USERRA Claims Processing under the Demonstration Project

Under a demonstration project established by VBIA, from February 8,  2005, through September 30, 2007, and subsequently extended through  November 16, 2007, OSC and DOL share responsibility for receiving and  investigating USERRA claims and seeking corrective action for federal  employees. While the legislation did not establish specific goals for the  demonstration project, the language mandating that GAO conduct a  review suggested that duplication of effort and delays in processing cases  were of concern to Congress.
The demonstration project gave OSC, an independent investigative and  prosecutorial agency, authority to receive and investigate claims for  federal employees whose social security numbers end in odd numbers.  VETS investigated claims for individuals whose social security numbers  end in even numbers. Under the demonstration project, OSC conducts an  investigation of claims assigned to determine whether the evidence is  sufficient to resolve the claimants’ USERRA allegations and, if so, seeks  voluntary corrective action from the involved agency or initiates legal  action against the agency before the Merit Systems Protection Board  (MSPB). For claims assigned to DOL, VETS conducts an investigation,  and if it cannot resolve a claim, DOL is to inform claimants that they may  request to have their claims referred to OSC.
OSC’s responsibility under USERRA for conducting independent reviews  of referred claims after they are investigated but not resolved by VETS  remained unchanged during the demonstration project. Before sending the  referred claim to OSC, two additional levels of review take place within  DOL. After OSC receives the referred claim from DOL, it reviews the case  file, and if satisfied that the evidence is sufficient to resolve the claimant’s  allegations and that the claimant is entitled to corrective action, OSC  begins negotiations with the claimant’s federal executive branch employer.  According to OSC, if an agreement for full relief via voluntary settlement  by the employer cannot be reached, OSC may represent the  servicemember before MSPB. If MSPB rules against the servicemember,  OSC may appeal the decision to the U.S. Court of Appeals for the Federal  Circuit. In instances where OSC finds that referred claims do not have  merit, it informs servicemembers of its decision not to represent them and  that they have the right to take their claims to MSPB without OSC  representation. Figure 1 depicts USERRA claims’ processing under the  demonstration project.

	Key Findings on the Demonstration Project and Actions Taken to Address Recommendations

Under the demonstration project, VETS and OSC used two different  models to investigate federal employee USERRA claims. Both DOL and  OSC officials have said that cooperation and communication increased  between the two agencies concerning USERRA claims, raising awareness  of the issues related to servicemembers who are federal employees. In  addition, technological enhancements have occurred, primarily on the part  of VETS since the demonstration project. For example, at VETS, an  enhancement to its database enables the electronic transfer of information  between agencies and the electronic filing of USERRA claims. However,  we found that DOL did not consistently notify claimants concerning the  right to have their claims referred to OSC for further investigation or to  bring their claims directly to MSPB if DOL did not resolve their claims. We  also found data limitations at both agencies that made claim outcome data  unreliable. DOL agreed with our findings and recommendations and has  begun to take corrective action.

		Agencies Used Two Models for Processing USERRA Claims

Since the start of the demonstration project on February 8, 2005, both  DOL/VETS and OSC had policies and procedures for receiving,  investigating, and resolving USERRA claims against federal executive  branch employers. Table 1 describes the two models we reported DOL and  OSC using to process USERRA claims.

		VETS Is Taking Action to Help Ensure That It Consistently Notifies Claimants of the Right to Referral

Once a VETS investigator completes an investigation and arrives at a  determination on a claim, the investigator is to contact the claimant,  discuss the findings, and send a letter to the claimant notifying him or her  of VETS’s determination. When VETS is unsuccessful in resolving  servicemembers’ claims, DOL is to notify servicemembers who filed claims  against federal executive branch agencies that they may request to have  their claims referred to OSC or file directly with MSPB. Our review of a  random sample of claims showed that for claims VETS was not successful  in resolving (i.e., claims not granted or settled), VETS (1) failed to notify  half the claimants in writing, (2) correctly notified some claimants,   (3) notified others of only some of their options, and (4) incorrectly  advised some claimants of a right applicable only to nonfederal  claimants—to have their claims referred to the Department of Justice or to  bring their claims directly to federal district court. In addition, we found  that the VETS USERRA Operations Manual failed to provide clear  guidance to VETS investigators on when to notify servicemembers of their  rights and the content of the notifications. VETS had no internal process to  routinely review investigators’ determinations before claimants are  notified of them. According to a VETS official, there was no requirement  that a supervisor review investigators’ determinations before notifying the  claimant of the determination. In addition, legal reviews by a DOL regional  Office of the Solicitor occurred only when a claimant requested to have his  or her claim referred to OSC. A VETS official estimated that about 7  percent of claimants ask for their claims to be referred to OSC or, for  nonfederal servicemembers, to the Department of Justice.
During our review, citing our preliminary findings, DOL officials required  each region to revise its guidance concerning the notification of rights.  Since that time, DOL has taken the following additional actions:  reviewed and updated policy changes to incorporate into the revised  Operations Manual and prepared the first draft of the revised Manual;  issued a memo in July 2007 from the Assistant Secretary for Veteran’s  Employment and Training to regional administrators, senior investigators,  and directors requiring case closing procedure changes, including the use  of standard language to help ensure that claimants (federal and  nonfederal) are apprised of their rights; and   began conducting mandatory training on the requirements contained in the  memo in August 2007.
In addition, according to DOL officials, beginning in January 2008, all  claims are to be reviewed before the closure letter is sent to the claimant.  These are positive steps. It is important for DOL to follow through with its  plans to complete revisions to its USERRA Operations Manual, which  according to DOL officials is expected in January 2008, to ensure that clear  and uniform guidance is available to all involved in processing USERRA  claims.

