Outsourcing Absence and Leave Management
May 25, 2021
An Employer Focus
Across the globe, coronavirus has become an accelerator for some of the greatest workplace transformations of all time. When the World Health Organization (WHO) officially declared COVID a global pandemic in March 2020, it not only temporarily shut down most restaurants and shops leaving many employees furloughed, but required organizations to mandate remote work, place hiring freezes and establish additional leave entitlements.
All of a sudden, HR departments all over the country were working overtime, trying to juggle the workplace changes caused by the pandemic. They were managing mass remote workforces, creating business continuity plans, updating employee leave policies, and drafting emergency communication procedures, among other tasks too numerous to name.
And it has not worked in their favor that leave legislation continues to change on an ongoing basis. More and more employers are recognizing the need to either have a dedicated team member whose sole job is to understand the national trends and local changes surrounding leaves and who can stay on top of compliantly managing the company’s leaves – or they need to partner with a vendor or carrier who can. Today, as some HR managers work around the clock to stay up-do-date on those legislative changes, others are outsourcing.
According to Disability Management Employer Coalition (DMEC), outsourcing leave management has increased year over year. The outsourcing of federal Family and Medical Leave Act (FMLA) support has increased at an average annual rate of 5% since 2014, with larger employers also opting to outsource paid leaves.
Why Outsource Leave Management?
Leave management encompasses the processes and policies of managing federal, state and locally mandated leave laws, plus any company leave programs.
Following the pandemic, managing leaves became more and more complicated and time consuming to decide, track and report on. By outsourcing leave management, the heavy burden of administering leaves now shifts to their vendor/carrier partner who will act as an extension of the employer’s HR department. Their vast wealth of resources suddenly becomes the employer’s, from vocational rehabilitation staff to claim specialists to attorneys and more. They will:
- Communicate with the employees
- Confirm leave eligibility
- Stay current on changing leave laws
- Assist with compliance
- Manage the tracking, reporting, and compliance with legislated requirements
Outsourcing not only saves time, but it keeps employers compliant and may reduce costs.
Changing Leave Legislation Challenges Employers
Keeping apprised of changing leave legislation presents a challenge for all employers. Outsourcing to a vendor/carrier partner can help employers relieve this burden by aiding them in establishing compliant policies amid complex legislation. They can adjudicate claims for employers, which allows for fair application of policies across the organization. They track leave entitlements and report in accordance with federal, state and local leave regulations.
Employee time off has a significant impact on a company’s bottom line. Outsourcing provides employers with enhanced reporting capabilities which can have a dual advantage of positively improving the bottom line with increased productivity and cost-savings. Oftentimes costs-savings are achieved by helping employers identify misuse, quantify lost opportunities and reduce the amount of time a worker spends away from work. Enriched reporting and technology allow managers to effectively plan their team workloads around employee leave without disrupting yields which improves productivity.
As business scenarios continue to evolve and internal and external customer expectations continue to increase, it is imperative that companies become more agile. Partnering with a vendor or carrier who offers leave management solutions can help employers do just that. By offering multi-level solutions that enable rapid integration, comprehensive reporting and a robust service platform, the right partnership can be a gamechanger.
The above information does not constitute advice. Always contact your employee benefits broker or trusted adviser for insurance-related questions.
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