Outsourcing Leave Programs – Is This Right for Your Organization?
By Phil Bruen
VP Group Life and Disability Products
While many organizations can manage their leave requests and documentation using their own internal resources, others find that leave administration is simply too cumbersome. With the recent introduction of paid family leave in a number of jurisdictions, the complexity continues to grow.
What does leave administration entail? The basic elements an organization must manage include:
- Eligibility: Consistently approving or denying a leave request by accurately determining employee eligibility
- Recordkeeping: Maintaining accurate and complete records for all employees on leave.
- Tracking: Keeping track of intermittent leave usage and monitoring time taken/time remaining
- Notification: Federal Family and Medical Leave Act (FMLA) regulations require employees be notified of eligibility for leave within five days of the request
- Regulatory: Keeping current on federal, state, and local leave laws while dealing with the complexities of complying with and interpreting laws across multiple states
Outsourcing Decision Factors
How can you determine if outsourcing your leave program is the right decision? There are a number of questions to consider when making the choice for your organization.
How are you currently administering FML and other leaves of absence? Smaller organizations often lack the resources to handle leave administration in addition to other human resource (HR) matters. Larger organizations can feel overwhelmed by the volume of paperwork and recordkeeping associated with tracking employee leaves. Add to that the necessary understanding of the applicable laws, and the resources required to keep up-to-date on changes, and the list of administrative duties becomes daunting.
Are you keeping accurate time records? Can you smoothly coordinate recordkeeping and decision-making among all involved parties? Leave self-administration requires collaboration among the employee, his/her manager, HR, and payroll to determine if the employee qualifies based on time worked and reason for request. Accurately deciding if the leave should be approved is crucial and needs to be treated consistently across all requests. If approved, HR must correctly track the leave time taken. If not approved, the organization must be prepared to defend the decision.
What is your organizational culture? Would your employees be receptive to change? Making the switch from self-administration to outsourced leave administration can be a big adjustment both for the organization and the individuals who wish to take leave. Self-administration gives employees the opportunity to speak directly with an HR representative., which may support employee satisfaction and fit better with your current organizational culture.
Outsourcing leave administration can relieve organizations of many of the administrative, legal, and regulatory burdens of complying with the complicated and sometimes costly leave rules and regulations., such as:
- Determining employee eligibility based on both attendance records and reason for requesting leave
- Reviewing healthcare provider certifications or medical documentation
- Approving or denying FML requests
- Managing paperwork and communicating with employees about their leave
- Monitoring changes to and new requirements under applicable leave laws
- Tracking leave usage and monitoring time taken/time remaining
- Administering leave consistently for all qualifying employees
- Integrating the short-term disability approval process with leave tracking when both are with the same administrator
The time your HR department spends on all these activities could be spent on other projects and responsibilities. Take an unbiased look at your current processes to determine the ultimate benefits and drawbacks of transferring your leave administration to an outside vendor.
Ultimately, the decision to outsource leave administration should be based on what is best for your organization, including administrative and leave costs.
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