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The Complete Rundown of Absence Management

Leave of Absence management considerations for employers, from leave administration to HR compliance.

Buried in paperwork, endless research of new legislative changes, and the constant cycle of improving processes — HR professionals are left with little time and minimal resources to understand which way is up relative to leave of absence (LOA).

There’s an emerging trend for employers to consider outsourcing this complex function due to challenges and obstacles in absence management. While outsourcing the LOA function may shift the HR burden from internal to external responsibilities, there are still several important considerations when evaluating the most suitable and effective LOA administration solutions.

Below are the top three strategic considerations employers should evaluate while searching for LOA administrators:

  1. Insurance-Based vs. Non-Insurance-Based LOA Administrators

    Every organization has different needs and figuring out which option is best for you and your organization can be confusing. Currently, several group life and disability insurance companies offer LOA administration bundled with group insurance plans. For major insurance companies, the potential benefits of a bundled LOA and group insurance program might include discounted LOA administration prices, primarily due to the revenue and business gained via insurance premiums.

    Additionally, insurance companies that offer a bundled program will advertise their integrated disability claims management along with LOA administration – all of which certainly sounds attractive. However, HR professionals and employers should consider some potential challenges in such an arrangement. For example, employers should consider the possibility of receiving extraordinarily high group insurance renewals from the same carriers administering their LOAs. If that were to happen, you could be facing a tough decision to possibly un-bundle these services resulting in restructuring the LOA function and changing group insurance options due to a significant renewal increase.

    Non-insurance-based LOA administrators mean insurance renewals will not intertwine with LOA services. Still, these administrators typically charge higher fees because there is no additional revenue gained from insurance premiums. That said, the emerging demand for LOA outsourced services in today’s marketplace has resulted in a growing and competitive LOA administration industry where employers should be able to capitalize on selecting an unbundled LOA administrator with high service quality at a competitive price.

  2. LOA Policy Reviews, Updates and Development

    Are you still confident with your LOA policy, given all the recent regulatory updates? If your answer is “no” like many employers, it might be time to conduct a comprehensive review of your LOA policy. With that in mind, you should consider selecting an LOA administrator with the resources to provide compliance guidelines and best practices. Employers may be on the hook for up to $450,000 for wrongful termination based on FMLA Absence (Source: EEOC).

    In addition to the Family Medical Leave Act (FMLA), this area has numerous statutory compliance requirements nationwide. Almost every year, there appears to be new legislation either at the federal or state level.

    According to the Society for Human Resource Management (SHRM), the average cost to defend an FMLA lawsuit is $78,000, regardless of the outcome. It is imperative that your administrator has the resources to keep up with these developments.

    Moreover, if your company is doing business in multiple states, there is added pressure to ensure you are meeting compliance requirements. Failure to do so could mean facing significant penalties and subjecting your organization to potential liability related to lawsuits.

  3. The “Interactive Process” of Absence Management

    The most effective LOA administrators are genuinely business partners with their clients. HR professionals and employers should assess the communication strategies offered by LOA administrators. It’s essential to consider the employee experience provided by the LOA team and who will be responsible for interacting and communicating directly with your employees. Keep in mind when you decide to outsource this vital function, you are also choosing to allow the selected LOA administrator to represent your company and your HR department.

    Suppose you select an administrator that poorly communicates and educates your employees about their options during their LOA process. This experience could reflect negatively on your company and your department. Remember that employees who request LOA are typically discussing some of the most sensitive and personal situations you can imagine.

    Your LOA administrator should have experienced professionals who are qualified, professional and empathetic to your employee’s needs. In a worst-case scenario, if you’re not careful, an employee might build resentment with your company, resulting in a lawsuit primarily because they perceived their experience with an external LOA administrator as uncaring and erroneous.

    In addition to the ability to effectively communicate employee options, your LOA administrator should provide regular communications to your HR department regarding your group’s LOA activity. Periodic communications between your HR department and your LOA administrator are critical to a successful partnership.

Capitalizing on emerging trends such as outsourcing absence management can significantly benefit your HR department and your company with thoughtful and careful considerations. The complexity of FMLA and the various LOA laws can create such a workload that HR professionals feel buried with paperwork. However, if you can partner with the right LOA administrator, you will have a better chance of figuring out which way is up!

Leave of absence management can be complicated and overwhelming. Review the leave laws that every employer should know today or connect with one of our OneDigital Consultants.