Whether it’s a response to the tight employment market or seasonal employment rehiring, former employees are becoming more common. Rehiring employees can be beneficial to your organization, especially if they were strong contributors. You could save time and money since they are familiar with your business, and you do not need to provide them with the in-depth training required for onboarding new employees. A former employee also might have worked elsewhere since leaving your organization, which can be an opportunity to bring new skills, knowledge, and fresh ideas to your workplace.
There are also legal implications and potential liabilities to consider. We recommend employers evaluate their practices and potentially create a rehiring policy or procedure to increase administrative efficiency and reduce your risk exposure. Here are a few areas to review:
Be consistent to avoid discrimination charges. This does not mean you have to rehire everyone. In fact, it is a common misunderstanding that an employer must recall laid-off workers. However, it does mean that you must have a legitimate business reason for failing to rehire someone who is part of a protected class, when you rehired someone similarly situated who was not a part of a protected class. If you establish rehire rules around credit for prior service for benefits or otherwise, having a clear policy and applying it consistently will reduce exposures for such claims.
Consider a new background check. If you normally complete background checks, you can determine if you want to perform a new background check, or rely upon the former (or good standing). Again, if you waive the background check, you will want to have a policy and enforce it consistently to avoid claims of discrimination.
Seniority. Some employers voluntarily offer more generous compensation, benefits, and perks to employees based on their length of service. If you intend to give rehired employees credit for their prior service for seniority-based benefits, establish and communicate clear rules and apply them consistently.
Complete Form I-9. All employers must complete a Form I-9 for a new hire, but if you rehire an employee within three years of the date that a previous Form I-9 was completed, you may choose to complete a new Form I-9 or complete Section 3. For details, see our article on employment verification practices.
Provide required notices. We recommend providing the same required notices and paperwork to employees upon rehire (e.g. COBRA, handbooks, safety notices, etc.).
Review your benefit plan documents. They may allow a participant to reenroll without a waiting period depending on the length of the service break. Some retirement plans are required to give rehired employees credit for their prior service, or allow an employee to accumulate credit for vesting purposes. Since plans vary, you will want to consult yours specifically.
Comply with the ACA. For purposes of the Affordable Care Act (ACA), a rehire in less than 13 weeks is treated differently. For details, see our article “ACA reporting tip 10: Break in service/ongoing employment.”
Consider your paid time off policy. What does it say (if anything) about rehiring? Will the rehires start to accrue at a new hire basis, or will they receive a credit (in full or in part) for prior years of service?
Factor in leave eligibility. Employees may be eligible for leave depending on the length of service. Certain states have leave laws where eligibility is based on total years of service, not consecutive years. The Family Medical Leave Act (FMLA) grants eligibility to employees who work for the employer for at least 12 months. If an employee’s break in employment is less than seven years, any time worked prior to that break would count toward meeting the 12-months of work requirement. Once the employee is rehired and meets the 12-month requirement, the employee only needs to work 1,250 hours immediately preceding the leave to be eligible for FMLA.
Comply with the Americans with Disabilities Act (ADA). If the employee was previously receiving an ADA accommodation, such as a job modification, you will need to engage in the interactive process again – depending on the length of time that had elapsed and the nature of the request.
Are you a federal contractor? If so, there are reinstatement requirements (such as for sick leave) as well. You will want to review those requirements.
Whether or not you are reinstating seniority, benefits, or otherwise, we encourage you to communicate the policy to your rehired employee. This will set their expectations from the start and hopefully avoid any confusion.
Heather Kaiser, JD educates and advises employers on all aspects of employment law, including compliance with state and federal laws, leaves of absence, discrimination, harassment, accommodations, discipline and discharge, wage and hour obligations, unfair competition, and other issues that arise in the workplace. She conducts respectful workplace (harassment prevention), leadership, and other employment-related trainings, third-party investigations, and mediations. In addition to Heather's employment counseling, her background includes nearly a decade of litigation experience. Her prior experience includes litigating for a regional insurance company, business disputes, and employment.