introduction to fmla and fmla outsourcing ellen donovan mccann spring 2013

Introduction to FMLA andFMLA Outsourcing

Ellen Donovan McCannSpring 2013

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Presentation Content

• Impact of Lost Time: What are the Costs?

• Quiz

• FMLA History

• FMLA 101

• Legal Considerations

• Employer Challenges

• FMLA Administrative Options

• Progression Study

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Rate of Absenteeism

Paid Unscheduled Absence Hours/Paid Productive Hours

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Lost Time Costs

The Total Financial Impact of Employee AbsencesSurvey Highlights October 2008 Mercer Guy Carpenter, Oliver Wyman

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Lost Time Costs


6

The Big Picture!


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Quiz

Do the following situations meet criteria for a job protected leave under the FMLA? Yes or No?

• Jane Green’s daughter, Amanda, has a chronic asthma condition. Amanda’s condition does not necessitate a need for her to remain home from school.

– Answer: No – unless Jane is required to accompany Amanda for periodic doctor’s appointments or treatments.

– • Marcus Doe is receiving treatment for substance abuse on an out-patient basis.

– Answer: Yes, as long as all FMLA conditions are met and treatment is administered by a health care provider or by a provider of health care services on the referral by a health care provider. Absence due to the use of the substance would not be protected.

• Since she became pregnant, Fi Marceau has experienced severe morning sickness and is occasionally absent from work.

– Answer: Yes, any period of incapacity due to pregnancy meets the criteria. In addition, some state leave laws may provide additional benefits due to pregnancy.

• Lola LaRue recently had a miscarriage and missed work due to related emotional impact.

– Answer: Yes, any period of incapacity due to pregnancy qualifies under the FMLA.

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Quiz


• Henry Oldasice had a face lift requiring overnight hospitalization.– Answer: Yes - While the face lift diagnosis would be considered cosmetic and

not meet FMLA eligibility criteria, Mr. Oldasice’s overnight hospital confinement would meet the criteria for FMLA.

• Bonnie Beauty was preparing for her 35th high school reunion and had liposuction requiring multiple outpatient treatments with a physician.

– Answer: No - Under these circumstances, the treatments would be considered as cosmetic in nature. Cosmetic treatments or surgery do not qualify unless they require in-patient hospital care or unless medical complications develop.

• Sheba Vee requested a leave to care for her grandmother with cancer who is hospitalized. Sheba’s grandmother raised her as a child.

– Answer: Yes – because Sheba Vee’s grandmother raised her “in loco parentis,” Sheba’s grandmother is considered a covered family member under the FMLA. In addition, some state leave laws cover grandparents.

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Quiz


• Suzie Q was hired through Smith Temporary Agency to work at the Jones Company. She worked as a temp for a 90 day period and then was made permanent on January 1, 2007. Suzie requested leave to begin on November 1, 2007.

– Answer – Yes, time worked as a temporary employee counts towards an employee’s eligibility under the FMLA.

• Mary’s elderly mother has Alzheimer's. Her nursing home is closing their Alzheimer's wing so Mary has requested leave to locate another care facility.

– Answer – Yes, arranging care for a qualifying family member is a covered reason for leave under the FMLA.

• James has a 28 year old son with Down Syndrome. The son resides with James and his wife. James has requested leave to care for his son who is suffering from a serious health condition.

– Answer – Yes, under the FMLA, an adult child who is incapable of self care qualifies as a “child.”

FMLA History

FMLA History

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FMLA History

• Enactment The Family Medical Leave Act (“FMLA”) of 1993 was enacted on February 5, 1993 and became effective on August 5, 1993 for most covered employers.

• Revisions New regulations interpreting the FMLA were issued in November 2008 with an effective date of January 16, 2009, these amendments included active duty and military caregiver leave. Additional revisions issued February 6, 2013 (effective March 8, 2013) implementing National Defense Authorization Act for Fiscal Year 2010 and the Airline Flight Crew Technical Corrections Act.

• Accountability The United States Department of Labor is the governmental agency responsible for enforcement of the FMLA.

• Coverage Based on 2005 data* there were an estimated 94.4 million workers in establishments covered by the FMLA regulations and about 76.1 million workers in covered establishments who met the FMLA requirements for eligibility.

