Employers sometimes look to former employees to fill job vacancies. This can be an attractive option if the individual was a strong performer since they already have a proven track record with the company. Rehiring can also help the company save on recruitment costs. Here are seven factors to consider when rehiring a former employee:
#1: I-9 Form.
All employers must complete and retain a Form I-9 for each new hire to verify their identity and work authorization. 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 I-9 for them or complete Section 3 of the previously completed form. After three years, a new I-9 must be completed.
#2: Required paid sick leave.
Many jurisdictions require employers to provide paid sick leave to employees. While these laws don’t typically require employers to pay out unused sick leave at the time of termination, some do require employers to reinstate unused sick leave if the employee is rehired within a certain timeframe. For example, in the state of Washington, if an employee is rehired within 12 months of separation, the employer must reinstate any accrued unused paid sick leave from the previous period of employment. Comply with all requirements in the jurisdictions where your employees work.
#3: Other leave.
The federal Family and Medical Leave Act requires employers with 50 or more employees to provide unpaid leave to employees for certain purposes. To be eligible, employees must work for the employer for at least 12 months and perform at least 1,250 hours of service for the employer during the year immediately preceding the leave. If an employee has a break in service, any time worked prior to that break would count toward meeting the 12-months of work requirement as long as the break was less than seven years (unless the time frame is extended by written agreement or because of military service covered by the Uniformed Services Employment and Reemployment Rights Act). After a break in service, the employee would still need to meet the requirement of having performed 1,250 hours of service for the employer during the year immediately preceding the leave. Many states have family and medical leave laws that apply in additional circumstances. Check your applicable law to ensure compliance when managing leave for rehired employees.
#4: Affordable Care Act (ACA).
Under the ACA, employers with 50 or more full-time and full-time equivalent employees must generally offer health coverage to full-time employees or pay a penalty. These employers must also comply with certain reporting requirements. The ACA has specific rules for how employers should treat employees who return after a break in service. Additionally, the ACA generally prohibits all health plans from requiring an otherwise eligible individual to wait more than 90 days to enroll in the plan. Depending on the circumstances, health plans may have the option of requiring rehires to satisfy the waiting period again, if reasonable (for example, the termination and rehire cannot be used to avoid compliance with the 90-day waiting period limitation). Check your health plan documents for details on waiting periods for rehired employees.
#5: Retirement plans.
Depending on a rehired employee’s prior status, retirement plans may be required to give rehired employees credit for their prior service. For example, plans generally preserve the service credit an employee has accumulated for vesting purposes if they leave and then return to the employer within five years. Because retirement plan rules for rehired employees are very specific, carefully review controlling plan documents and consult legal counsel as needed.
Many employers voluntarily offer more generous compensation, benefits, and perks to employees based on their length of service. Employers typically give rehired employees credit for prior service even if they aren’t required to do so by law. 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. For example, many employers require rehired employees to have at least one year of prior service to be eligible for credit upon rehire and/or require employees’ prior service to be longer than the gap between employment at the company.
#7: Required notices.
Various federal, state, and local laws require employers to provide certain notices to employees at the time of hire. For purposes of these notice requirements, employers should, and may be required to, treat rehired employees as new hires. Rehired employees should also be provided with an up-to-date employee handbook and be required to sign a new form acknowledging that they read, understand, and will comply with all company policies.
When developing a hiring strategy, carefully weigh the advantages and disadvantages of hiring new employees versus rehiring former employees. Additionally, be sure to comply with all applicable federal, state, and local laws.