Understanding State Family Leave Laws, FMLA, And Employer Responsibility

Today’s challenges, tomorrow’s solutions

Every HR professional is painfully aware that the Family and Medical Leave Act (FMLA) is an incredibly complicated area of employment law. There are hundreds of pages of regulations and myriad legal decisions, plus Department of Labor opinion letters employers need to take into account when evaluating their employees’ leave requests. It’s enough to manage and maintain all on its own. However, in today’s environment, leave laws and requirements are also constantly evolving as more states, and even municipalities, pass new legislation to keep pace with changing workplace and employee expectations for more generous leave accommodations.
 

Right now, there are more than 200 active state unpaid leave laws across the country. Many of these laws cover leave reasons not protected by the FMLA, and some actually conflict with federal leave law, potentially adding confusion to the complexity. It is essential employers know how these laws interact, so they can appropriately evaluate their employees’ leave requests and ensure the company and its policies are fully compliant. Importantly, this also applies to virtually every state where a company operates with at least one eligible employee. 

All of this change and new legislation has ultimately created a bigger problem for many employers: It’s possible some don’t even know which laws they’re subject to. That’s because ensuring compliance across company policy requires extensive resources to research existing leave laws, and to track new and emerging legislation. Where HR staff is often pulled between a growing burden of administrative tasks and higher-level strategic work, leave management and compliance with the laws can be overwhelming to say the least; at worst, it can expose your company and your people to substantial risk.
 
Unum recently partnered with HR.com to publish a study, titled How Today’s Organizations Manage Employee Leave, in order to understand how companies and HR professionals are managing the logistics and legal requirements of both paid and unpaid leave. While 84% of employers surveyed believe their companies’ leave policies are fully compliant with all laws and regulations, chances are that unless they have an in-house legal team or are working with a fully indemnified outsourcing partner, these companies simply aren’t aware of everything they’re responsible for with state, local and FMLA leave. So, a high degree of confidence is great. But with just 32% of employers in the study outsourcing some component of their leave management, it could also be a case of “you don’t know what you don’t know.” 

Of course, just like with any law on the books, covered individuals and organizations are responsible for compliance whether they know it or not. Failure to comply with the FMLA and state leave laws can result in significant legal exposure, including fines, injunctive relief, attorneys’ fees and legal judgments. There have been many multimillion-dollar FMLA judgments against U.S. companies large and small. And even if you win an FMLA lawsuit, you could spend hundreds of thousands of dollars on legal fees in defense of the company’s decision.
 
Employers might also be surprised to learn that employees can file a class-action lawsuit based on FMLA violations that have a broad impact on employee leave. Additionally, HR and management personnel who make leave decisions for company employees can face individual liability for FMLA violations. And it makes no difference whether violations were intentional or simply the result of honest mistakes. There are also other costs associated with failure to administer FMLA appropriately, such as loss of productivity and potential for employee leave abuse, which in turn may result in morale problems for your organization.  

Paid leave is another area where there has been recent rapid growth in the new legislation. In January of this year alone, 19 different states introduced at least one type of paid leave law. Here, too, the landscape is constantly changing as states try to outdo each other with more qualifying reasons for the leave and more generous leave programs. Consequently, each state can have varying plan designs, so employers must be careful to understand the nuances.
 
One thing we can count on amid all this change is that the growing trend in new leave laws will continue at least for now, as several states are currently reviewing bills to adopt paid leave programs in the near future. On this note, it would seem that expectations are aligned among HR.com survey respondents: 85% of employers agree that the need to deal with new laws and regulations will continue. Furthermore, 75% stated that employee leave issues will grow more complex as they look ahead. 

While attempting to find ways to comply with these new and complicated leave laws, many HR professionals are also finding themselves with even less time to stay up to date. For some, it’s a perfect storm: As the legal landscape gets more complicated, budgets are also shrinking, leaving limited resources to address the increasing compliance risk presented by the new laws. Similarly, in the Unum and HR.com study, fully two-thirds of employers surveyed found it challenging to keep up with changing leave laws and regulations. In addition, 61% of those same employers found it difficult to dedicate the necessary time and resources to effectively manage employee leave and absences.
 
As HR departments are already stretched thin with so many responsibilities to take care of, the results of the survey indicate a growing interest in technology and outsourcing solutions to alleviate the burden. Overall, 62% believe technology will help make leave management easier, and 24% will further look to outsource their leave management programs. It’s important to note here that employers in the study currently using an outsourced solution were more satisfied with their leave programs than those who administered leave internally. However, even those employers who outsource report varying degrees of satisfaction with the process, so it remains vitally important to carefully choose the right vendor if you are contemplating outsourcing for your company. 

Outsourcing can be more effective for certain types of employers. Employers who are in multiple states with decentralized HR departments can especially benefit from outsourcing. Employers in industries where absenteeism creates an increased burden on operations are also likely to find more benefit from outsourcing. These industries and markets include health care, call centers, and retail, as well as manufacturing and more blue-collar-leaning businesses. Although large employers often have adequate resources to administer leave internally, they also tend to outsource more than smaller employers, due to the complexity and cost-efficiencies of managing leave across multiple locations and thousands of employees.
 
With all the risk and complexity surrounding leave today, there are several best practices you should consider if you’re thinking about outsourcing to a strategic leave partner. For any potential vendor you select, be sure to ask the following questions:
 

1. Does your service include all state leave laws that provide job protection?

2. What legal resources do you have to track pending legislation and ensure that your product is compliant with all state and federal laws?

3. Can you administer our corporate leave policies?

4. Can we customize correspondence or processes?

5. Will we have access to records upon request?

6. What steps will you take to manage intermittent leaves?

7. Can you investigate suspected fraud on our behalf?

8. Do you have an integrated resource for short term disability and FMLA?

9. Can you provide us with references from customers in our industry?

10. Can you provide a Return on Investment projection?

11. Will you guarantee compliance with all federal and state leave laws?

12. Will you stand behind the compliance guarantee with an indemnification provision that will reimburse us for any and all damages that result from negligence (or a simple mistake) that arises out of a decision you made on one of our leaves?

Directionally, the results of the Unum and HR.com survey are aligned with what we’re seeing in broader national trends around leave and absence management. Companies today recognize the importance of leave and what it means to their employees who need to take time off to care for a loved one, welcome home a child or for any reason protected by state or local law or the FMLA. At the same time, managing compliance and leave administration is now demanding much more from resources that were already feeling the squeeze. Between outsourcing and fully managing leave internally, there is no one-size-fits-all solution for every company. However, if you’re struggling with the new laws or the pace of change, just know you’re not alone.

Ellen McCann is the Assistant Vice President and Special Counsel for Unum’s Employment Law Group. Visit www.unum.com Connect Ellen McCann Follow @unumnews