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Leave Management Continues to Vex, but Outsourcing and Integrated Systems Help

Training managers is key to accurate leave tracking and administration

A woman using a laptop with a calendar on it.

If you think managing your employees' leave is getting more complicated, you're not alone.

"The landscape of employer leaves continues to change and increase in complexity," said Terri Rhodes, CEO of the San Diego-based Disability Management Employer Coalition (DMEC).

In February, her organization released initial findings from its 6th Annual Employer Leave Management Survey, conducted last year among 1,132 U.S. employers of all sizes. Findings on a number of key leave-management trends are highlighted below.

Outsourcing Leave Management

Outsourcing of Family and Medical Leave Act (FMLA) administration continues to increase, the survey found:

  • 34 percent of employers with 50 or more employees outsource FMLA leave to a third-party administrator (TPA).

  • 45 percent of employers with 1,000 and more employees do so.

  • 80 percent of employers that also outsource management of short-term disability (STD) and long-term disability (LTD) leave do so through the same TPA that manages FMLA leave on their behalf.

"Satisfaction with external vendors continues to be high—up to 86 percent," said Karen English, a partner at Spring Consulting Group in Boston, which partnered with DMEC in conducting the study.

"Compliance is really what drives outsourcing of leave administration and organizations lacking the internal resources to handle all of the obligations that they face today with leave management," Rhodes said.

While LTD coverage is more commonly a fully insured benefit, STD is more commonly self-insured by employers that use the services of a TPA to administer the program:

  • LTD is fully insured (56 percent of respondents).

  • STD is self-insured with a TPA that is either cutting checks to employees (40 percent of respondents) or notifying the employer of the need to pay (29 percent).

FMLA and Americans with Disabilities Act (ADA) leave management is increasingly being integrated with an employee assistance program (EAP). "A trend is to bring these programs together," English said. "When employees are taking disability leave, they're being referred to the EAP," which then helps with managing the employees' return to work.

[SHRM members-only toolkits: Managing Family and Medical Leave and Coordinating Leaves of Absence]

Leave-Tracking Technology

Rhodes said that alternatives to outsourcing include using automated software systems and platforms, which can be helpful "given that the majority of employers are still managing their leave obligations internally."

Leave tracking and management systems can be integrated with, and draw data electronically from, HR information systems, time and attendance platforms, and payroll systems. "More flexible data feeds and functionality to upload reports can help" meet complex leave-tracking issues, English said.

The survey showed that the challenges respondents most often said were difficult or extremely difficult were:

  • Tracking intermittent FMLA leave (35 percent of respondents).
  • Concurrently managing FMLA and ADA leave-taking (30 percent).
  • Transferring employees to alternative positions (29 percent).
  • Denying leave requests (26 percent).

The survey found that top reasons for shifting from manual tracking to automated systems to manage FMLA and other leave-taking included the desire to lessen the HR staff's time burden, reduce errors and ensure regulatory compliance. "These activities can be made easier by implementing an automated tracking system to eliminate manual processes and to facilitate better recordkeeping," English said.

Other helpful steps English recommended include having a dedicated or legal resource to aid in interpreting the law, and providing training and education to employees and managers when transferring employees to alternative positions.

[SHRM members-only guide: How to Develop and Administer Paid Leave Programs]

Manager Training

Despite increased employer sophistication in managing leave, "additional tools, resources and training are needed—especially for the more complex aspects of intermittent leave and the ADA," English said. For instance, the survey showed that 37 percent of respondents cited supervisors' and managers' lack of exposure to leave management as a problem.

Employers should ensure that the managers who are interacting with leave-taking employees are gathering the right information and taking the right steps. "Making training mandatory for managers and making it easier through online tools can help," English said.

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