The Significance of Continuous Service
Employers in periods of economic instability may find themselves with a higher frequency of employees leaving and even returning back to work within a short time period. One item that some employers may not be familiar with is the concept of “continuous service.”
Continuous service involves a period of employment service with an employer, starting with the employee’s very first date of hire with the employer) and ending with the latest termination date. When an employee terminates (i.e. resigns or is discharged), the employer may designate the individual as “rehirable” and eligible to return to work. The time between a termination date and being rehired is often referred to as a “break in service.” Bridging the time before and after the employee’s break in service may offer a nice benefit to the rehired employee.
To determine how continuous service may be considered, review the following points:
- Know if the employee is rehireable and left previously on good terms.
- Know what will be the employee’s rehire date (original date hired versus new date rejoined)
- Know if employment forms (I-9, W-2, etc.) need to be revised or completed if there is a significant gap in employment period.
- Know how compensation and benefits (i.e. PTO, sick leave, vacation leave, etc.) may or may not reset based on previous years of service.
- The Employee Retirement Income Security Act (ERISA) impacts pension plans to require that a participant’s service be more or less continuous in order to qualify for a retirement benefit.
Advantages of initiating continuous service exist. There are cost savings in time and money without having to train rehired individuals. Rehired employees also are already familiar with the workplace culture, practices and procedures. If deciding to adopt such a practice, be sure to treat all employees consistently.