• Utilization Between 8% and 17.1% of covered and eligible workers took FMLA Leave in 2005 (between 6.1 million and 13.0 million workers)*. Nearly one-quarter of all employees who took FMLA Leave, took at least some of it intermittently*.

* Family and Medical Leave Act Regulation:

A Report on the Department of Labor's Request for Information June 2007

FMLA 101

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FMLA-Regulatory Context

ERISA-Notification/Tolling

ADA-Job Accommodation/Protection

HIPAA-Privacy

• 3 key aspects of the regulations:– Creates an absolute entitlement for the employee– Entitlement to the same health benefits as if still working– Entitlement to be reinstated to the same or equivalent

position upon return from leave

FMLA

• Employer notification requirements • Employer prohibitions • Medical information privacy

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Employer Obligations

An employer must, within predetermined time frames:

Evaluate eligibility for leave- Hours worked - Location- Tenure - Employee Status

Calculate entitlement for leave- How much time available- Coordination with state leave laws

Determine qualification of leave - Meet the definition of a serious health condition or military leave entitlements

through review of employee-provided medical certification or information - Meet the definition of non-medical leaves - Applicable state leave laws

Confirm in writing within 5 business days of notice for leave: - Eligibility- Rights and responsibilities

Confirm in writing within 5 business days of receipt of information:- Designation of leave

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Methods for Calculating FMLA Leave

Fixed year Method:

• Under the fixed 12-Month Period method, an eligible EE can take up to 12 weeks leave at any time within the fixed 12-month period selected. Employer can select one of the following:

– The Calendar year.– Any other 12-Month period.

Rolling Forward Method:

• Under the forward method, an EE’s 12-Month period starts on the day the EE’s first FMLA leave begins and ends 12 months later. The EE can take 12 weeks of FMLA leave during that 12-month period. The EE’s next 12-month period begins the first time he/she takes FMLA leave after completing the previous 12-month period.

Rolling Backward Method:

• Under the backward method, an EE’s 12-month period is measured backward from the date an EE uses any FMLA leave. Every day an EE takes FMLA leave (including intermittent leaves) he/she is entitled to any remaining balance of the 12 weeks of leave that has not been used during the immediately preceding 12-month period.

Note: Flight crew employees have fixed entitlements of 72 days for ‘regular’ FMLA and 156 days for military caregiver leave

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Who is Covered by the FMLA?

Which employers are covered?• Private Sector: 50 or more employees for at least 20 weeks in the current or

preceding calendar year.• Must employ 50 or more employees within a 75-mile radius of the site where the

requesting employee works.

Which employees can take FMLA leave?• Been employed for at least 12 months (does not need to be consecutive)

– Any week in which employee is maintained on the payroll counts (including weeks when no work is performed)

• Employed at a site with 50 or more employees within a 75 mile radius of larger site • Has worked at least 1,250 hours during the 12 months prior to the leave request

(consecutive)– Only actual work time counted– Leaves of absence, paid or unpaid, including FMLA leave, not counted– Pursuant to USERRA, employees returning from military service shall be

credited with hours that would have been performed but for the military service.

What about Temporary employees?• Time worked counts toward employee’s hours and tenure requirements

NOTE: Flight Crew members have different requirements based on airline industry scheduling equivalents

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When Can an Employee Take FMLA Leave?

• Birth of a child

• Placement of a child for adoption or foster care

• To care for a spouse, child, or parent with a serious health condition

• Because of the employee’s own serious health condition

• Because of a Qualifying Exigency

• To care for a family member injured in the line of duty –

Military Caregiver leave

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Birth of a Child

• Both mothers and fathers are eligible– But if they work for the same employer, they are only entitled to 12

weeks jointly• They can split up the leave however they want• Can overlap• Each spouse eligible to take his or her own remaining weeks for

other purposes

• Remember, this is a separate kind of leave from leave related to pregnancy

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Adoption or Foster Care

• Covers absences required in order for the placement to occur

– Attorney meetings– Court appearances– Doctor visits– Going to pick up the child

• Foster care leave only applies to arrangements sanctioned by state

– Employer has right to request documentation– Rule applies even if children are relatives of your employees

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Care for Loved Ones

• Spouse– Husband or wife as defined by state law. Excludes same sex marriages

due to DOMA.– Includes common law marriage

• Son or daughter– Biological child– Adopted or foster child– Stepchild– Legal ward– Any child employee has day-to-day responsibility for (practical or

financial care if the person intends to assume the responsibility of a parent)

– Under 18, or incapable of caring for herself due to mental or physical disability at the time FMLA leave is to commence.

