Compliance May 14, 2009

Supreme Court Turns Away USERRA Decision Appeal

May 14, 2009 (PLANSPONSOR.com) - The U.S. Supreme Court has turned aside a request to review a 6th U.S. Circuit Court of Appeals ruling finding that an employer had run afoul of the Uniformed Services Employment and Reemployment Rights Act (USERRA) by forcing a returning Army reservist to go through a three-week re-entry process.
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The 6 th Circuit decision issued last year held that police officer Brian Petty had met all four of the prerequisites to invoke his rights under USERRA so the employer, the Metro Government of Nashville-Davidson County, could not delay his re-employment.

The four requirements were that:

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  • Petty notified his employer in advance of his departure that he would be leaving for military service;
  • The cumulative length of such military service was less than five years;
  • Upon his return, he requested reemployment and submitted proper documentation within the time period set by statute; and
  • His separation from service was under “honorable conditions”.

Appellate judges said specifically the employer could not apply its normal return-to-work process used with employees off the job for an extended period because USERRA effectively trumped the employer’s internal HR policies.

Petty sued under USERRA but lost at the trial court level. The 6 th Circuit threw out that decision in the ruling later appealed to the Supreme Court.

The 6 th Circuit also found that the employer did not properly place Petty into any of the positions of employment mandated by USERRA. Depending on an employee’s duration of service with the employer prior to the military leave, employers are required to reinstate qualified service members under USERRA to one of the following:

  • a position of employment the person would have held if the continuous employment of such person had not been interrupted by military service;
  • a position of employment in which that person was employed on the date of commencement of service; or
  • a position of like seniority, status and pay for the position the person would have ad or did hold, the duties of which the person is qualified to perform.

The 6th Circuit decision is available  here .

Investing May 13, 2009

DC Plans See Widespread Equity Losses in Q109

May 13, 2009 (PLANSPONSOR.com) - Mercer's first-quarter 2009 Defined Contribution Universe Summary found losses in all equity markets during the period.
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A Mercer news release said the balanced asset class, using a benchmark of 60% S&P 500/40% Barclays Capital Aggregate Bond Indices, posted a 6.5%-loss. International equity markets, as measured by the MSCI EAFE Index, lost 13.9% during the period.

Mercer data showed the international equity asset class underperformed U.S. equities for the quarter by 290 basis points. Global equities lost 11.9% for the quarter and outperformed international equities by 200 basis points.

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According to Mercer, growth funds outperformed value funds during the first quarter, as the median large cap growth fund posted a loss of 4.7% compared to a loss of 12.9% for the median large cap value fund. The small cap segment of the market trended in the same direction as large cap stocks, as the median small cap growth fund outperformed the median small cap value fund by 710 basis points.

The median large cap fund outperformed the S&P 500 Index by 120 basis points for the first quarter. Small cap funds underperformed their large cap counterparts for the quarter, as the median small cap fund lost 12.9% for the quarter versus a loss of 9.8% for the median large cap fund.

Within the international equity asset class, the median manager outperformed the MSCI EAFE Index by 130 basis points during the quarter. The median emerging markets manager lost 1.4% for the quarter and underperformed the MSCI Emerging Markets Free Index by 240 basis points, according to the Mercer data.

The median core fixed income fund outperformed the Barclays Capital Aggregate Bond Index for the first quarter by 30 basis points. Mercer said the S&P 500 Index lost 11% during the quarter while the fixed income asset class was flat for the quarter, with the Barclays Capital Aggregate Bond Index posting a 0.1% gain. Money market instruments had a zero return, as measured by the three-month T-bill rate.

According to the report, capital market returns remained negative over the long term as losses during the first quarter of 2009 affected results. Over a 10-year time frame, the S&P 500 Index lost 3%, while the Russell 2000 Index gained 1.9%.

The survey report is available at http://www.mercer.us/referencecontent.htm?idContent=1335980 .

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