Employers Use Technology and Outsourcing to Ease Leave Management

'Co-sourcing' tasks with vendors helps to lessen administrative burdens

Stephen Miller, CEBS By Stephen Miller, CEBS March 8, 2018
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While the legal requirements to provide employees with paid or unpaid leave for family and medical issues become more complex, the leave-management tools and services available to employers continue to expand.

Employers with the budget to do so are outsourcing—often to a single vendor—leave-management tasks for the federal Family and Medical Leave Act (FMLA) and Americans with Disabilities Act (ADA), and state and local leave ordinances, according to recently released findings from a survey of 1,203 employers conducted last year. Employers with the resources to manage leave internally are increasingly using technology to assist them.

Challenges continue to exist, especially in managing intermittent leave and the ADA, such as relying on managers and supervisors for leave enforcement and training them in the first place, the survey showed.

The 2017 DMEC Employer Leave Management Survey was sponsored by the San Diego-based Disability Management Employer Coalition (DMEC), a not-for-profit organization that provides education, resources and networking for absence- and disability-management professionals, and by Boston-based Spring Consulting Group, an advisory firm. Employers of all sizes were polled.

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How Leave Is Managed

Most employers have programs in place to manage employee leave, and as employer size increases, so does leave-management outsourcing, the survey showed.

Large employers had an average 40 percent outsourcing rate versus smaller employers at 27 percent. For smaller employers, "we see their rate of outsourcing increasing but at a slower rate than the larger firms," said Karen English, a partner at Spring Consulting Group. "They not only outsource disability and FMLA to the same vendor, but they're more likely to bundle workers' compensation, group health, the employee assistance program and wellness with their leave program."

Employers also are moving toward integrating management of different leave types, "including sick leave taken prior to disability [leave] coming into play," said DMEC CEO Terri Rhodes.

Larger organizations are more likely to offer leave benefits beyond those they are legally required to provide, such as personal leave, bereavement leave and paid parental leave.

About half of the surveyed employers consider their leave programs to be co-sourced, with some management tasks handled internally and more complex or time-consuming tasks—such as payment coordination, medical review and obtaining medical certification—handled by a vendor.

Employers' satisfaction with their leave-management vendors is highest for jumbo-size employers, for whom vendors play a key collaboration role. Midsize companies appreciate a variety of information intake options, including online portals and mobile apps, and small employers value leave-related fraud identification and technology tools.

Employers overall reported that vendors improved their ability to keep apprised of changing regulations and requirements, particularly given today's high level of leave legislation activity.

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

Being Too Generous?

Due to compliance complexities, many employers find it more efficient to offer programs that are more generous than the laws require, the survey found.

A problem with being more generous than necessary, English said, is that it can lead to "more people being absent, which equates to higher costs to employers. It also can result in an entitlement mentality or even abuse if employees think it's easier for them to take time off."

"Be consistent in your generosity across the board," instead of picking favorites among employees, Rhodes added.

"The stronger the policy you have around different types of leave, the better able you'll be able to manage these programs," English said. "If being more generous than the law requires is a stance you're taking, make sure you have a policy that guides that generosity."

Handling Intermittent Leave

Intermittent leave time, taken in separate blocks of time for a single illness or injury, is still the most difficult FMLA activity to manage for employers of all sizes and industries, the survey showed.

When managing intermittent leave, "jumbo employers cite a lower level of difficulty, and that's probably because they have greater internal sophistication or vendor arrangements in place," said Lai-Sahn Hackett, a consultant at Spring Consulting Group.

Tools and resources that make FMLA leave administration easier are manager training, automated tracking systems/software, and outsourcing or co-sourcing to a vendor, while ADA administration is helped by clear legal guidelines and best practices that are developed in accordance with legal guidelines.

For many organizations, however, training managers to recognize and respond appropriately to FMLA and ADA requests remains a challenge, and "the biggest reasons were around time constraints, high turnover and lack of support from upper management," Hackett said.

According to English, employers indicated that managing workers' compensation or disability claims running concurrently with the FMLA "is a challenge that stems from poor communication and coordination between departments or vendors, lack of education and the absence of a system or method for tracking and reporting."

Seeking Help

Who do HR leave managers turn to for help? The internal legal department "is at the top of the list, followed by brokers and consultants, and then third-party administrators, payroll providers, insurance carriers and other service providers," English said.

When researching vendors that would be a good fit for an organization, "reach out and ask for recommendations from trusted brokers and consultants you're currently using, and network among your peers," Rhodes advised.

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Related SHRM Articles:

FMLA Surveillance of Employees Requires a Good Reason, SHRM Online Benefits, March 2018

FMLA: A Primer for HRHR Magazine, March 2018

Replacement After Medical Leave Can Lead to FMLA Liability, SHRM Online Employment Law, January 2018

Related SHRM Resource:

SHRM Vendor Directory: Family & Medical Leave Administration

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