I 

108TH CONGRESS 

1ST SESSION H. R. 1345

To provide compensation to members of the reserve components who suffer 

discrepancies between their military and nonmilitary compensation as 

a result of being ordered to serve on active duty for a period of more 

than 30 days, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 19, 2003

Mr. LANTOS (for himself, Mr. WEXLER, Mr. GRAVES, Ms. WATSON, Mr. 

BROWN of Ohio, and Mr. FALEOMAVAEGA) introduced the following bill; 

which was referred to the Committee on Ways and Means, and in addition to the Committees on Government Reform and Armed Services, for 

a period to be subsequently determined by the Speaker, in each case for 

consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL

To provide compensation to members of the reserve components who suffer discrepancies between their military 

and nonmilitary compensation as a result of being ordered to serve on active duty for a period of more than 

30 days, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Equity for Reservists 

5 Pay Act of 2003’’. 
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1 SEC. 2. NONREDUCTION IN PAY WHILE FEDERAL EM2 PLOYEE IS SERVING ON ACTIVE DUTY IN A 

3 RESERVE COMPONENT OF THE UNIFORMED 

4 SERVICES. 

5 (a) IN GENERAL.—Subchapter IV of chapter 55 of 

6 title 5, United States Code, is amended by adding at the 

7 end the following new section: 

8 ‘‘§ 5538. Nonreduction in pay while serving on active 

9 duty in a reserve component 

10 ‘‘(a) An employee who is also a member of a reserve 

11 component and is absent from a position of employment 

12 with the Federal Government under a call or order to 

13 serve on active duty for a period of more than 30 days 

14 shall be entitled to receive, for each pay period described 

15 in subsection (b), an amount equal to the difference (if 

16 any) between—

17 ‘‘(1) the amount of civilian basic pay that would 

18 otherwise have been payable to the employee for 

19 such pay period if the employee’s civilian employ20 ment with the Government had not been interrupted 

21 by the service on active duty; and 

22 ‘‘(2) the amount of military compensation that 

23 is payable to the employee for the service on active 

24 duty and is allocable to such pay period. 

25 ‘‘(b)(1) Amounts under this section shall be payable 

26 with respect to each pay period (which would otherwise 
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1 apply if the employee’s civilian employment had not been 

2 interrupted) that occurs—

3 ‘‘(A) while the employee serves on active duty 

4 for a period of more than 30 days; 

5 ‘‘(B) while the employee is hospitalized for, or 

6 convalescing from, an illness or injury incurred in, 

7 or aggravated during, the performance of such active 

8 duty; or 

9 ‘‘(C) during the 14-day period beginning at the 

10 end of such active duty or the end of the period re11 ferred to in subparagraph (B). 

12 ‘‘(2) Paragraph (1) shall not apply with respect to 

13 a pay period for which the employee receives civilian basic 

14 pay (including by taking any annual, military, or other 

15 paid leave) to which the employee is entitled by virtue of 

16 the employee’s civilian employment with the Government. 

17 ‘‘(c) Any amount payable under this section to an em18 ployee shall be paid—

19 ‘‘(1) by employing agency of the employee; 

20 ‘‘(2) from the appropriations or fund that 

21 would be used to pay the employee if the employee 

22 were in a pay status; and 

23 ‘‘(3) to the extent practicable, at the same time 

24 and in the same manner as would civilian basic pay 
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1 if the employee’s civilian employment had not been 

2 interrupted. 

3 ‘‘(d) In consultation with Secretary of Defense, the 

4 Office of Personnel Management shall prescribe such reg5 ulations as may be necessary to carry out this section. 

6 ‘‘(e)(1) In consultation with the Office, the head of 

7 each agency referred to in section 2302(a)(2)(C)(ii) of this 

8 title shall prescribe procedures to ensure that the rights 

9 under this section apply to the employees of such agency. 

10 ‘‘(2) The Administrator of the Federal Aviation Ad11 ministration shall, in consultation with the Office, pre12 scribe procedures to ensure that the rights under this sec13 tion apply to the employees of that agency. 

14 ‘‘(f) In this section: 

15 ‘‘(1) The terms ‘active duty for a period of 

16 more than 30 days’, ‘member’, and ‘reserve compo17 nent’ have the meanings given such terms in section 

18 101 of title 37. 

19 ‘‘(2) The term ‘civilian basic pay’ includes any 

20 amount payable under section 5304 of this title. 

21 ‘‘(3) The term ‘employing agency’, as used with 

22 respect to an employee entitled to any payments 

23 under this section, means the agency or other entity 

24 of the Government (including an agency referred to 

25 in section 2302(a)(2)(C)(ii) of this title) with respect 
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1 to which the employee has reemployment rights 

2 under chapter 43 of title 38. 

3 ‘‘(4) The term ‘military compensation’ has the 

4 meaning given the term ‘pay’ in section 101(21) of 

5 title 37.’’. 