		Number of Claims and Average Processing Time under the Demonstration Project

Our review of data from VETS’s database showed that from the start of the  demonstration project on February 8, 2005, through September 30, 2006,  VETS investigated a total of 166 unique claims. We reviewed a random  sample of case files to assess the reliability of VETS’s data and found that  the closed dates in VETS’s database were not sufficiently reliable.  Therefore, we could not use the dates for the time VETS spent on  investigations in the database to accurately determine DOL’s average  processing time. Instead, we used the correct closed dates from the case  files in our random sample and statistically estimated the average  processing time for VETS’s investigations from the start of the  demonstration project through July 21, 2006—the period of our sample.  Based on the random sample, there is at least a 95 percent chance that  VETS’s average processing time for investigations ranged from 53 to 86  days. During the same period, OSC received 269 claims and took an  average of 115 days to process these claims. We found the closed dates in  OSC’s case tracking system to be sufficiently reliable.
In his July 2007 memo discussed above, the Assistant Secretary for  Veteran’s Employment and Training also instructed regional  administrators, senior investigators, and directors that investigators are to  ensure that the closed date of each USERRA case entered in VETS’s  database matches the date on the closing letter sent to the claimant.

		Data Limitations at Both Agencies

We found data limitations at both agencies that affected our ability to  determine outcomes of the demonstration project and could adversely  affect Congress’s ability to assess how well federal USERRA claims are  processed and whether changes are needed. At VETS, we found an  overstatement in the number of claims and unreliable data in the VETS’s  database. From February 8, 2005, through September 30, 2006, VETS  received a total of 166 unique claims, although 202 claims were recorded  as opened in VETS’s database. Duplicate, reopened, and transferred claims  accounted for most of this difference. Also, in our review of a random  sample of case files, we found  the dates recorded for case closure in VETS’s database did not reflect the  dates on the closure letters in 22 of 52 claims reviewed, so using the  correct dates from the sample, we statistically estimated average  processing time, and the closed code, which VETS uses to describe the outcomes of USERRA  claims (i.e., claim granted, claim settled, no merit, withdrawn) was not  sufficiently reliable for reporting specific outcomes of claims.
At OSC, we assessed the reliability of selected data elements in OSC’s case  tracking system in an earlier report and found that the corrective action  data element, which would be used for identifying the outcomes of  USERRA claims, was not sufficiently reliable.

		DOL Has a Lengthy Two- Phase Review Process before Claims Are Referred to OSC

We separately reviewed those claims that VETS investigated but could not  resolve and for which claimants requested referral of their claims to OSC.  For these claims, two sequential DOL reviews take place: a VETS regional  office prepares a report of the investigation, including a recommendation  on the merits and a regional Office of the Solicitor conducts a separate  legal analysis and makes an independent recommendation on the merits.  From February 8, 2005, through September 30, 2006, 11 claimants asked  VETS to refer their claims to OSC. Of those 11 claims, 6 claims had been  reviewed by both a VETS regional office and a regional Office of the  Solicitor and sent to OSC. For those 6 claims, from initial VETS  investigation through the VETS regional office and regional Office of the  Solicitor reviews, it took an average of 247 days or about 8 months before  the Office of the Solicitor sent the claims to OSC. Of the 6 referred claims  that OSC received from DOL during the demonstration project, as of  September 30, 2006, OSC declined to represent the claimant in 5 claims  and was still reviewing 1 of them, taking an average of 61 days to  independently review the claims and determine if the claims had merit and  whether to represent the claimants.

