Leave Management 101
May is Disability Insurance Awareness Month (DIAM) — a perfect time for employers to brush up on the complexities of leave management. And learn how to administer a successful and supportive program that also aligns with a company’s culture. Here’s a Leave Management 101 primer for employers — including the pros and cons of working with a leave management vendor.
At one time, most companies could support their human-resource responsibilities in-house. Those days are fading as competitive pressures reduce investment in Human Resource departments, companies offer more employee benefits to attract and retain talent, and programs mandated by multiple levels of government become more prevalent and complex.
In this environment, employers may find themselves facing a critical decision: to administer each benefit internally or hire an outside company that specializes in specific programs to assume responsibility for day-to-day administration. Leave management is a case in point. Some companies choose to continue to self-administer their program, citing the low volume and additional budget line item to pay a third-party administrator. In addition, they want to offer a personalized experience that reflects the company culture of caring for employees during what is often an emotional period in their lives.
Other firms hire a leave management services provider, choosing to pay a company that specializes in administering a specific program (and sometimes multiple programs) the company offers. The challenge is to couple a personalized experience the company delivers on the front end — with the administrative efficiency and expertise a vendor can provide to evaluate the request and manage the leave.
Here are some helpful leave management points to consider:
The complexity of leave management
Offering leave management isn’t optional for most companies with 50 or more employees (though each worker must meet certain eligibility requirements to qualify individually). It is no longer as simple as understanding and administering the federal Family Medical Leave Act (FMLA) of 1993 and subsequent amendments.
Employers often cite these challenges when evaluating the in-source-versus-outsource decision:
Multiple jurisdictions may require leave programs
- The Family Medical Leave statutes and regulations governs federal medical and military leave programs. But that’s not the sum of leave benefits. Many states mandate that certain companies administer programs that may expand the definition of eligibility and specify the maximum length of a leave, pay policies during leave, required documentation to substantiate the request, and criteria for a return to active employment.
- Employers must understand how the programs run concurrently and that employees receive the higher benefit in each aspect of the respective programs. For example, if the state program requires 10 weeks of paid leave and the employee is entitled to 12 weeks of unpaid leave under FMLA, the employee receives 10 weeks of paid leave under the state rules and another two weeks of unpaid leave under FMLA. Some companies don’t have the resources to help them familiarize themselves with the details of these programs and keep up with changes in laws and regulations.
- A strong leave administration vendor knows the rules that govern federal and all state programs and applies them appropriately to ensure workers receive the benefits they’re entitled to — and the company remains in compliance with requirements.
Leave requests are infrequent
- In this scenario, a front-line manager may receive a single request or less annually for medical or personal leave. This low volume makes training and re-training managers challenging, and it’s difficult for managers to recall their responsibilities in real time.
- Technology can help employers deliver basic online training about how to steer a conversation and probe when a direct report shares a personal situation that may qualify for leave under federal and state laws. But managers who completed training nine months ago and receive a request today may find it challenging to remember the required information and apply it during the conversation requesting leave.
- A strong leave administration vendor’s business is to process leave requests, manage leaves and coordinate a return to the workforce. That specialization allows them to deliver a compliant and personalized experience, usually at a competitive price, than most companies would invest to develop the same expertise internally for a small volume of requests. The combination of an empathic front-line manager and/or Human Resources officer and a leave vendor with administrative expertise can deliver a better employee experience that aligns with the company’s culture.
Laws change frequently
- Programs that allow workers time to deal with major life issues are a popular political policy. It’s not uncommon for state political leaders to create a program, see it implemented and then alter it. For example, expanding the range of situations in which leave laws apply or lengthening the maximum leave period in response to feedback from employees whose needs weren’t met in full by the existing program. Many companies, even those with robust compliance departments, can’t keep up with and implement the volume of new rules.
- A strong leave administrator commits the resources to tracking these changes and integrating them into its management of leaves of absence across many clients because that’s its business.
Virtual workforces create new challenges
- Virtual employees aren’t a new concept, particularly for companies with a national sales force. But their prevalence exploded during the height of the pandemic when many employees worked virtually, and firms often hired employees regardless of their proximity to the company headquarters, the location of their division or any company facility.
- A related challenge is that some states claim that employees who live out of state, commuted to the worksite state, and worked from home-based offices were subject to the worksite state for tax purposes. This claim, and litigation around it, adds another potential element of confusion in administering leave. Few companies have built this expertise internally and are staffed to track these dynamic aspects of leave management.
- A strong leave administration vendor understands how to navigate these issues in leave laws and applies them accordingly.
Most employers lack medical expertise
- FMLA (and state programs as well) require proper medical certification to accompany a request for leave. Few companies have invested in resources to evaluate the leave request, manage the leave and prepare employees for return to work.
- A strong leave management vendor builds this expertise by employing experts who understand and evaluate these requests as their responsibility.
Leave programs and employees with disabilities
When a company commits to offering a leave program that reflects its culture and business goals, it can gain a competitive edge in the marketplace. Nowhere is this concept more obvious than in the recruitment and retention of employees with disabilities.
Employees who leave the workforce or are challenged to remain at work due to a disability may possess unique skills and experiences that add value to a company. Businesses who can provide accommodation for these workers through a combination of intermittent leave and accommodation can reap their rewards. Both the disabled person and the company benefit.
The Americans with Disabilities Act (ADA) of 1990 requires covered entities — companies with 15 or more employees, plus employment agencies, labor organizations and joint labor-management committees — to provide reasonable accommodation for a wide range of disabilities. The goal is to ensure that disabled workers who want to contribute and can add value receive the support they need to do so.
Here are two situations when a well-crafted, intermittent leave program can encourage new employees into the workforce, attract former workers seeking to return to productive employment, and help those who might otherwise leave employment to remain on the job:
Employees disabled while working for the company
- Federal and state leave laws may allow some employers and newly disabled employees to continue their relationship without the appearance of showing favoritism or granting accommodations to other employees without similar conditions may feel entitled as well.
- For example, an employee who suffers a nerve or musculoskeletal injury can continue to perform his duties at work only if he undergoes a full day of treatment — perhaps an infusion and intense physical therapy – bi-weekly.
- Companies may find they can fill critical knowledge gaps with employees who left the work force due to a disability. This initiative requires a separate company leave policy in addition to FMLA provisions.
- New hires aren’t eligible for FMLA leave until they’ve worked for the company for at least 12 months, have at least 1,250 hours of service before taking leave, and work at a location where the employer has at least 50 employees within 75 miles of the employee’s worksite.
- An employer can create its own leave program to offer the flexibility and job protections of FMLA before the new worker qualifies under FMLA. The company and FMLA programs could be structured to run concurrently so that the company program runs concurrent with FMLA once the federal program kicks in.
Many companies must comply with leave programs at the federal and state level. Administration can be challenging. And absent employees can create temporary loss of expertise and/or capacity that employers must manage. But employers can turn this requirement into a competitive advantage by designing and delivering a supportive program that reflects the company culture, keeps worker loyalty high and retains talent.
Learn more about Voya’s Leave Management program, or contact your Voya representative for more information.
This information is provided by Voya for your education only. Neither Voya nor its representatives offer tax or legal advice. Please consult your tax or legal advisor before making a tax-related investment/insurance decision.
Voya Leave Management Services provided in part by Disability Reinsurance Management Services, Inc.