taxation at Doeren Mayhew, a regional accounting firm in Troy, Michigan. Doeren Mayhew provides a wide range of professional services to middle-market companies. Contact O'Rilley at firstname.lastname@example.org or (248) 244-3171.
The white collar exemptions are executive, administrative, professional, outside sales and computer employee. To be considered exempt, employees must meet certain minimum tests related to their primary job duties and be paid a salary not less than specified minimum amounts.
The DOL is attempting to bring the regulations up to date with modern business realities. The basic duties tests and the salary basis test have remained essentially unchanged for the last 50 years. The salary levels required for exemption were last updated in 1975.
To qualify for the executive, administrative or professional exemptions under the existing regulations, an employee must earn a minimum salary of $155 per week ($8,060 per year) for the executive and administrative exemptions, and $170 per week ($8,840 a year) for the professional exemption. Employees paid above these minimum levels must meet a long duties test to qualify for the exemption.
The current regulations also provide that employees paid more than $250 per week ($13,000 a year) are exempt if they meet a short duties test. The short tests contain fewer requirements and are less burdensome. Because nearly all salaried employees are paid more than $250 per week, the long duties test has become irrelevant.
Under the DOL proposal, the minimum salary level to qualify for exemption from the FLSA minimum wage and overtime requirements as an executive, administrative or professional employee will be increased to $425 per week ($22,100 a year). Employees who do not meet this minimum level will be non-exempt, regardless of their duties. In addition, the short and long duties tests for each white collar exemption will be replaced by a standard duties test.
The two white collar exemptions that affect the greatest number of employees are the executive and administrative exemptions. To qualify for the executive exemption under the proposed standard duties test, an employee will be required to (1) have a primary duty of managing the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof; (2) customarily and regularly direct the work of two or more other employees; and (3) have the authority to hire or fire employees or have particular weight given to suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees.
This new standard test consists of the current short test requirements plus a third requirement taken from the current long test.
To qualify for the administrative exemption under the proposed standard duties test, an employee will be required to (1) have a primary duty of performing office or nonmanual work directly related to the management or general business operations of the employer or the employer's customers; and (2) hold a "position of responsibility" with the employer, defined as either performing work of substantial importance or performing work requiring a high level of skill or training.
The standard test will eliminate the requirement under the current short administrative duties test that the work require the exercise of discretion and independent judgment, but replaces that requirement with the position of responsibility requirement.
The proposed rules contain many other changes to the current salary test that, according to the DOL, are designed to create brighter lines and reduce litigation. it is impossible to predict what the final rules may look like. Many of the proposed revisions could be modified or deleted altogether.
The DOL is not expected to finalize the rules until the end of this year or later. Until then, the 50-year old rules still apply. Allen S. Kinzer and Michael F. O'Brien are attorneys with the Columbus office of Vorys, Sater, Seymour and Pease LLP where they practice in the labor and employment law group. Reach them at (614) 464-6400 or www.vssp.com.
Given the tragic events of Sept. 11, National Guard and military reserve units are either on high alert status or have already been called into active service.
Employers should do some careful planning, formulate a policy for consistency in dealing with military leave situations and be prepared to deal with the unexpected as part of their patriotic duty.
Under the federal Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), employees who must take a leave of absence for active or reserve duty in the United States Armed Forces, Coast Guard, National Guard or Reserves as a result of a time of war or national emergency have certain protections. These protections also apply to military training and service during peacetime, but compliance becomes more difficult when there is a big military mobilization.
USERRA guarantees that employees who take leave for military service will have certain protections, including, in most cases, the right to return to their former jobs when their military service is completed, continuation of group health insurance and other benefits while they are on military leave and freedom from discrimination both before and after military service. Many employers choose to voluntarily pay or partially pay employees who are on military leave, but are not obligated to do so.
Here are some general guidelines with which employers should be familiar:
* Responding to requests for leave. Upon receipt of orders for active or reserve duty, an employee must immediately notify his or her employer. Employers have no choice but to permit the employee to take leave in those circumstances. Sometimes, the employee can't provide much advance notice. In those cases, employers are obligated to cope with the situation as best they can.
* Continuation of benefits. USERRA guarantees COBRA-like continuation health care coverage. If an employee's group health benefits would terminate because the employee must take leave for military service, the employee may elect to continue the group health care coverage for up to 18 months.
The employee may be required by the employer to pay the entire premium for group coverage after 30 days. Again, this is often an area where employers pitch in and help by subsidizing coverage for employees while they are serving their country. Pension and retirement plan rights continue while an employee is on military leave.
* Returning to work after military leave. Employees who give prompt notice of their intention to return to work after military service must be reinstated to their former positions. If the employee would have been promoted into a better position had it not been for the leave, the employer must put that person into the higher position upon his or her return.
In either case, the employer is obligated to make every effort to supply the employee with the necessary training and make other reasonable efforts to ensure the returning employee is qualified for the position.
If an employee has been gone for fewer than 90 days, he or she has an absolute right to return to the same job. If the leave exceeds 90 days, the employer must place the employee in the same job or an equivalent job with equal seniority, status and pay.
After returning, employees who have been on military leave are protected against job loss for up to one year, unless the employer has just cause to terminate an employee's job during that time period. This period of job protection varies depending on the length of the employee's absence.
Because of USERRA, employees who are called to active duty can be assured their interests are equally protected during and after times of war or national emergency and during peacetime service. USERRA contains enforcement provisions that can be activated by the employee or by the U.S. Department of Labor, and employers who violate it can be liable for back pay, attorneys fees and punitive damages.
Because the statute is complicated, employers are well-advised to review specific situations with legal counsel.
Bonnie O'Neil is a partner in Thompson Hine LLP's Labor and Employment group. She focuses her practice on the representation of management in employment litigation, including defense of employment discrimination and sexual harassment cases, wrongful discharge cases, discipline and contract arbitrations and proceedings before administrative agencies. She can be reached at 469-3231 or email@example.com.