Your Message To Employers: Manage FLMA With Other Benefit Programs
Do you work with employers having 50 or more employees within a 75-mile radius? If so, you–and your clients–need to understand the federal Family and Medical Leave Act.
With the recent and steady stream of publicized FMLA court cases, compliance issues can no longer escape the radar of managers in risk, benefits and human resources. Many employers have opted to tackle FMLA with internal personnel and systems, and have managed to steer clear of the risks of non-compliance. But even one complaint filed with the Department of Labor against an employer can embroil a company in a legal battle, so it pays to keep abreast of FMLA compliance issues.
If you help your clients do this, youll be providing a critically important service.
Aside from the risks of non-compliance, an even bigger challenge looms. Just because FMLA allows for an unpaid leave doesnt mean it has no effect on other benefit programs, including insured disability.
The FMLA hits paid programs hard. If not coordinated appropriately with these other programs, it can negatively impact your clients work productivity and ultimately the bottom line.
That wasnt the intent, of course. FMLA was intended to benefit both employees and employers. Enacted in 1993, it protects eligible U.S. employees who have worked at least 1,250 hours in a given year from job loss resulting from personal or family health issues. The law allows employees unpaid leave of up to 12 weeks a year during their own or a family members serious illness, or to care for, or bond with, a newborn, foster or adopted child.
However, the complexity of the act has made it difficult for employers to administer it in the spirit originally intended. In fact, it is an administrative and productivity burden for many, according to a study our firm did of actual absence data from more than 700,000 FMLA transactions involving firms with 1,000 to 60,000 employees.
For example, your employer clients can expect that annually from 1% to 9% of their employees will take an FMLA leave. That translates to up to 200 lost work days for every 100 employees. At this rate, the potential cost of lost productivity due to the FMLA hits payroll at almost 4% a year.
Compliance and administrative costs add even more to those lost dollars. These costs arise from the administrative time necessary to comply with communication, documentation, tracking and follow-up on the part of HR, supervisors and occupational health personnel. Companies are devoting the equivalent of one full time employee for every 4,000 employees to handle the administrative aspect of FMLA.
Further, an unmanaged or poorly managed FMLA program can double the cost burden of the FMLA.
Are your clients tracking FMLA absences concurrently with disability leave (such as insured short-term disability or Workers Compensation)? If not, they may be experiencing 50% more FMLA days than those that do this tracking.
Are your clients approving all FMLA cases in order to avoid managing, tracking and litigation? These are firms that could be seeing 15% more FMLA cases.
Finally, do your clients have poor tracking or compliance procedures? If so, they may experience 10% higher administrative costs to provide documentation for DOL audits and legal investigations. (To help minimize the risk and cost burden, some firms outsource their FMLA administration.)
Ideally, FMLA leaves should be coordinated with existing absence, disability and occupational health programs. Tell the employers you work with not to be discouraged. They can control lost time costs, while remaining compliant, by establishing or contracting for integrated disability management programs.
Ideally, such programs should, in my opinion, do such things as: cover disability leaves of eight calendar days or more; cover all qualified FMLA leaves; run disability concurrently with FMLA leaves; deduct the leave period from the 12-week annual allotment; track intermittent FMLA leaves in the smallest time increments used by payroll; and deduct pregnancy-related disabilities from pregnancy disability leave in states where applicable.
Also, the FMLA component should include eligibility review, notification, medical certification, tracking, reporting and constant monitoring of compliance with state and federal regulations.
More than anything, employers and their business partners–including disability insurers–need to recognize that FMLA absences can, and should, be managed with virtually all other employee absences.
is vice president-research at CORE, Inc., a Portland, Maine employee absence management firm. She may be e-mailed at: contactus@
Reproduced from National Underwriter Life & Health/Financial Services Edition, April 22, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.