• Parent– Biological or adopted parents– Does not include in-laws or grandparents, except if that individual acted

as a parent to the employee when he/she was a child

• You can request documentation – but proceed with care!

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General Categories of Serious Health Conditions

• Inpatient care

• Pregnancy-related conditions

• Continuing Treatment: incapacity and treatment

• Chronic health conditions

• Permanent long term condition

• Treatment to prevent incapacitation or restorative surgery

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Serious Health Condition: Examples

• Allergies

• Asthma

• Alzheimer’s disease

• Diabetes

• Epilepsy

• Mental illness

• Restorative/plastic surgery after an injury

• Removal of cancerous tumors

• Stroke

• Substance abuse

* Remember: applies to employee or loved one

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Examples of medically-related absences NOT typically covered by the FMLA

• Routine check-ups

• Minor illnesses, injuries– Even if there is a doctor’s visit

• Child falls on playground at school, needs stitches• Employee goes to emergency room with chest pains,

turns out to be gas

• Elective cosmetic treatments not requiring inpatient care– Lasik eye surgery

– But if inpatient care is required (as part of standard treatment, or due to

complications) it will qualify.

• Absences caused by substance abuse

– But absences caused by treatment for addiction typically will be covered.

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Military Amendments

• Active Duty Leave

• Up to 12 weeks of unpaid leave to address a qualifying exigency arising out of the fact that a spouse, son, daughter, or parent of the employee is on covered active duty (or has been notified of an impending call or order to covered active duty) in the Armed Forces.

• Covered active duty includes members of both the regular and reserve components of the Armed Forces.

• Covered active duty must involve deployment to a foreign country.

• Qualifying Exigency is specifically defined by the regulations.

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• To address any issue that arises as a result of short notice deployment of 7 or less calendar days. (7-day limit on this leave)

• To attend military events and activities related to the active duty or call to active duty, includes family support or assistance programs and informational briefings.

• Child care and school activities – To arrange for alternate child care – To provide child care on an urgent immediate need basis– To enroll in or transfer to a new school or daycare– To attend disciplinary meeting with school or daycare (arises out of

active duty or call to active duty).

Qualifying Exigency

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• Financial and legal arrangements– Make or update financial or legal arrangements to address absence. – To act as covered military member’s representative before an agency

regarding military benefits.

• Counseling– To attend counseling (other than by healthcare provider) for oneself, the

covered military member or the child, provided need for counseling as a result of active duty or call to active duty.

• R&R leave (15-day limit)– To spend time with covered military member during periods of

deployment

• Post-deployment– To attend ceremonies, briefings, etc. for a period of 90 days following the

termination of active duty status.

Qualifying Exigency (continued)

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Qualifying Exigency (continued)

• Parental Care

– Must be parent of servicemember who is incapable of self-care

– To arrange for alternate care when the active duty or call to active duty status necessitates a change in existing arrangements

– To provide care on an urgent immediate need basis when the need to provide care arises from the active duty or call to active duty

– To admit or transfer to a care facility when admittance or transfer is necessitated by the active duty or call to active duty

– To attend meetings with staff at a care facility (e.g. hospice or social service providers) when meetings are necessary due to circumstances arising out of active duty or call to active duty

• “Catch-all”– To address other events provided employer and employee agree it is

a qualifying exigency and agree to timing and duration.

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• Leave to provide care for covered service member who is employee’s injured spouse, son, daughter, parent, “next of kin”

• Covered servicemember - current member or veteran of either the Armed Forces, National Guard, or Reserves

– veteran’s discharge or release must be under conditions other than dishonorable during the 5-year period preceding the start of leave

– October 28, 2009 – March 8, 2013 excluded from 5-year period

• Not a SHC (serious health condition); a “serious illness or injury” incurred by service member in the line of duty on active duty, and which may render service member unfit for duty.

• Serious injury or illness extended to also mean those that existed before the beginning of the member’s active duty and was aggravated by service in line of duty on active duty.

