Return to Virginia Business - May 2003

Citizen Soldiers
The U.S. miltary depends on part-time armed forces. Yet, their employers suffer. How are Virginia's businesses coping?

by Robert Burke
Virginia Business
May 2003

It’s just past dawn and Jeff Perkins, dressed in Army fatigues, is already at work at what are two very different jobs. He sips coffee in a rented house in Williamsburg, while he clicks at a laptop and thinks about concrete and crushed stone. He’s got a high-speed Web link to the network at his office back home in Roanoke at the Boxley Co., a construction materials firm, so he can check the daily sales reports.

He’s 40 years old with a young family and a high-pressure job — vice president of sales. This guy can’t make mistakes if his company is going to make money.

The Web link, he says, “makes it just like I was sitting at my desk in Roanoke.” But in reality, he hasn’t been there for months. His Army Reserve colonel called a few days before Christmas. By January Perkins, a major, was pulling 12-hour shifts at Fort Eustis near Newport News, helping other reserve units get ready to go to war. He can only squeeze in a couple of hours a day to see what’s happening at Boxley. “There’s all sorts of stuff that you miss,” he says. “You feel a little detached.”

Perkins knows he’s lucky. He has a stateside assignment and support from his boss, Ab Boxley, president of the 360-employee company. In the few weeks before Perkins left, Boxley says, the two worked out a plan to “take care of him and his family and take care of the company.” Co-workers have picked up pieces of Perkins’ job, he says. “We are prepared for him to be gone for a year.” Throughout Virginia, more than 5,900 reservists and National Guard troops have been called up for anti-terrorist duty or for the war in Iraq, leaving behind their families and jobs.

This is how wars are fought today. Gone are the Cold War-era days of an active-force military large enough to handle two and a half wars simultaneously, at least in theory. Today’s military reflects the Pentagon’s “Total Force” concept, written 30 years ago, which merges the active and reserve forces into one. There are 1.3 million reserve and National Guard troops nationwide — equal to more than half the U.S. military. “We can’t go to war today without the National Guard and reserves,” says Charles M. Quillin, executive director of the state chapter of the Employer Support for the Guard and Reserve (ESGR), a U.S. Department of Defense-sponsored volunteer group that acts as a go-between for employees and employers.

Employers feel the pain in two ways. They lose their citizen-soldier employees more often. Presidents rarely called on reserve or guard troops during the four decades of the Cold War. Since the 1990-91 Gulf War — in which 263,000 troops were called to active duty — they’ve been deployed, in smaller numbers, in Bosnia, Serbia and Afghanistan, as well as deployments since Sept. 11, 2001, for homeland security. Today there are more than 212,000 reserve troops and National Guard on active duty nationwide.

Second, the current mobilization is shaping up as a major test of how well employers can cope with federal laws passed after the first Gulf War, designed to protect the jobs of reserve and guard members. “What we’re seeing right now is very different than what we’ve ever seen before in the impact on employers in this country,” Quillin says. “I don’t have any doubt that the military members will do just fine. The test is going to come in how the employers respond to it.”

Quillin’s group is trying to spread the word about the Uniformed Services Employment and Reemployment Rights Act, or USERRA, passed by Congress in 1994 after some troops returned from the Gulf War only to find pink slips waiting for them. The law’s breadth is sweeping. It requires employers to provide up to five years of unpaid leave to military members, and to take them back in virtually the same job they would have held had they not been called to active duty. It also requires returning workers to receive the same seniority, pay raises and other benefits, as well as training to bring their job skills up to speed. Companies don’t have to pay salaries or extend benefits while employees are away — reserve and guard members start collecting salaries for active-duty service and are eligible for military health benefits. USERRA also protects the status of employees in pension plans and 401(k) funds even if the employee isn’t making any contributions.

Soldiers are also protected by the Soldiers’ and Sailors’ Civil Relief Act of 1940 (SSCRA), which caps interest rates on existing loans at 6 percent and delays civil court actions such as bankruptcy, foreclosure and divorce. It also protects against eviction if a service member’s rent is below $1,200 a month.

Bigger companies with human resource departments generally know what the laws require, including the newer USERRA. But many smaller companies don’t. Holding jobs is the biggest issue, Quillin says. “We’re busy now with the education process, because as units mobilize, employers need to know what to expect.” The group is training volunteers on how to approach employers regarding the law and why they should employ guard and reserve members. The group also has about a dozen attorneys to help explain the law when conflicts arise, but its role is just advisory, Quillin says. “If we can’t make it go away then it becomes a [U.S.] Department of Labor issue and it’s out of our hands.”

Of course, the current tide of patriot fervor often helps smooth the way. Few companies want to be seen as playing tough with those in uniform. Robert L. Pineda, who runs the Veterans’ Employment and Training Service program at the Department of Labor’s Richmond office, says he gets about 40 complaints a year. Employers sometimes won’t take workers back after they’ve been called away repeatedly, he says. Or, they’ve hired replacement workers and don’t want to fire them. Sometimes employers say they’re firing a reserve or guard member for performance but haven’t documented their case, and have to take the worker back. Sometimes reservists get fired and want to claim it’s because of their military status. “It creates a very unstable situation for everybody,” he says.

In most cases, Pineda explains the law and employers comply. If they don’t, the case goes to the U.S. Department of Justice for prosecution. Very few cases get that far, but Pineda predicts the current mobilization will change that. “With the situation we have going now, I know we’re going to have so many people coming and filing claims.” Which points up a problem: Pineda and just one assistant have to handle all complaints in Virginia. A second assistant retired, but budget cuts make it unlikely that opening will be filled, he says. Investigations of complaints currently take about 45 days. “We’re doing the best we can.”

