COVID-19 and the FFCRA threw a wrench into existing employee leave policies. Now with states and municipalities following suit, companies need to get serious about revamping how they handle employee absence.
Since the onset of the pandemic last year, employers have faced an avalanche of unprecedented business challenges, including an abrupt shift to remote work, forced shutdowns and customer and employee attrition. Another issue added to the complexity of all these challenges: managing employee leaves of absence. Employers had to abide by a slew of new federal and state paid leave legislation that addressed the need for employees to take leave for the illness, school closures and other COVID-19-related disruptions.
According to Guardian Life’s report, “Absence Management Redefined: During the COVID-19 Pandemic and Beyond,” approximately 56 percent of employers stated their staffing was impacted because of employees taking leave under the Families First Coronavirus Response Act (FFCRA). The FFCRA, which expired on December 31, 2020, required employers with fewer than 500 employees to provide paid sick leave or expanded medical leave time off for reasons related to COVID-19. Employers, in general, are challenged with tracking intermittent time. But the FFCRA had a significant impact. Most employee leave, such as that related to caring for a child due to school closure, was taken as intermittent time, when that previously would not have been treated as such.
The FFCRA, coupled with state and municipal paid leave legislation, also put pressure on employers last year to get up to speed quickly on the new paid leave laws, ensure compliance and manage employee leave of absence. It’s no surprise that our research found the pandemic raised senior leadership’s awareness about the importance of an effective absence management program by 77 percent.
While most organizations believed they were reasonably well-prepared for COVID-19 in terms of their disability and/or leave programs or policies, three in four employers changed their unpaid leave policies to paid due to COVID-19, while one in three employers created new and separate COVID-19 leave policies. This was especially true for employers where at least 25 percent of their population was already working remotely.
The findings also showed that several leave trends emerged last year, such as revisions to existing leave policies, increased outsourcing of leave administration and greater use of technology to improve the employee experience. For example, 67 percent stated they were very or somewhat likely to outsource Family and Medical Leave Act (FMLA) compliance. What’s more, 74 percent want to centralize Americans with Disability Act (ADA) service with FMLA and short-term disability (STD).
The Race to Keep Up with Expanding Number of Employee Leave Laws
The lack of a national paid family and medical leave program has continued to result in states passing their own individual laws. Although the FFCRA brought on by COVID-19 set a precedent for how such a program could work, its temporary nature, coupled with the evolving political landscape, left states on their own. The greatest challenge for employers (87 percent), and particularly those in highly regulated states, is keeping up with the many changes to federal and state leave laws in the past two years and coordinating different types of absences.
For example, at the start of this year, employers and leave administrators had been closely monitoring the American Rescue Plan framework and whether it would include components of the FFCRA’s emergency paid leave provisions. We now know that it did not reinstate the FFCRA paid leave mandate, but rather, expanded and extended paid leave tax credits for FFCRA-covered employers.
This ever-changing landscape – which was further exacerbated by the pandemic – has prompted employers to re-evaluate whether to manage leave in-house or move to an outsourced model. Our research confirmed that roughly half of employers are managing with in-house resources. Of those who made the decision to outsource, many cited concerns about compliance and cost control as the key drivers.
The past year has also taught us a lot about the changing dynamics in the workplace and the reality that remote work is here to stay. It has prompted employers to adopt new technologies and best practices to better run their companies, whether it is looking at absence management through a new lens or redefining what employee wellness and return-to-work looks like.
Looking ahead, below are some best practices that employers and compliance professionals should consider when thinking about new federal, state or municipal paid leave laws:
1. Evaluate Your Policies
It is critical to understand how your workforce will be impacted by new paid leave laws and how the changes will interact with current employer leave policies as well as employer benefit offerings. As mentioned previously, COVID-19 prompted employers to make temporary or permanent changes to their policies. This included expanding definitions within current policies, increasing benefit levels or changing existing unpaid policies to be paid.
Also important is identifying whether disparities exist, particularly if the employer has multiple offices across the country. For example, a New York-based employee will have different rights than a California-based employee. To alleviate this challenge, many employers look to standardize their company-wide policies to help ensure parity amongst their workforce and help create a positive employee experience. But even this is difficult.
2. Consider an Integrated Approach to Employee Leave
Employers should also evaluate potential unintended gaps in the benefit offerings following the passage of a new paid leave law and prepare accordingly. In many cases, a state paid leave law may not cover employees equally when having to take leave due to their own serious health conditions. Employers can fill the gaps with disability coverage. For example, due to the state benefit calculations, employees earning over a certain amount of income may not have a sufficient wage replacement from the state plan. We have worked with employers who decided to add and/or increase their disability coverage to ensure all their employees are protected.
There is also a shift toward taking a holistic, integrated approach with absence management that focuses not only on staying compliant and managing costs, but on the well-being of the employee. Employers tell us that the process for certifying leave can be difficult, especially when it comes to ensuring consistent handling across an employee population. One of the benefits of integrating programs is that it allows for coordinating the various state, federal and employer’s own types of absences, particularly for those multi-state employers where each state has paid family and leave laws that have varying details regarding employee eligibility, benefit levels, complicated benefit calculations, different covered persons and different administrative compliance responsibilities. This eliminates the many compliance and administrative challenges that employers face. Also, for employees, it ensures a seamless, positive leave experience because they receive one benefit letter and one check from one source.
3. Improved Employee Communications
As noted previously, the paid leave landscape is rapidly changing, making it critical for employers to effectively communicate to employees about the updated policies and procedures related to the new law. This may include changes to accommodations, various working conditions or pregnancy/childbirth leaves. In many instances, employers are required to put up posters in the workplace about the new paid leave law, so employers need to think about alternative options for workers who are remote.
Effective communications also requires that employers properly train staff, including human resource professionals, managers and supervisors. Staff should have a solid understanding of the new paid leave laws, employees’ rights, how to address requests and how and when to engage with colleagues throughout the process (i.e., leading up to, during and returning from leave). We have seen firsthand what can happen when staff isn’t properly trained and how it can not only lead to mistakes, but also possibly deny an employee leave when the laws indicate they are qualified.
Finally, the use of technology is making it possible for employers and employees to access information through self-service web portals and mobile devices throughout the leave process. In fact, the percentage of employees wanting text or chat options grew 50 percent and 38 percent respectively in the last two years.
4. Centralization Increases Compliance
Employers should consider consolidation of absence management activities to help ensure compliance and centralize intake to create efficiencies. As the complexity of managing benefits intensifies, employers are seeking to streamline leave administration and centralize it with a single internal department or vendor. Doing this has an upside: Our research showed that employers who outsourced their short-term disability/FMLA administration for four years or more are most likely to achieve favorable results, such as efficiency gains, improved return-to-work rates and a favorable employee experience.
In addition, employers that outsource absence management report fewer administration challenges and are more confident in being compliant with federal and state laws, compared to firms managing leave in-house.
For companies re-evaluating their approach to managing employee leave, these best practices have resulted in positive outcomes for companies, including compliance, retention, lower absenteeism, reduced costs and overall employee happiness. And most importantly, it provides employers with the confidence they need to navigate this complex process.