– “In the line of active duty” is defined in military regulations to include any injury suffered while in the military, even if not caused by the performance of military duties, i.e. cancer.

– There is an exclusion for injuries caused by the service member’s misconduct.

Military Caregiver Leave

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• An eligible employee is entitled to 26 work weeks of leave to care for a covered service member with a serious injury or illness during a single 12-month rolling forward period, regardless of the calculation method used by an employer.

– Different (and potentially separate) 12-month period(s)

– The leave entitlement is applied on “per-service member, per-injury basis” such that eligible employee may be able to take more than one period of 26 workweeks of leave if leave is to care for different covered service member or same service member with subsequent injury or illness; but maximum 26 weeks in each 12 month period.

– Employee entitled to both caregiver leave and regular FMLA (even for same SHC of covered military member).

– Maximum 26 weeks in each 12-month period for “regular FMLA” and “military caregiver leave.”

– Employer responsible for designating leave as FMLA qualifying.

Military Caregiver Leave

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Types of Leave

• Single Block of Leave:

• Intermittent Leave: Leave taken in separate blocks of time for a single illness or injury.

– Can be for planned treatments– Or for conditions which “flare up” unexpectedly and prevent employee from

doing his job (migraines, arthritis, lupus, bad back, etc.)

• Reduced Leave schedule: Leave which results in regular alteration/reduction of scheduled work hours during the certified period.

– Employee is entitled to be given a reduced leave schedule if condition qualifies

• FMLA does not require an employer to allow employees to take intermittent or reduced schedule leave for bonding; however, an employer can choose to allow under their leave policies

• An employee cannot be forced to take off more time than he needs

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How Do You Deduct Leave for Intermittent or Reduced Schedule Absences?

• FMLA leave is based on the employee’s normal workweek.

– If employee normally works a 5-day week and takes off one day, the employer should deduct 1/5 of a week of FMLA leave

– If employee who normally works an 8-hour day is put on a 4-hour per day reduced leave schedule, he would use ½ week of FMLA leave each week

• When employee works part time, FMLA deduction is made on a pro-rata basis by comparing new schedule with old schedule.

– If employee normally works 30 hours per week, but is put on a 20-hour per week reduced schedule, he is using 1/3 week of FMLA leave each week.

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• Increment of time clarified

– Employer must account for leave using increment no greater than the shortest period of time that employer uses to account for other forms of leave

• Increment cannot be greater than 1 hour

• Cannot reduce by more than amount of leave actually taken

• If increments for other forms of leave vary based on time of day or shift, FMLA increment can vary as long as it remains consistent with other forms of leave taken at the same time of the day

– Flight Crew increment no greater than 1 day

Intermittent and Reduced Schedule Leave

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Tips for Managing Intermittent Leave

• Remember eligibility rule – once employee is deemed eligible, he remains so for 12 months going forward

– But he still can only take 12 weeks during your chosen 12-month period

• Always require medical certification – Form should specifically state whether intermittent or reduced leave is

required – send it back if it does not– Require recertification as allowed by the regulations

• Require foreseeable leave to be scheduled so as to be least disruptive to your operations

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Tips for Managing Intermittent Leave

• Consider possibility of temporary transfer to a position where intermittent absences won’t have such an impact– This is only allowed for planned medical treatment

• Carefully track all time

• Be careful about enforcing attendance policies – Check with Human Resources

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Can You Transfer an Employee to Minimize the Disruption Caused by Intermittent Leave?

• This option is available only when:– The employee is taking foreseeable intermittent leave or leave based on planned

medical treatment – The employee is qualified for the position– The position better accommodates recurring periods of leave than the employee’s

regular position

• Beware of pitfalls:– Alternate position must have equivalent pay and benefits (but not duties)– Transfer must comply with the ADAAA– You may not require an employee to take more leave than is necessary– Transfers otherwise permitted by regs may nevertheless be characterized as

“retaliatory” if duties are diminished, position less attractive– The following transfers are generally not permitted:

• White-collar to labor, day shift to night shift• Main office to branch (or other significantly increased burden for employee)

• When leave is finished, employee must be returned to original job or equivalent position immediately

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Case Study-Intermittent Leave Management

Company-Outdoor Clothing and Gear Retailer

• # US Employees

4,500 year round

11,500 at peak (December)

• Products & Services – Retail Sales

Offering clothing and outdoor gear for customers to enjoy the outdoors.