6 (b) CLERICAL AMENDMENT.—The table of sections 

7 at the beginning of chapter 55 of title 5, United States 

8 Code, is amended by inserting after the item relating to 

9 section 5537 the following new item:

‘‘5538. Nonreduction in pay while serving on active duty in a reserve component.’’.

10 (c) APPLICATION OF AMENDMENT.—Section 5538 of 

11 title 5, United States Code, as added by subsection (a), 

12 shall apply with respect to pay periods (as described in 

13 subsection (b) of such section) beginning on or after the 

14 date of the enactment of this Act. 

15 SEC. 3. ASSISTANCE FOR STATE AND LOCAL GOVERN16 MENTS THAT CONTINUE TO PAY EMPLOYEES 

17 WHO SERVE ON ACTIVE DUTY IN A RESERVE 

18 COMPONENT OF THE UNIFORMED SERVICES. 

19 (a) IN GENERAL.—Chapter 17 of title 37, United 

20 States Code, is amended by adding at the end the fol21 lowing new section:
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1 ‘‘§ 910. Assistance for State and local governments 

2 that continue to pay employees who 

3 serve on active duty 

4 ‘‘(a) CONTINUATION OF CIVILIAN BASIC PAY.—It is 

5 the purpose of this section to encourage States and local 

6 governments to continue to pay a portion of the civilian 

7 compensation of those employees who are also members 

8 of a reserve component and are absent from a position 

9 of employment with the State or local government under 

10 a call or order to serve on active duty for a period of more 

11 than 30 days so that the employees receive compensation 

12 in an amount that, when taken together with their military 

13 pay, is at least equal to their civilian compensation. 

14 ‘‘(b) REIMBURSEMENT OFFERED.—(1) At the re15 quest of a State or local government that continues to pay 

16 all or a portion of the civilian compensation of an employee 

17 described in subsection (a), the Secretary concerned shall 

18 reimburse the State or local government for 50 percent 

19 of the civilian compensation paid by the State or local gov20 ernment for each pay period described in subsection (c), 

21 but not to exceed 50 percent of the difference (if any) be22 tween—

23 ‘‘(A) the amount of civilian compensation that 

24 would otherwise have been payable to the employee 

25 for such pay period if the employee’s civilian employ-
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1 ment with the State or local government had not 

2 been interrupted by the service on active duty; and 

3 ‘‘(B) the amount of military pay that is payable 

4 to the employee for the service on active duty and 

5 is allocable to such pay period. 

6 ‘‘(2) If the pay periods described in subsection (c) 

7 extend more than nine consecutive months after the first 

8 day of the first month during which the employee began 

9 to serve on active duty for a period of more than 30 days, 

10 the reimbursement rate shall become 100 percent for the 

11 subsequent payments. However, as is the case under para12 graph (1), reimbursement shall be provided only for the 

13 difference (if any) between—

14 ‘‘(A) the amount of civilian compensation that 

15 would otherwise have been payable to the employee 

16 for such pay period if the employee’s civilian employ17 ment with the State or local government had not 

18 been interrupted by the service on active duty; and 

19 ‘‘(B) the amount of military pay that is payable 

20 to the employee for the service on active duty and 

21 is allocable to such pay period. 

22 ‘‘(c) PAY PERIODS.—Reimbursement shall be pro23 vided under this section with respect to each pay period 

24 (which would otherwise apply if the employee’s civilian em25 ployment had not been interrupted) that occurs—
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1 ‘‘(1) while the employee serves on active duty 

2 for a period of more than 30 days; 

3 ‘‘(2) while the employee is hospitalized for, or 

4 convalescing from, an illness or injury incurred in, 

5 or aggravated during, the performance of such active 

6 duty; or 

7 ‘‘(3) during the 14-day period beginning at the 

8 end of such active duty or the end of the period re9 ferred to in subparagraph (B). 

10 ‘‘(d) EFFECT OF FAILURE TO RETURN TO EMPLOY11 MENT.—(1) If an employee described in subsection (a), 

12 with respect to whom reimbursement is provided to a 

13 State or local government under this section, fails to re14 port or apply for employment or reemployment with the 

15 State or local government by the end of the period referred 

16 to in subsection (c)(3), the employee shall refund to the 

17 Secretary concerned the total amount of the reimburse18 ment provided with respect to the employee. 

19 ‘‘(2) Subject to paragraph (3), an obligation to re20 fund moneys to the United States imposed under para21 graph (1) is for all purposes a debt owed to the United 

22 States. 

23 ‘‘(3) The Secretary concerned may waive, in whole 

24 or in part, a refund required under paragraph (1) if the 

25 Secretary concerned determines that recovery would be 
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1 against equity and good conscience or would be contrary 

2 to the best interests of the United States. 

3 ‘‘(4) A discharge in bankruptcy under title 11 that 

4 is entered less than five years after the end of the period 

5 referred to in subsection (c)(3) does not discharge the em6 ployee from a debt arising under paragraph (1). This 

7 paragraph applies to any case commenced under title 11 

8 after the date of the enactment of this section. 