Some worry that the law’s demands could produce a backlash, and hurt reserve and guard members in the long run. In many cases what employers want to know, Quillin says, is “What’s in it for me? Why would I want to hire a guard or reservist when you’re telling me there’s a federal law and the president could call them and they could be gone?”

He’s quick to return fire. “That guard and reservist is probably going to be better trained than anybody you could get off the street. You know for a fact that they’re going to be drug-free. You know for a fact they’re going to have a work ethic. So by and large they’re exactly the person you want to hire.”

Some companies, especially larger ones, go well beyond what the law requires. Shipbuilder Northrop Grumman Newport News is making up the difference in salary for employees who earn less as reserve or guard members, and extending health benefits indefinitely. The company has about 50 employees called to active duty out of the 8,000 in the Newport News area. Virginia’s largest private-sector employer, Falls Church-based Capital One, also makes up the salary differential but leaves benefits to the military. Norfolk Southern in October began giving employees called to active duty under Operation Enduring Freedom a monthly income supplement of $1,500 and extended health care and life insurance benefits for the first 90 days. Virginia is pitching in, too. In March Gov. Mark Warner said that the state would pay the salary difference for the estimated 200 state workers called to active duty. “The bottom line is that if these men and women can leave their homes, jobs and families to protect our freedom, then the least we can do is to help protect the family's savings while they are away,” Warner said in announcing the move.

At Boxley, Perkins is getting full benefits and the difference in his salary paid as well. The financial pressure of a drop in income is intense for soldiers, especially those who’ve left a spouse and family behind. A Department of Defense survey found that 41 percent of activated guard and reserve members had active-duty salaries lower than their civilian pay. A bill now before Congress would require federal agencies — the largest employer of reservists at 120,000 — to pay the difference between civilian and military wages for personnel on active duty. “I’ve talked to a lot of soldiers, and some employers are helping them and some aren’t,” Perkins says. “You can tell the ones that have had help with their compensation are able to concentrate here.”

There is less help, though, for the business owner called to serve. Portsmouth auto repair shop owner David Moscopulos was called to active duty with the Navy Reserve for a year beginning in January 2002 with the Naval Coastal Warfare Group 2, which did harbor defense patrols near Navy vessels. Moscopulos, 50, was stationed just 50 miles away in Williamsburg. He left his five-employee shop in the hands of a trusted worker, who did a good job, he says. “But it still put a hardship on me because I need to be here. A lot of my customers ask for me.”

When Moscopulos got back he was in debt from the $3,000 he spent each month paying his own replacement. He got a $38,000 emergency loan through the U.S. Small Business Administration under a program designed to help businesses when a key employee, including the owner, is called to active duty in the reserves. The loans are to help pay operating expenses and make debt payments and not intended to cover lost income. “They did a good job for me, [both] my employers and the SBA,” he says.

Others, though, are pushed to the brink. Roanoke electrician Dewey Milton was called to active duty in the Navy Reserve in November 2001 and spent seven months in Annapolis. His business, which he had inherited from his father, floundered when he left. His crews did work for developers of new subdivisions but the jobs started taking too long and he lost clients, he says. Soon there wasn’t enough work to support the payroll.

For all the protection other reservists get from the law, Milton, 45, is bitter that he couldn’t persuade his commanders to let him come home more often to take care of his company. When his deployment was done, he quit the reserves. That’s a tough finish for a guy who joined the Navy right out of high school. “I feel like America just totally turned its back on me,” he says. “If you’re a business owner, my advice is sell it before you leave, because that’s all you can do.”
Milton says he’s trying to rebuild the business. He also got an SBA loan, for $20,000. That will almost cover the $20,100 in back taxes he owes the Internal Revenue Service. He’d like to buy the building he now leases but can’t get a loan because of his debt problems. “It’s just a lot of compounded effects, one after another. I didn’t realize it was going to get this bad.”

It’s hard to say how many small businesses have had the owner or a key employee called to active duty. Moscopulos says that of the 200 reservists activated from his unit the only other business owner was an officer with a bike shop in Virginia Beach. Only three businesses in Virginia received emergency SBA loans, totaling $62,700. In fact it’s hard to even say where the guard and reserve members work, though many are with government agencies, or in law enforcement-related jobs. Francis Bell, chairman of the state’s ESGR chapter, says privacy laws prevent the guard and reserves from even telling his group which companies employ activated reservists.

It may be easier to find out, though, as the strain grows on both businesses and employees and complaints arise. Longer and more frequent deployments raise the question of whether guard and reservists and their employers are being asked to do too much. And, there’s another pressure that could change how reserve troops are used. Secretary of Defense Donald Rumsfeld has said that the current mix of active and reserve troops is too slow to mobilize. “It doesn’t make sense to have the people who are required very early in a conflict [to be] in the Reserves,” he said in a January speech to the Reserve Officers Association. “We need to have those skills on active duty as well as in the Reserves.”

If Rumsfeld changes the role of guard and reserve troops, it might keep civilian employees from having to be among the first to answer the president’s call. It might even shorten the duration of their service. Such changes would come slowly, though, and maybe not at all. In the meantime, U.S. forces are clearly facing an extended stay in Iraq and extra duty in the U.S. for homeland security.

Media coverage of soldiers in combat has helped rally support at home among both employers and co-workers. “These guys, they’re making a hell of a lot bigger sacrifice than the company is,” says Boxley, Perkins’ boss. True enough. But there may be plenty of sacrifice to go around.

Return to Virginia Business - May 2003