‘‘5538. Nonreduction in pay while serving on active duty in a reserve compo-
nent.’’. 
(c) APPLICATION OF AMENDMENT.—Section 5538 of 
title 5, United States Code, as added by subsection (a), 
shall apply with respect to pay periods (as described in 
subsection (b) of such section) beginning on or after the 
date of the enactment of this Act. 
SEC. 102. ASSISTANCE FOR STATE AND LOCAL GOVERN-
MENTS THAT CONTINUE TO PAY EMPLOYEES 
WHO SERVE ON ACTIVE DUTY IN A RESERVE 
COMPONENT OF THE UNIFORMED SERVICES. 
(a) IN GENERAL.—Chapter 17 of title 37, United 
States Code, is amended by adding at the end the fol-
lowing new section: 
‘‘§ 910. Assistance for State and local governments 
that continue to pay employees who 
serve on active duty 
‘‘(a) CONTINUATION OF CIVILIAN BASIC PAY.—It is 
the purpose of this section to encourage States and local 
governments to continue to pay a portion of the civilian 
compensation of those employees who are also members 
of a reserve component and are absent from a position 
of employment with the State or local government under 
a call or order to serve on active duty for a period of more 
than 30 days so that the employees receive compensation
in an amount that, when taken together with their military 
pay, is at least equal to their civilian compensation. 
‘‘(b) REIMBURSEMENT OFFERED.—(1) At the re-
quest of a State or local government that continues to pay 
all or a portion of the civilian compensation of an employee 
described in subsection (a), the Secretary concerned shall 
reimburse the State or local government for 50 percent 
of the civilian compensation paid by the State or local gov-
ernment for each pay period described in subsection (c), 
but not to exceed 50 percent of the difference (if any) be-
tween— 
‘‘(A) the amount of civilian compensation that 
would otherwise have been payable to the employee 
for such pay period if the employee’s civilian employ-
ment with the State or local government had not 
been interrupted by the service on active duty; and 
‘‘(B) the amount of military pay that is payable 
to the employee for the service on active duty and 
is allocable to such pay period. 
‘‘(2) If the pay periods described in subsection (c) 
extend more than nine consecutive months after the first 
day of the first month during which the employee began 
to serve on active duty for a period of more than 30 days, 
the reimbursement rate shall become 100 percent for the 
subsequent payments. However, as is the case under para-
graph (1), reimbursement shall be provided only for the 
difference (if any) between— 
‘‘(A) the amount of civilian compensation that 
would otherwise have been payable to the employee 
for such pay period if the employee’s civilian employ-
ment with the State or local government had not 
been interrupted by the service on active duty; and 
‘‘(B) the amount of military pay that is payable 
to the employee for the service on active duty and 
is allocable to such pay period. 
‘‘(c) PAY PERIODS.—Reimbursement shall be pro-
vided under this section with respect to each pay period 
(which would otherwise apply if the employee’s civilian em-
ployment had not been interrupted) that occurs— 
‘‘(1) while the employee serves on active duty 
for a period of more than 30 days; 
‘‘(2) while the employee is hospitalized for, or 
convalescing from, an illness or injury incurred in, 
or aggravated during, the performance of such active 
duty; or 
‘‘(3) during the 14-day period beginning at the 
end of such active duty or the end of the period re-
ferred to in subparagraph (B). 
‘‘(d) EFFECT OF FAILURE TO RETURN TO EMPLOY-
MENT.—(1) If an employee described in subsection (a),
with respect to whom reimbursement is provided to a 
State or local government under this section, fails to re-
port or apply for employment or reemployment with the 
State or local government by the end of the period referred 
to in subsection (c)(3), the employee shall refund to the 
Secretary concerned the total amount of the reimburse-
ment provided with respect to the employee. 
‘‘(2) Subject to paragraph (3), an obligation to re-
fund moneys to the United States imposed under para-
graph (1) is for all purposes a debt owed to the United 
States. 
‘‘(3) The Secretary concerned may waive, in whole 
or in part, a refund required under paragraph (1) if the 
Secretary concerned determines that recovery would be 
against equity and good conscience or would be contrary 
to the best interests of the United States. 
‘‘(4) A discharge in bankruptcy under title 11 that 
is entered less than five years after the end of the period 
referred to in subsection (c)(3) does not discharge the em-
ployee from a debt arising under paragraph (1). This 
paragraph applies to any case commenced under title 11 
after the date of the enactment of this section. 
‘‘(e) REGULATIONS.—The Secretaries concerned shall 
prescribe regulations to carry out this section. 
‘‘(f) DEFINITIONS.—In this section: