On / Off The Job

Effective strategies to help simplify the management of employee leave

by Jennifer Hader

Traditionally, HR departments have led the management of employee leave and paid leave policies, however, the onset of the pandemic changed all that. In addition to employers quickly pivoting to remote work, a significant number found themselves having to address their employees’ need to take extended leave due to COVID-19 –either because they were ill themselves or because they needed to care for a sick family member. This, coupled with employee leave of absence due to childcare challenges, brought absence management to the forefront with 80 percent of employers say COVID-19 raised senior leadership’s awareness on the importance of effectively managing employee leave.

Take for example that approximately 56 percent of employers stated their staffing was impacted because of employees taking leave under the Families First Coronavirus Response Act (FFCRA), according to Guardian Life’s report, “Absence Management Redefined: During the COVID-19 Pandemic and Beyond.” The FFCRA, which expired on December 31, 2020, required employers with fewer than 500 employees to provide paid sick leave or expanded medical leave time off for reasons related to COVID-19. Employers, in general, were already challenged with tracking intermittent time, but the FFCRA had a significant impact on that as most employee leaves related to caring for a child due to school closure had been taken as intermittent time.

The FFCRA, coupled with state and municipal paid leave legislations, also put pressure on employers last year to get up to speed quickly on the new paid leave laws, ensure compliance, and manage employee leave of absence.

While most organizations believed they were reasonably well-prepared for COVID-19 in terms of their disability and/or leave programs or policies, three in four employers changed their unpaid leave policies to paid due to COVID-19, while one in three employers created new and separate COVID-19 leave policies.

As a result of this, one emerging trend we are seeing is that most employers are maintaining their existing paid leave policies to provide employees with more flexibility to balance the demands of remote work and home life. While flexible scheduling existed long before the pandemic, more companies adopted it during COVID-19 to better fit employees’ changing needs.

Other leave trends that emerged last year included greater use of technology to improve the employee experience and an increase in the outsourcing of leave administration. For example, sixty seven percent stated they were “very” or “somewhat likely” to outsource Family and Medical Leave Act (FMLA), and 74 percent want to centralize Americans with Disability Act (ADA) service with FMLA and Short-Term Disability (STD).

The Race to Keep Up with Expanding Number of State Paid Leave Laws and Municipal Laws

The lack of a national paid family and medical leave program has continued to result in states passing their own individual laws. Although the FFCRA brought on by COVID-19 set a precedent for how such a program could work, its temporary nature, coupled with the evolving political landscape, leaves states on their own. The greatest challenge for employers (87 percent), and particularly those in highly regulated states, is keeping up with the many changes to federal and state leave laws in the past two years and coordinating different types of absences.

For example, at the start of this year, employers and leave administrators had been closely monitoring the American Rescue Plan framework and whether it would include components of the FFCRA’s emergency paid leave provisions. Ultimately, it did not reinstate the FFCRA paid leave mandate, but rather, expanded and extended paid leave tax credits for FFCRA-covered employers. Now, employers have turned their attention to the paid leave provisions in the president’s proposed American Families Plan (AFP), which if enacted, would require employers to provide up to 12 weeks of paid family and medical leave through a federally funded program.

It is this ever-changing paid leave landscape – which was further exacerbated by the pandemic – that has prompted employers to re-evaluate whether to manage leave in-house or move to an outsourced model. Our research confirmed that roughly half of employers are managing them with in-house resources, and of those who made the decision to outsource, many cited concerns about compliance and cost control as the key drivers.

Then there is the “new normal” currently underway with the changing dynamics in the workplace, and the reality that remote work is here to stay. Our latest research shows there was a significant uptick in companies prioritizing flexible schedules –58 percent of employers agree flexibility is important for employee well-being vs. 48 percent in 2019.^[1] It has also prompted employers to adopt new technologies and best practices to better run their companies, whether it is looking at absence management through a new lens or redefining what employee wellness looks like.

For an effective absence management program, below are some best practices that employers should consider when thinking about new federal, state or municipal paid leave laws:

Evaluate Your Paid Leave Policies – It is critical to understand how your company leave policies interact with federal paid leave and state paid leave laws. Any changes- whether federal or state – could potentially impact current employer leave policies as well as employer benefit offerings to ensure they complement each other. As mentioned previously, COVID-19 prompted employers to make temporary or permanent changes to their policies. This included expanding definitions within current policies, increasing benefit levels or changing existing unpaid policies to be paid.

Also important is identifying whether disparities exist, particularly if the employer has multiple offices across the country. For example, a New York-based employee will have different rights than a California-based employee. To alleviate this challenge, many employers look to standardize their companywide policies to help ensure parity amongst its workforce and help create a positive employee experience, but even this is difficult.

Consider an Integrated Approach to Employee Leave – Employers should also evaluate potential unintended gaps in the benefit offerings following the passage of a new paid leave law and prepare accordingly. In many cases, a state paid leave law may not cover employees equally when having to take leave due to his/her own serious health condition. Employers can fill the gaps with disability coverage. For example, due to the state benefit calculations, employees earning over a certain amount of income may not have a sufficient wage replacement from the state plan. We have worked with employers who decide to add and/or increase their disability coverage to help ensure all their employees are protected.

There is also a shift toward taking a holistic, integrated approach with absence management that focuses not only on staying compliant and managing costs but on the well-being of the employee. Employers tell us that the process for certifying leave can be difficult, especially when it comes to ensuring consistent handling across employee population. One of the benefits of integrating programs is that it allows for coordinating the various state, federal and employer’s own types of absences, particularly for those multi-state employers where each state has paid family and leave laws that have varying details regarding employee eligibility, benefit levels, complicated benefit calculations, different covered persons, and different administrative compliance responsibilities. This not only eliminates the many compliance and administrative challenges that employers face, but for employees, it helps ensure a seamless, positive leave experience because they receive one benefit letter, and one check from one source.

Effective Employee Communications – As noted previously, the paid leave landscape is rapidly changing making it critical for employers to effectively communicate to employees about the updated policies and procedures related to the new law. This may include changes to accommodations, pregnancy/childbirth leaves or other working conditions. In many instances, employers are required to put up posters in the workplace about the new paid leave law, so employers need to think about alternative options for workers who are remote.

Effective communications also requires that employers properly train staff, including human resource professionals, managers, and supervisors. Staff should have a solid understanding of the new paid leave laws, employees’ rights, how to address requests, and understand how and when to engage with employees throughout the process (i.e. leading up to, during and returning from leave). We have seen firsthand what can happen when staff isn’t properly trained and how it can not only lead to mistakes but possibly deny an employee leave when the laws indicated they are qualified.

Finally, the use of technology is making it possible for employers and employees to access information through self-service web portals and mobile devices throughout the leave process. Providing workers with flexibility in how they communicate at the beginning and throughout the leave process is important, especially with more people now working remotely. In fact, the percentage of employees wanting text or chat options grew 50 percent and 38 percent respectively in just two years.

Centralization Increases Compliance – Employers should consider consolidation of absence management activities to help ensure compliance and centralize intake to create efficiencies. As the complexity of managing benefits intensifies, employers are seeking to streamline leave administration and centralize it with a single internal department or vendor. Doing this has an upside – our research showed that employers who outsourced their Short-Term Disability/FMLA administration for four years or more are most likely to achieve favorable results, such as efficiency gains, improved return-to-work rates and a favorable employee experience.

In addition, employers that outsource absence management report fewer administration challenges and are more confident in being compliant with federal and state laws, compared to firms managing leave in-house.

For companies re-evaluating their approach to managing employee leave, these best practices have resulted in positive outcomes for companies, including compliance, retention, lower absenteeism, reduced costs, and overall employee happiness. And most importantly, it provides employers with the confidence they need to navigate this complex process.

¹ Guardian’s 10^th Annual Workplace Benefits Study “Inflection Point”, 2021

Unless otherwise noted, the data/sources referenced in this article are from The Guardian Life Insurance Company of America’s “Absence Management Redefined: During the COVID-19 Pandemic and Beyond” (2020)

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©Copyright 2021 The Guardian Life Insurance Company of America, New York, N.Y. Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or accounting professional regarding your individual situation.

2021-122949 (Exp. 6/23)