Employers Adapt to Evolving Leave Laws

Compliance challenges drive new approaches to absence management

Stephen Miller, CEBS By Stephen Miller, CEBS March 31, 2017
Employers Adapt to Evolving Leave Laws

Changing federal, state and local leave laws are pushing U.S. employers to alter how they manage employee absences, new research shows.

According to survey results released March 28, among U.S. companies 32 percent indicated that they are making major efforts to improve their absence management practices, up from 22 percent two years ago.

"Employers are required to maintain compliance with existing laws and corporate policies and to keep up with the latest provisions" of statutes such as the federal Family and Medical Leave Act (FMLA) and its state counterparts, the Americans with Disabilities Act, and statutory disability and workers' compensation laws, said Scott Larsen, vice president for group and worksite markets at Guardian Life Insurance Co. based in Plano, Texas. In addition, more localities are passing paid leave laws.

The survey, conducted last year, gathered responses from 1,000 benefits professionals at organizations with at least 50 employees.

Absence Management Trends

Among other things, the survey found that more U.S. companies now are:

  • Providing return-to-work programs. Seven in 10 companies surveyed (up from 6 in 10 in 2014) are focusing on ways to actively return employees to work when they are out on leave under short-term disability (STD) or the FMLA.

[SHRM members-only how-to guide: How to Create a Return-to-Work/Light-Duty Program]

  • Outsourcing and integrating leave management. Thirty-four percent of employers outsource both their STD and FMLA administration, more than twice as many as two years ago (16 percent). Many companies outsourcing STD and FMLA administration use a single vendor to handle both leave types—more than double the 2014 level (28 percent vs. 12 percent).

Among medium-size businesses (250 to 999 employees), 1 in 3 now outsource STD and FMLA administration to the same external vendor, three times as many as two years ago.

"Absence management was once viewed as a concern only for large companies, but it is becoming a higher priority for small and medium-size companies," Larsen said. By outsourcing absence management activities, "employers can alleviate the administrative and compliance burden on their human resource teams."

Firms that use the same vendor for STD and FMLA administration tend to have a sophisticated return-to-work process, including a formal policy (91 percent) and use of nurse case managers (59 percent).

In addition, employers are increasingly selecting insurance carriers as their vendor when outsourcing STD and FMLA administration. "The increase is mainly attributable to a greater share of small and medium-size firms leveraging the FMLA services of their STD carrier," Larsen explained.

  • Combining wellness programs with absence management. More companies said their disability or FMLA leave process included employee referrals to wellness/health management programs (54 percent vs. 42 percent in 2014). Employers that place high importance on reducing absenteeism and improving productivity are more likely than others to have wellness programs in place.

Seventy percent of surveyed employers offer employee incentives and discounts as part of their wellness programs, up from 64 percent two years ago.

"The more advanced a company is with its absence management efforts, the more likely it is to offer incentives or discounts for employees to participate in any activities of the wellness program," Larsen said.

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