Contact Centers provide world class legendary service to customers

• 4 year round centers & 1 seasonal center in Northern New England

• Handle inbound order & customer service calls 24 hrs/day, 7 days/week - 365 days a year

• Daily Call Volume: 35,250 calls off peak; 133,500 calls during peak

• Call Center Operations are supported by centralized planning functions (Finance, Systems/Technology, Quality, Training, Workforce Planning)

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Case Study-Intermittent Leave Management

1,170 call center staff year round increasing to over 4,340 employees at Peak

• Annual Turnover: 7-8%

• STD Absence in ‘05 – 2,850 days (est. equivalent of 11 FTE’s)

• WC Lost Time in ‘05 – 53 days

• Intermittent FMLA Absence:

Year prior to outsourcing:Equivalent of 1,100 days or est. 92 days/month

First 5 months after outsourcing: Reduced to the equivalent of 187.5 days or est. 38 days/month

58.7% reduction in lost time

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FMLA/Leave Management Services

Key: colored areas indicate states

with additional leave regulations

Scope and complexity of the law

WA MT

OR ID WY

NV

CA

UT

AZ

CO

NM

TX

OK

KS

NE

SD

ND

WI

I A

MO

MN

I L IN OH

MI NY

VT

ME

NH

PA MA RI

CT NJ

DE DC

MD

WV VA KY

FL

NC TN

SC GA

AR

AL MS LA

AK

HI

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State Leave Laws

• FMLA-like Leave Laws

• Pregnancy disability

• Bonding

• Bone marrow

• Volunteer Fire Fighters (Emergency workers)

• School Activities Leave Laws

• Domestic Violence/Crime Victim Leave Laws

• Kin Care

Legal Considerations

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Top FMLA Violations

• Failure to identify and promptly designate FMLA-qualifying absences. It is up to the employer to notify the employee

• Failure to educate management about the FMLA regulations

• Failure to notify employees of their FMLA rights and obligations

• Failure to administer state leave laws correctly in conjunction with the FMLA

• Failure to calculate leave entitlement in workweeks correctly

• Failure to understand that the FMLA can apply even if employees don’t specifically say, “I need FMLA leave”

• Failure to track FMLA entirely because more generous leave benefits are provided

(Source: 2006 CCH Unscheduled Absence Survey)

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Top FMLA Violations

• Failure to designate extended leaves as FMLA, except those who qualify for short-term disability

• Failure to realize that there can be significant penalties assessed for FMLA violations

• Failure to determine eligibility properly (temp time)

• Counting FMLA leave against employee’s absenteeism policy for disciplinary purposes.

• Failure to grant leave to provide physical or psychological comfort

• Failure to reinstate to same or equivalent job

• Terminating an employee during or at the conclusion of FMLA leave

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Top FMLA Violations

• Failure to grant leave because of misunderstanding of what qualifies as a “serious health condition”

• Failure to request medical certification in writing and to give 15 days

• Failure to handle questions about the validity of a medical certification accurately to the FMLA.

Remember: Under the FMLA, individual supervisors can be held personally liable for penalties resulting from violations of the FMLA.

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The risk of Non-compliance

Failing to comply with the law can be costly. Managers can be held personally responsible for violations.

Companies can be faced with expensive legal fees and settlement fees.

The Case:

In Schultz v. Advocate Health and Hospitals Corp., a long-time employee alleged his former employer terminated him in retaliation for using FMLA to care for his two ill parents.

The employee took intermittent leave over several months and during this period began having problems with his supervisors who established performance standards he was unable to meet. The problem escalated until the employee was terminated.

The Result:

A federal jury awarded $11.65 million to the employee. The award consisted of $10.75 million against the employer and $900,000 individually against the two supervisors.1

1 Schultz v. Advocate Health and Hospitals Corp., N.,D. Ill., No. 01 CV 702, 10/30/02.

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The Risk of Non-compliance



The Case:

In Allen v. A.G. Edwards & Sons*, Inc., the Plaintiff, Donald Allen brought suit against his employer, A.G. Edwards & Sons, Inc. for violations of the ADA and FMLA as well as State Laws on constructive discharge. In 2001, he was diagnosed with Bi-Polar disorder and briefly hospitalized. When he returned to work, the company refused to reinstate him to his old job. A.G. Edwards had options under FMLA and ADA but was concerned about the Plaintiff’s ability to perform his job. Allen claimed he was demoted to a Financial Consultant job that required him to report to the former Assistant Branch Manager and was not reinstated to an equivalent position. The Employer argued that there was no FMLA violation because they had returned him to a manager position.

