As an employer rehiring a former employee, you’re free to offer health insurance, 401(k) plan participation, and accrual of vacation or sick time in the same way you would offer these benefits to a new hire. In most cases, returning workers should fill out all of the requisite new-hire paperwork so that any questions that might later arise about the date of the employee’s return — and the reason why records show a gap in the employee’s payment by the company — will be supported by adequate documentation in his or her personnel file.
With the exception of federal or state laws governing employee leaves of absence, such as the Family and Medical Leave Act (FMLA) or the Uniformed Services Employment and Reemployment Rights Act (USERRA), you generally aren’t required to restore a returning employee to the same position he or she held previously or to give him or her credit for the term of prior service with respect to accrued company benefits. (However, if you use union workers, check with your attorney, as the rules may differ.) For example, if the person had accrued three weeks vacation as of the date of separation from the company, but new hires get two weeks, then the rehire would also get two weeks vacation. With respect to retirement benefits such as a 401(k) or the company pension plan, says Peter N. Lobasso, an employment attorney with Johanson Berenson LLP, in Great Falls, Va., “the terms of the plan itself will determine the rehire’s eligibility to resume participation in the plan and credit for the prior term of service for vesting purposes.”
And while the period of prior service generally doesn’t have to be taken into account in making future promotion or compensation decisions, Lobasso says, “in some cases it may be appropriate to do so, such as when the employee’s initial separation was due to a company layoff as opposed to the employee’s voluntary resignation.”
Lobasso adds that it’s important to implement such policies consistently. “Treat all similarly situated returning employees in the same manner to the extent practicable,” he advises. “To do otherwise will likely foster discord among workers as well as expose the company to potential claims of workplace discrimination.”
—Stacey Freed, senior editor, REMODELING.