Injury used to represent the bulk of employee absence managed by companies. Of course, injury leave is still important. But in recent years, the Family and Medical Leave Act (FMLA), state and even local laws have made leave the most pressing, complex — and possibly litigious — type of absence in the workplace.
The cost of complying with the FMLA is already significant. According to the Employment Policy Foundation, compliance with FMLA costs employers more than $21 billion in lost productivity, continued health benefits, and labor replacement.
But the real FMLA-related risk is that of litigation. HR.com reports the average verdict for FMLA cases related to wrongful termination is nearly $335,000. This can be a devastating amount for a small business, especially a newer enterprise investing for growth rather than immediate profitability. Almost as damaging as the direct costs of litigation are the indirect costs — diverted management time, recruitment impacts and reputational risk.
These costs will only increase as more states and localities adopt paid leave laws.
For example, part-time and temporary workers in California will soon receive up to three paid sick days a year after a last-minute compromise passed the state legislature. At press time, Gov. Jerry Brown was getting ready to sign the bill into law. California will become the second state to offer paid sick leave for part-time and temporary workers, after Connecticut passed a similar bill in 2011. The New Jersey Assembly will consider a paid sick leave bill later this month.
On top of these state laws are city laws. In 2006, San Francisco became the first city in the country to require employers to give their employees time off. In subsequent years, the District of Columbia, Seattle, Portland, Ore., New York City and Jersey City, N.J., among others, passed their own laws.
This multiplicity of leave laws makes managing employee absence very complex, particularly for companies with operations in multiple jurisdictions.
So what should employers do to deal with these laws, reduce leave absence costs and mitigate litigation risk?
1. Employers should invest the time to learn the basics of these laws and regulations.
There are numerous associations that understand the reality of running a business, and assist employers to tailor their leave-related programs. The Society for Human Resource Management, the Disability Management Employer Coalition (DMEC) and others provide low or even no cost overviews of FMLA, the Americans with Disabilities Act (ADA), and related laws. Opportunities range from online PowerPoints to local seminars designed for, and often presented by, professional leave and disability experts.
At the very least, such introductory training can outline the most important actions to avoid, and point companies to additional resources.
2. Employers should regularly communicate to employees the importance of FMLA and ADA, and owners and managers should embrace the laws’ goals and the need to comply with them.
Communicating and documenting proper intent is not only important should litigation ever occur. It also tells employees that management is open to discussion about the laws’ requirements. This is helpful to ensure compliance and has the added benefit of reducing fraudulent leave requests.
3. Employers — especially those with locations in multiple jurisdictions — should consider automating their entire absence management process.
There are numerous reasonably priced solutions that enable managers to track and manage absence in compliance with FMLA, ADA and other state laws and regulations. Industry groups like Spring Consulting estimate that comprehensive absence management solutions can reduce direct, indirect and return-to-work costs by 11 percent. Perhaps most important, today’s absence management solutions nearly eliminate litigation risk.
Employers have made great strides in reducing workplace injuries and leave, and other costs they impose. At the same time, family and medical leave related costs have increased and will continue to do so as more states and localities pass paid leave laws. It makes sense for companies to apply the same focus to managing leave absence as they have done to reducing injury absence.