	Considerations Related to Extending the Demonstration Project

You asked us about factors that could be considered in deciding whether  to extend the demonstration project and to conduct a follow-up review. If  the demonstration project were to be extended, it would be important to  have clear objectives. Legislation creating the current demonstration  project was not specific in terms of the objectives to be achieved. Having  clear objectives would be important for the effective implementation of  the extended demonstration project and would facilitate a follow-on  evaluation. In this regard, our report provides baseline data that could  inform this evaluation. Given adequate time and resources, an evaluation  of the extended demonstration project could be designed and tailored to  provide information to inform congressional decision making.
Congress also may want to consider some potential benefits and  limitations associated with options available if the demonstration is not  extended. Table 2 presents two potential actions that could be taken and  examples of potential benefits and limitations of each. The table does not  include steps, such as enabling legislation that might be associated with  implementing a particular course of action.
At a time when the nation’s attention is focused on those who serve our  country, it is important that employment and reemployment rights are  protected for federal servicemembers who leave their employment to  perform military or other uniformed service. Addressing the deficiencies  that we identified during our review, including correcting inaccurate and  unreliable data, is a key step to ensuring that servicemembers’ rights under  USERRA are protected. While DOL is taking positive actions in this regard,  it is important that these efforts are carried through to completion.
Chairman Akaka, Senator Burr, and Members of the Committee, this  concludes my prepared statement. I would be pleased to respond to any  questions that you may have.
For further information regarding this statement, please contact George  Stalcup, Director, Strategic Issues, at (202) 512-9490 or stalcupg@gao.gov.  Contact points for our Offices of Congressional Relations and Public  Affairs may be found on the last page of this testimony. Individuals making  key contributions to this statement included Belva Martin, Assistant  Director; Karin Fangman; Tamara F. Stenzel; Kiki Theodoropoulos; and  Greg Wilmoth.
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Summary:
Why GAO Did This Study

The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) protects the employment and reemployment rights of federal and nonfederal employees who leave their employment to perform military or other uniformed service. Under a demonstration project from February 8, 2005, through September 30, 2007, and subsequently extended through November 16, 2007, the Department of Labor (DOL) and the Office of Special Counsel (OSC) share responsibility for receiving and investigating USERRA claims and seeking corrective action for federal employees. In July 2007, GAO reported on its review of the operation of the demonstration project through September 2006. This testimony describes the findings of our work and actions taken to address our recommendations. In response to the request from Congress, GAO also presents views on (1) factors to consider in deciding whether to extend the demonstration project and the merits of conducting a follow-up review and (2) options available if the demonstration is not extended. In preparing this statement, GAO interviewed officials from DOL and OSC to update actions taken on recommendations from our July 2007 report and developments since we conducted that review.

What GAO Found

Under the demonstration project, OSC receives and investigates claims for federal employees whose social security numbers end in odd numbers; DOL investigates claims for individuals whose social security numbers end in even numbers. Among GAO's findings were the following: DOL and OSC use two different models to investigate federal USERRA claims, with DOL using a nationwide network and OSC using a centralized approach, mainly within its headquarters. Since the demonstration project began, both DOL and OSC officials have said that cooperation and communication increased between the two agencies concerning USERRA claims, raising awareness of the issues related to servicemembers who are federal employees. DOL did not consistently notify claimants concerning the right to have their claims referred to OSC for further investigation or to bring their claims directly to the Merit Systems Protection Board if DOL did not resolve their claims. DOL had no internal process to routinely review investigators' determinations before claimants were notified of them. Data limitations at both agencies made claim outcome data unreliable. DOL officials agreed with GAO's findings and recommendations and are taking actions to address the recommendations. In July 2007, DOL issued guidance concerning case closing procedures, including standard language to ensure that claimants (federal and nonfederal) are apprised of their rights,and began conducting mandatory training on the guidance in August 2007. In addition, according to DOL officials, beginning in January 2008, all claims are to be reviewed before the closure letter is sent to the claimant. These are positive steps and it will be important for DOL to follow through with these and other actions. If the demonstration project were to be extended, it would be important that clear objectives be set. Legislation creating the current demonstration project was not specific in terms of the objectives to be achieved. Clear project objectives would also facilitate a follow-on evaluation. In this regard, GAO's July 2007 report provides baseline data that could inform this evaluation. Given adequate time and resources, an evaluation of the extended demonstration project could be designed and tailored to provide information to inform congressional decision making. GAO also presents potential benefits and limitations associated with options available if the demonstration project is not extended.