The Result:

The arbitration panel ultimately found for the Plaintiff and found that the Employer violated the FMLA . Allen was awarded 1.25 million dollars.

*NASD #04-06092, June 26, 2006

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The Case:

Lubke v. Arlington*. The Plaintiff, Kim Lubke sued the City of Arlington, alleging he was discharged in violation of FMLA as a result of missing work to care for his ill wife. Lubke was scheduled to work from December 31, 1999 through January 1, 2000. On December 30, 1999, Lubke telephoned a call box and left a message stating that he would not be working during the Y2K weekend because he needed to stay home with a sick wife. Lubke was terminated for dereliction of duty, unauthorized absence and insubordination. At trial, the employer asserted that Lubke’s leave was not protected by the FMLA because he failed to provide timely and adequate medical certification required supporting his claim leave.

The Result:

The jury rejected the employer’s claim and found that the employer had violated the FMLA and awarded Plaintiff over 1 million dollars in damage. On appeal, the Fifth Circuit affirmed the jury verdict. *2006 WL1793268, June 30, 2006

US Court of Appeal, Fifth Circuit

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The Case: Dotson v. Pfizer*. The Plaintiff, Dotson was seeking to adopt a child from Russia and took intermittent time off to attend to the adoption, taking two trips to Russia. The employee kept his employer informed and spoke to his HR Dept. After returning from Russia with the child, the employee was terminated based on an alleged violation of company policy. Dotson sued for FMLA retaliation. The employer argued that the employee was not entitled to FMLA protection because he failed to indicate that he needed FMLA leave. The court rejected this argument, noting that an employee does not have to expressly sate that he needs FMLA or use any magic words to trigger the employer's obligation.

The Result: A jury found for the employee and awarded him more than $1 million plus prejudgment interest. The employer appealed but the court affirmed the decision in the employee’s favor. The court also held that the lower court erred when it failed to award the employee prejudgment interest, making the judgment even larger than that awarded by the jury.

*2009 Dotson v. Pfizer, No. 07-1920 (4th Cir. March 4, 2009)

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What Can You Do About Abuse of FMLA?

• Strictly follow certification requirements

• Don’t be afraid to seek clarification or ask for second or third opinions, particularly when dealing with employees with a history of attendance problems

• Be consistent – don’t selectively enforce

• Put everything in writing, it gives employees less “wiggle room”

• Stay in touch with absent employees – there is no prohibition against contacting them, asking about their status

• Keep your eyes and ears open – if circumstances have changed, request recertification – But your documentation must be solid

Employer Challenges

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Key FMLA Findings From Employers

The most frequently cited HR organizational challenges with FMLA:

80%

78%

73%

63%

57%

55%

Tracking/administering intermittent leave

Determining overall costs incurred

Determining whether an intermittent serious health condition should be protected by FMLA

Overall ease of complying with FMLA

Administering FMLA’s notification, designation and certifications requirements

Determining if a health condition is a serious health condition under FMLA

0% 25% 50% 75% 100%

Source: Society for Human Resource Management, “FMLA and Its Impact on Organizations,” 2007.

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The Challenges Facing Employers

• Leave policies must comply with both federal and state leave laws

• Each leave request must be individually evaluated for eligibility and qualifying conditions

• Documentation must be collected, verified, recorded and filed for every leave request

• Consistent administration is critical

• Managers may be found to be individually liable. Employers are subject to fines and/or other penalties if there is a violation of the FMLA

• Intermittent leaves are difficult to track

• It is difficult to coordinate STD & FMLA when they are outsourced separately

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Employer Challenges - Organizational

• Retention and termination of employees

• Productivity and employee morale

• Employers adjust to employees on FMLA leave by – Assigning work temporarily to another employee– Hiring an outside temporary replacement– Allowing work to go undone– Putting work on hold– Having employee work from home while on leave

