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Employers’ FMLA Compliance Issues Highlight Need for Total Absence Management



Since the Family and Medical Leave Act (FMLA) was passed nearly twenty years ago, consistent and fair treatment of employees who need unplanned or extended leave has become an expectation of the U.S. workforce. But what steps are employers taking to manage employee absence and help ensure compliance with federal and state leave laws? To answer that question, the ADP Research Institute℠ surveyed HR and benefit decision makers from 254 mid-sized companies (50-999 employees) and 249 large companies (1,000 or more employees) to better understand their business priorities and practices regarding FMLA administration and Total Absence Management (TAM).

FMLA Compliance Continues to Be a Complex Undertaking

Compliance issues created by the FMLA make effective implementation of TAM especially important. The compliance requirements and calculations required for leave administration are highly complex, particularly for large, multistate employers. As of September 2012, more than 54 U.S. states and territories have passed legislation expanding upon FMLA definitions for qualified protected leave.[1] FMLA regulations are also frequently revised to accommodate evolving labor practices and new legislation. The calculation of protected leave for an employee requires the simultaneous application of federal laws, state laws, and company leave policies, as well as frequent coordination with paid-time-off administration and short-term disability. Without the focus of a specialist and continuous updates, it can be difficult to administer leave accurately.

Compliance is a Driver for TAM Outsourcing and Solution Purchase Decisions

The TAM survey indicates that compliance is a major issue for most employers. The study findings show that compliance assistance is an important consideration for employers when selecting a TAM outsource vendor. Survey participants also noted that, beyond price, ease of integration with existing payroll and HR solutions and ensuring compliance with applicable federal, state, and local leave laws were the most important characteristics of TAM outsourced solutions.

Why is compliance so critical? FMLA case literature is rich with examples of adverse employer rulings, including jury awards exceeding several million dollars and specific cases where federal courts have also upheld the rights of plaintiffs to sue not only their employer for FMLA violations but also their direct supervisor and responsible executives as individual co-defendants.[2]

Manual Absence Tracking Methods May Result in Lax Enforcement of Leave Policies

From tracking to compliance and policy administration, survey results suggest wide disparities in TAM administration. Large companies are more likely than midsized to use automated tools to manage all aspects of TAM, but even among large employers manual processes are still widely used. About 53% of all large employers and 72% of midsized employers report using either manual processes or no systematic process to administer absence plan and policy provisions. These findings are particularly notable when you compare them with the number of companies who report applying punitive discipline for unauthorized absence: 47% of large employers and 35% of midsized employers. This suggests that many employers have limited ability to enforce absence policy. It also supports the hypothesis that many employers compensate for lack of TAM administration capabilities through lax enforcement or non-enforcement of leave policy.

Lack of TAM May Increase FMLA Compliance Risk for Employers

More than half of survey participants — 59% and 60% of midsized and large employers respectively — reported that they track and administer leave programs using only internal procedures and workflows. While some employers utilize sophisticated automation and third-party vendors to measure, mitigate, and help administer employee absence, most continue to use manual and/or improvised procedures. The widespread lack of TAM automation and/or outsourcing suggests that many employers are taking substantial compliance risks with FMLA.

[1] “State and Local Statutes and Regulations,” The Society for Human Resource Management, August 22, 2012
[2] See: Haybarger v. Lawrence, No. 10-3916 (3d Cir. Jan. 31, 2012).

*A complete list of sources and citations can be found in the full report.

About This Report: This report is based on findings from a May 2012 ADP HR/Benefits Pulse Survey on Total Absence Management (TAM) conducted by the ADP Research Institute℠, a specialized group within ADP. Decision makers in midsized (50-999 employees) and large (1,000+ employees) across the United States were surveyed to better understand their business priorities and practices regarding FMLA administration and TAM.

Keywords: Benefits Administration, HR Management

Business Types: Research for Midsized Organizations, Research for Large Organizations

Roles: Research for Human Resources Professionals

Total Absence Management Two Decades After the Passage of FMLA

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