9 ‘‘(e) REGULATIONS.—The Secretaries concerned shall 

10 prescribe regulations to carry out this section. 

11 ‘‘(f) DEFINITIONS.—In this section: 

12 ‘‘(1) The term ‘civilian compensation’ means 

13 the wages or salary that an employee of a State or 

14 local government normally receives from the employ15 ee’s employment by the State or local government. 

16 ‘‘(2) The term ‘local government’ means an 

17 agency or political subdivision of a State. 

18 ‘‘(3) The term ‘military pay’ has the meaning 

19 given the term ‘pay’ in section 101(21) of this title. 

20 ‘‘(4) The term ‘State’ means each of the several 

21 States of the United States, the District of Colum22 bia, the Commonwealth of Puerto Rico, Guam, the 

23 Virgin Islands, and other territories or possessions 

24 of the United States.’’. 
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1 (b) CLERICAL AMENDMENT.—The table of sections 

2 at the beginning of chapter 17 of title 37, United States 

3 Code, is amended by inserting after the item relating to 

4 section 909 the following new item:

‘‘910. Assistance for State and local governments that continue to pay employees who serve on active duty.’’.

5 (c) APPLICATION OF AMENDMENT.—Section 910 of 

6 title 37, United States Code, as added by subsection (a), 

7 shall apply with respect to pay periods (as described in 

8 subsection (b) of such section) beginning on or after the 

9 date of the enactment of this Act. 

10 SEC. 4. ACTIVE-DUTY RESERVE COMPONENT EMPLOYEE 

11 CREDIT ADDED TO GENERAL BUSINESS 

12 CREDIT. 

13 (a) ADDITION OF CREDIT.—Subpart D of part IV of 

14 subchapter A of chapter 1 of the Internal Revenue Code 

15 of 1986 (relating to business-related credits) is amended 

16 by adding at the end the following new section: 

17 ‘‘SEC. 45G. ACTIVE-DUTY RESERVE COMPONENT EMPLOYEE 

18 CREDIT. 

19 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

20 in the case of an employer, the active-duty reserve compo21 nent employee credit determined under this section for the 

22 taxable year is an amount equal to 50 percent of the com23 pensation paid by the employer to an employee who is also 

24 a member of a reserve component during the taxable year 
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1 when the employee was absent from employment for a rea2 son described in subsection (b), but not to exceed 50 per3 cent of the difference (if any) between—

4 ‘‘(1) the amount of compensation that would 

5 otherwise have been payable to the employee during 

6 such absence if the employee’s employment with the 

7 employer had not been interrupted by the employee’s 

8 absence; and 

9 ‘‘(2) the amount of military pay that is payable 

10 to the employee during the absence. 

11 ‘‘(b) COVERED PAY PERIODS.—Subsection (a) shall 

12 apply with respect to an employee who is also a member 

13 of a reserve component—

14 ‘‘(1) while the employee serves on active duty 

15 for a period of more than 30 days; 

16 ‘‘(2) while the employee is hospitalized for, or 

17 convalescing from, an illness or injury incurred in, 

18 or aggravated during, the performance of such active 

19 duty; or 

20 ‘‘(3) during the 14-day period beginning at the 

21 end of such active duty or the end of the period re22 ferred to in subparagraph (B). 

23 ‘‘(c) LIMITATION.—No credit shall be allowed under 

24 subsection (a) with respect to an employee on any day on 

25 which the employee was not scheduled to work (for a rea-
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1 son other than such service on active duty) and ordinarily 

2 would not have worked. 

3 ‘‘(d) DEFINITIONS.—For purposes of this section—

4 ‘‘(1) The terms ‘active duty for a period of 

5 more than 30 days’, ‘member’, and ‘reserve compo6 nent’ have the meanings given such terms in section 

7 101 of title 37, United States Code. 

8 ‘‘(2) The term ‘compensation’ means any remu9 neration for employment, whether in cash or in kind, 

10 which is paid or incurred by a taxpayer and which 

11 is deductible from the taxpayer’s gross income under 

12 section 162(a)(1).’’. 

13 (b) CREDIT TO BE PART OF GENERAL BUSINESS

14 CREDIT.—Subsection (b) of section 38 of such Code (re15 lating to general business credit) is amended by striking 

16 ‘‘plus’’ at the end of paragraph (14), by striking the period 

17 at the end of paragraph (15) and inserting ‘‘, plus’’, and 

18 by adding at the end the following new paragraph: 

19 ‘‘(16) the active-duty reserve component em20 ployee credit determined under section 45G(a).’’. 

21 (c) CONFORMING AMENDMENT.—The table of sec22 tions for subpart D of part IV of subchapter A of chapter 

23 1 of the Internal Revenue Code of 1986 is amended by 

24 inserting after the item relating to section 45F the fol25 lowing new item:

‘‘Sec. 45G. Active-duty reserve component employee credit.’’.
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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2001.

Æ