Employer Challenges with Leave of Absence and FMLA

By Josh Davis

The Department of Labor (DOL) recently celebrated the Family Medical Leave Act’s (FMLAs) 20th Anniversary.  And in an effort to promote this anniversary, the DOL published the results of a survey entitled Family and Medical Leave Act in 2012: Final Report. What was really interesting is the study uncovered that 13 percent, or about 13 out of every 100 employees, reported taking leave for an FMLA-related request in the last 12 months. This doesn’t even include the leave of absences taken for non FMLA-related leave.  So, it’s pretty safe to assume that for most companies, managing leave is an area of the business that demands attention and administration, but it can be a challenge…

To help you understand what the most challenging parts about this are for your existing and prospective clients view our recorded webinar, Managing Leave Management in the SMB Space.

Utilizing a Manual or Decentralized System for Tracking Leave

Two of the most important aspects of leave compliance are having a leave policy, and consistently applying that policy through uniform procedures and practices.  Companies using a manual or decentralized process can find this to be nearly impossible.  This is likely why, according to an Aberdeen Group study entitled Absence Management, 74 percent of companies that have an absence management solution, have it as an integrated part of a time and labor management system or HCM / workforce management suite.

Finding Coverage for Employees on Leave

It’s inevitable that employees will have to take leave at some point or another and an employer will have to figure out what to do when that happens, which is exactly why companies are using leave solutions as part of an integrated workforce management suite.  Here’s the typical response companies take to leave as communicated by that Absence Management study conducted by the Aberdeen Group in December 2012:
–  47 percent have existing staff work overtime or extra shifts to cover
–  21 percent say the work doesn’t get done
–  19 percent have supervisors cover
–  7 percent utilize contingent or temporary labor

The problem is that all of these methods have a cost in one way or another, which businesses will have to absorb. As a service provider, your responsibility is to help them mitigate these costs…

Managing the Cost of Leave

Finding coverage for employees on leave is just one area of cost that a company will have to absorb.  In fact, managing absence as a whole can have significant cost impacts.  A survey by Mercer, entitled The Total Financial Impact of Employee Absences, states that employee absences average an astounding 36 percent of payroll annually.  2.9 percent of these costs can be associated with extended absences or leave.  With an organization that only has $1,000,000 payroll, extended absences alone are $29,000, and the costs of other absences are obviously much higher.  For this reason, it’s important to provide full absence management solutions to your clients to help them cover the spectrum of needs associated with managing absence.  These estimated costs don’t include the administrative costs, which oftentimes for the SMB market consist of tracking these balances, requests, and statuses via spreadsheets. If you throw the cost of non-compliance in there, forget about it…

Keeping Track of… Everything Leave Related

The ability to identify and integrate federal, state, and local leave entitlements with employer benefit programs is tough – there are over 70 federal, state, and local leave laws or variations of law throughout the United States.  Employers need to track eligibility, time taken, balances, expected return dates, etc. for all types of leave. This can be especially difficult if there are multiple people managing it throughout multiple locations because it can lead to various interpretations of each piece of legislation, which opens companies up to non-compliance.  Typically, we’ve found that the cost just to get to trial when defending an FMLA case can range from $78,000 – $150,000.

Depending on the organization, leave can be paid or unpaid, and may require the use of vacation or sick time.  To top it all off, employees can actually request their leave status every 30 days, and employers need to respond in writing by the next pay period.  The list goes on and on, but here are some additional areas employers have trouble with when tracking leave:
–  Managing intermittent leave
–  Executing a consistent leave policy and process for every employee
–  Informing employees of rights and responsibilities as dictated by the FMLA
–  Providing notices of eligibility within five days of a leave request

Helping clients to manage leave of absence or FMLA can definitely be challenging, but it’s important to find a solution that can help you and your clients establish the policy and automate as much of the administration and management as possible.  What else do you find clients have trouble with when it comes to leave management?

About Josh Davis:

Josh is the Marketing Manager at SaaShr responsible for increasing the growth of existing channel partners and the recruitment of new channel partners while positioning the SaaShr brand to the market through the development of both traditional and digital marketing endeavors.

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