Military Service Benefits: SCRA and USERRA
Because of the sacrifices that military service members make while serving, the Servicemembers' Civil Relief Act (SCRA) and the Uniformed Services Employment and Reemployment Relief Act of 1994 (USERRA) provide service members with military service benefits for financial relief and job protection. The SCRA is an expanded version of the 1918 Soldiers' and Sailors Civil Relief Act (SSCRA). The SCRA extends benefits to active military service members, reservists, and active National Guard members. The law provides military service members with relief from certain civil obligations while on active military duty. The USERRA prohibits all employers from discriminating against employees that leave to serve in the military and requires the employer to reinstate the employee if the absence is five years or less.
Interest Rate Cap
Under a provision in the SCRA, a service member may qualify for a 6 percent cap on debts and financial obligations, with the exclusion of student loans guaranteed by the federal government. Qualifying debt includes mortgages and credit card debt incurred by the service member alone or with a spouse. The provision applies if:
- The service member acquired the debt prior to beginning active duty; and
- The service member's military commitment materially affects the ability to pay the debt at the pre-service interest rate.
To receive the rate cap, the service member must provide the creditor with the following proof: military orders, a pay stub, and proof that a reduction in income occurred after active service. The creditor can challenge the claim in court, but must grant the cap until a court rules otherwise. When the service member is no longer serving in active duty, the creditor can reset the interest rate.
Termination of Rental Agreements and Leases
The SCRA permits service members to terminate a residential or commercial rental agreement or lease after signing it if:
- The service member enlists in active military duty during the term of the tenancy; or
- A military member receives orders to make a permanent change of location or receives orders to deploy for not less than 90 days.
The service member can terminate the lease by mailing or delivering written notice of the termination and a copy of the military order to the landlord.
- Month-to-month rental agreement: After the service member gives notice, the tenancy ends 30 days after the due date of the next rent payment. For example, if rent were due on the first of every month, a service member that sends a termination notice on April 15 would terminate the tenancy on June 1 (30 days after the next rent payment on May 1 is June 1).
- Lease agreement: A yearly lease will terminate the last day of the month following the month that the service member gives proper notice. A termination notice given on April 15 would terminate the tenancy on May 31.
Termination of Motor Vehicle Leases
The military service benefits under the SCRA also allows a service member to terminate a lease of a motor vehicle intended to be used by the service member or the service member's dependents, if after signing the lease:
- The service member is called for active duty for not less than 180 days of service; or
- The military member receives orders to make a permanent change of location or receives orders to deploy for not less than 180 days.
The service member must make the termination request in writing and must provide a copy of the military orders. The service member must return the vehicle to the owner within 15 days of the termination notice.
Protection from Eviction
Under certain circumstances, the SCRA provides military service members with protection from eviction for the nonpayment of rent without regard for whether the rental of the unit occurred before or after military service. The provision applies if:
- The service member or the dependents of the service member occupy the unit for dwelling during the member's military service; and
- The rent does not exceed $2720.95 per month (adjusted every year for inflation).
Even if the provision in the SCRA applies, the landlord can still file an eviction action against the occupants of the dwelling. The court, however, can choose to grant up to a three-month stay or enter an "order as may be just" if the service member's ability to pay the rent is materially affected by the military service. If the service member serves in a certain branch of the military, the member may have to pay some portion of the rent regardless of the court decision. If the court does not issue a stay, the landlord may proceed with the eviction lawsuit.
Protection against Pending Trials
Under the SCRA, service members may request a stay of a legal action during their military service, deployment, or tour overseas.
- Stay of court proceedings: A court may postpone an action for no less than 90 days if the individual is in military service or was released or terminated from military service within 90 days.
- Stay of execution: A court may stay an action to carry out judgments, court actions, garnishments, and attachments against an individual engaged in military service or previously engaged in military service within the last 90 days. A court can deny the request if the military service does not affect the ability of the member to comply with the execution of the judgment.
- Default judgment: If a court issues a default judgment (a judgment issued against an individual that fails to respond to a lawsuit or fails to appear in court) against a service member, the case can be reopened within 90 days after the end of military service, if it can be established that the service member had a legal defense and military service affected the ability to make a defense.
- Statute of limitations: The time of military service is excluded from the limitations period for filing a lawsuit.
Installment Contract Protection
Provisions in the SCRA also protect service members that enter into installment agreements. To qualify for the benefits of installment protection under federal law, it is necessary to show that:
- The service member entered into an installment agreement for real or personal property prior to active duty in the military; and
- Military service substantially affects the ability of the service member to make payments.
If a service member qualifies under the provision, the lender may not terminate the contract or repossess the property for nonpayment or breach of contract if a court order does not provide otherwise.
In actions for foreclosure, the SSCRA protects service members if the member meets both of the aforementioned requirements and the following:
- Relief is based on obligations under the mortgage;
- The service member or a family member owned the property prior to active military service; and
- The service member or a family member owned the property during the time the lender initiated an action for relief.
Reemployment under Federal Law
The USERRA protects individuals that leave a job for U.S. military service from discrimination. Employers must reemploy the service member if:
- Before leaving, the employee gave the employer advanced written or verbal notice of the military service (unless impossible or unreasonable because of military necessity);
- The employee's absence because of military service did not exceed five years (unless an exception applies);
- The employee was given an honorable discharge at the end of military service; and
- The employee applies for reemployment within a specified time.
The USERRA prohibits employers from reinstating service members into the same position they served in prior to entering the military. Instead, the employer must establish the appropriate position by determining what position the employee would have been in if continuously employed during military service. If the employee is not qualified, the employer must offer the employee training. In addition to promoting the employee, the employer must give the employee the same raises, benefits, and seniority status entitled to if they had continuously worked for the employer. For up to one year after reinstatement, the employer cannot fire the service member without cause.
There are some exceptions to a service member's right to reinstatement under the USERRA. The employer does not have to rehire a returning service member if:
- Workplace changes make it unreasonable or impossible to reinstate the employee;
- Reemployment of the returning service member would create an undue hardship on the employer; or
- The employment of the service member prior to service was brief and there was no reasonable expectation that employment would continue for a long time.
Reemployment under State Law
Most states have laws that also ban discrimination against individuals that serve in the military or in the National Guard. For example, many states require employers to grant leave for individuals called for active military service or require employers to reinstate the returning military member. Most states only require reemployment if the employee:
- Received an honorable discharge;
- Can provide proof of the satisfactory completion of military service; and
- Applies for reemployment within a certain time.
In some cases, state laws expand upon USERRA protection of reemployment rights of returning military service members.