Most advisers know the basics of FMLA. The Family and Medical Leave Act is the federal law that requires employers to provide employees with a job-protected, unpaid leave of absence from work for a variety of family reasons, including military leave or their own medical-related needs. FMLA strictly regulates the process that employers must follow to comply with the law.
If it sounds simple, most employers would tell you it's anything but. One human resources helpline in the Midwest reports that FMLA is the topic callers ask about most often, and their questions typically focus on who is covered, how a serious medical condition is defined, and how to control intermittent leave.
Although FMLA has been in force since 1993, recent revisions to the law - plus an overlay of numerous state-specific leave laws that employers also must comply with simultaneously - make leave management an increasingly complex program for many employers to administer. This is especially true for those employers that have employees working in multiple states. Furthermore, the use of family medical leave has been rising with the aging of the population, the dual-caregiver roles of many employees in the "sandwich generation," and the increasing toll of chronic diseases on workers' health and productivity - a trend that's likely to continue.
FML requests increased nearly 20% from 2008 to 2009, according to an annual survey of large and mid-sized U.S. companies by EMPAQ (Employer Measure of Productivity, Absence and Quality), a data analysis firm run by the National Business Group on Health that helps employers benchmark their health and productivity management programs. The report also found that larger employers are particularly vulnerable to an increase in the number of FML requests because of the impact absence can have on productivity and a company's bottom line.
FML and STD
FML doesn't happen in a vacuum. According to a Cigna book of business data, about two-thirds of requests for FML run concurrently with an employee's short-term disability absence, and, according to a 2007 analysis by Cigna, use of FML may even help predict future disability claims. The analysis showed that employees on FML were five times more likely to have a subsequent short-term disability claim than those not on FML (24% vs. 4.5%). Further, those on FML for a family reason were 50% more likely to have a subsequent short-term disability claim for behavioral illness than those on FML for other reasons.
Employers always pay attention to labor costs. Chief among the cost drivers is lost productivity due to disabling illness and injuries. In fact, on average, nearly 9% of payroll goes to cover the direct and indirect cost of incidental and extended disability absence, according to research published in 2010 by Mercer.
An employer may run an employee's FMLA leave concurrently with its short-term disability program. In fact, employers that do not coordinate these programs are missing an opportunity to use an integrated "offense" and "defense" in their approach to absence management - regardless of the cause of the unplanned absence. A good offense includes a strong disability management program that focuses on prevention through employee assistance programs, vocational rehabilitation, and lifestyle or chronic condition management programs. The best defense includes efficient, effective FMLA administration with effective tracking and ongoing compliance with federal and state leave laws and best practices.
Beyond failing to run leaves concurrently and view absence management holistically, the following are some common and potentially costly mistakes that employers make in administering FMLA leave:
*Failure to timely notify employees of their FMLA rights
*Granting FMLA leave to employees ineligible for it
*Misunderstanding what qualifies as a "serious health condition"
*Inconsistent treatment of employees requesting FMLA leave
*Failure to accurately track FMLA leave
*Failure to designate leave as FMLA
*Improperly contacting an employee's health care provider for additional information
*Failing to reinstate an employee to an equivalent position at the end of his/her leave
How to help
It's common for employers to ask their advisers about program structure and whether it's better to administer leave programs in-house or seek the assistance of an outside partner. Of course, the answer varies widely from employer to employer, but here are a few of the top challenges that employers report with FMLA administration, as identified by the Society for Human Resource Management. These are all concerns for which brokers can help find solutions:
*Managing intermittent leave
*Determining overall costs
*Understanding their organization's health care drivers
*Staying current with federal and state regulations
*Administering FMLA's notice and certification requirements
*Determining if the absence meets the definition of "serious health condition"
*Maintaining additional recordkeeping required by the FMLA
While brokers work hard to understand their clients' "pain points," they may be more accustomed to advising about a different set of benefit issues. Because FMLA is not an insured or paid benefit, brokers may not be as familiar with it as they are with other benefit programs. Nevertheless, it's important for them to develop expertise about the law's provisions because FMLA is heavily regulated; there are strict timelines that employers must meet during leave administration and there can be steep penalties for non-compliance. This is made even more challenging by the fact that laws governing federal and state leaves continue to change.
As a result, brokers should add these items to their "must do" list: They must know about available options in the marketplace for helping their clients address FMLA requirements; they must be sensitive to their clients' needs to determine and understand the financial costs and benefits of using an FMLA administrator and model the return on investment for clients; and they must help clients address absence management in a more holistic way in order to help prevent illness or injury from happening altogether and to help ensure employees do not abuse FMLA leave.
Mohl is responsible for legal issues with respect to employment matters domestically and internationally for Cigna. He supports Cigna Leave Solutions, the insurer's absence management and FMLA leave administration offering. Prior to joining Cigna, he was in private practice specializing in labor-management cases.
Employers that are successful in avoiding FML problems have three things in common:
1. Clear, consistent communications for employees
2. A focus on prevention programs that aim to keep employees healthy and on the job
3. Coordination across all types of absences, including FMLA, state leaves, company-specific leaves, and disability leaves
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