Most employers administer their FMLA programs in-house, and where incidence is low, this may be the correct decision. However, businesses with more than 100 employees have been getting a wake-up call: They learn they don’t have the resources or expertise to administer this complex set of regulations—and avoid the penalty of an error in adjudicating a FMLA claim.
Compliance and associated penalties with current federal and state regulations can be even more challenging for larger, decentralized groups with multiple locations. And litigation costs are often $100k to $200k per claim, not including the settlement costs.
Outsourcing FMLA may be the right approach for your organization. Here are some considerations:
- Can your organization meet the employer FMLA obligations such as evaluating the eligibility, calculating the entitlement, and determining the qualification for a leave?
- Does your team have the clinical expertise to determine if a condition meets the definition of a Serious Health Condition?
- Have you been releasing the FMLA rights and responsibilities notice in writing within five business days of the notice of leave?
- Are all the FMLA leaves administered consistently across all your locations?
- How are you addressing COBRA notices for employees on FMLA?
- Are you providing notice that STD and Salary Continuation are running concurrently with FMLA?
- Does your organization have a reliable tracking system and robust reporting capabilities that identify potential red flag cases, particularly for intermittent leave?
There are many alternatives for outsourcing this function, which can incorporate a complete outsourced solution for FMLA, STD and LTD coverages. Many insurance carriers have outsourced administrative capabilities, which can be integrated with the underlying coverage. There are also standalone third-party administrators that work with very large companies.
Generally for midsized employers, the integrated approach offers the simplest and most cost-effective option. If you wish to outsource, you will need to provide an indication of the number of incidents in the prior 12 months as well as a current census with demographics.
FMLA outsourcing: Think of it as a safety belt. . . .