• Indirect costs of covering for absences (extra overtime, temporary workers, outside contractors) adds another 7% or payroll

FMLA Administrative Options

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• In-source-Decentralized model

• In-source-Centralized model

• Outsource-TPA

• Outsource-Carrier/TPA

• Outsource-Carrier with dedicated capabilities

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The Costs of In-house Administration

• Productivity– Employee leaves disrupt work routines and cause confusion and distraction

among remaining staff – Leaves can require replacement workers and/or overtime wages– Managers must consider any impact of FMLA absence separately from other

performance issues, complicating the entire management process

• Legal/Compliance – State leave laws are numerous and change often. Employers and their legal

counsel must constantly survey court rulings and changes in the laws to remain up-to-date.

– Failing to comply with the law can be costly and managers can be held personally responsible for violations

– Litigation costs are roughly $100K to $200K per claim not including settlement costs.1

• Tracking & Administration – It takes the equivalent of one full-time HR professional to manage leave requests

for every 5,000 employees.2

– Other tracking and administration costs include maintenance of records, storage and supplies in conjunction with the administration of other benefits such as STD and workers compensation.

1 Based on Unum internal experience, 2007.2 Society for Human Resource Management, 2002 FMLA Survey.

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In-Source versus Out-Sourcing-Factors to consider:

• Employer Size

• Demographics

• Industry

• Location and number of operational sites

• Absence Management Philosophy

• Company Culture • Current Capabilities

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• Whether managing in-house or with a Carrier/ TPA, look for these capabilities:

– Single integrated solution, one vendor administering STD and FMLA – Single point of intake (STD/FMLA)– Web based reporting that allows drill down into data– Real time updates to changes in state leave laws or federal– In-house legal and technical expertise, includes newsletter to employer– Proven scale with large customer base and covered lives, strong customer

persistency – Superior customer satisfaction survey results– Administration for all separate state leave laws– Look for case studies showing enhanced productivity though reduction of lost

time– Indemnification

Outsourcing Evaluation - Look for Robust Leave Management Services Capabilities

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The Case for Integration

Because of the significant overlap that exists between short term disability and FMLA leaves, managing these leaves separately can cause additional costs and result in employees absent from work longer than entitled.

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Leave Management High Level Workflow Example

• Determining eligibility for FMLA and applicablestate leaves

• Approving leaves and tracking leave data

• Distributing communications and forms to employees as required

• Collecting and validating completed certifications, documentation and other paperwork;

• Conducting periodic recertification of leave periods allowed by law

• Providing daily and/or weekly absence reports

Between 50% and 70% of FMLA leaves are also short- term disability

absences.*

* Based on Unum internal experience, 2007.

Employee callsUnum’s

telephonic intake

Progression Study

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1. All values include pregnancy claims.2. STD durations values were calculated using survival modeling techniques to adjust for the ratio of open to closed claims.3. LTD duration was not reported due to claim maturity issues.4. Values based on 2006 experience.

Metrics

Customers with FMLA services

integrated with STD/LTD

administration

Customers with STD/LTD services only

Difference

Average (mean) work days per STD claim

33.2 41.4* -8.2 -19.8%

FMLA claims per 1000 employees 98.4 N/A N/A

STD claims per 1000 employees 63.2 69.9 -6.7 -9.5%

Percent repeat STD claimants 14.2% 14.8% -0.6% -4.1%

STD claim reporting lag 1.1 days 4.3 days 3.2 days -74.4%

* Estimated mean lost work days of a comparison group (Unum Book of Business)

Things to connect:• Reduced lost work days per claim with integrated product

• Calibration with baseline FMLA claims rate

• Reduced STD claims per 1,000 EE’s

• Reduced lag time per claim FMLA to STD Progression Study, Unum US, 2008

Benefit Administration Connections

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FMLA Intermittent

• A likely precursor to future absences and costs

– Evolving medical issue

– Evolving family issue

– Evolving employee relations issue

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QuestionsQuestions

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Introduction to FMLA andFMLA Outsourcing

FX-3180

introduction to fmla and fmla outsourcing ellen donovan mccann spring 2013

Documents

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fmla conditions

fmla eligibility criteria

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following situations