Outsourcing FMLA Management


Posted By

Jul 31st, 2010

Many companies are trending toward outsourcing FMLA management. For large companies, outsourcing is a no-brainer. What is surprising is that smaller companies, with workforces of 50 to 200 employees are also beginning to outsource for the same reason as larger employers: in-house management of FMLA can be a burden, especially when you have to coordinate notifications and verify paperwork. Since it’s a Friday evening, I won’t even begin to discuss the complications that arise when an employee is certified for intermittent FMLA or abuse of intermittent leave is suspected.

If your company is considering outsourcing, there are plenty of options for you. Insurance giants like Met Life, Prudential, and The Hartford function as Third Party Administrators (TPAs) for FMLA management. Their plans come with all the bells and whistles and can even coordinate Short Term Disability payments with FMLA.

If you choose to go with one of these companies, expect to have the leave process managed from start to finish. Employees call a service center or initiate the claim online. The TPA collects all of the necessary information, determines whether the employee is eligible for leave, estimates the amount of leave necessary, and informs the employer of the outcome. The TPA tracks the leave throughout the open claim period, and “Voila!”, you and your over-worked HR staff are out of the business of FMLA processing and tracking.

If you’re not looking for a full service option, smaller companies offer other FMLA administration options. One company in particular, QQuest Corp., tracks FMLA for employers, but leaves the approval decision up to the employer. In QQuest’s model, they serve as the middle ground between in-house tracking and full service outsourcing.

No matter which model you go with – full service or self serve – there are a few things you should keep in mind:

    When outsourcing, every good HR person should be concerned about liability. Generally, no matter who manages your FMLA, you – as the employer – cannot avoid liability for mistakes and mismanagement. The legislation covering FML is strict. You will want to involve your legal team during the contracting phase to make sure you understand your potential exposure.
    In my experience with outsourcing, your current technology has a lot to do with how smoothly the takeover process will be. If your current tracking process isn’t in an Excel spreadsheet, at the very least, you will have a difficult time providing your TPA with the information they need about current leaves.

    To get past the hurdle of inefficient tracking, you have two options: budget additional time in the takeover process to create an electronic file from your hard copy records or grant all of your employees FMLA amnesty. By amnesty, I mean resetting the FMLA clock on all of your employees currently on leave. If you’re currently short-staffed or are having issues meeting productivity deadlines because of leave, you will want to put in the additional effort to create an electronic file.

    Ahh, the roll-out. Once you’ve decided to outsource, the first and likely only question you’ll receive from your HR staff is, “When can we roll this puppy out?” Aside from all the excitement around shifting the paperwork burden, be sure your HR team gives the roll-out all of the attention it deserves. Communication is key here.

    Your frontline employees, supervisors, and managers will have plenty of questions about the outsourcing process and their role in getting information to the TPA. The more thought you put into this phase, the better everyone’s life will be. Don’t overlook the small details, like – who’s responsibility it is to act on the leave updates from the TPA or who’s responsibility it is to report a leave when the employee fails to.

    Will it be HR’s responsibility to contact the employee when the TPA notifies the company that an employee’s leave has expired? Is it the manager’s responsibility to report an employee’s absence when the employee doesn’t? These questions will surely arise. And for that reason, your HR team will want to work closely with your managers and supervisors to predict scenarios and troubleshoot potential problems. Don’t let a lack of preparation undermine your roll-out.

All in all, FMLA outsourcing is a gift from heaven. If you’re so inclined to outsource, your managers, employees, and HR team will love you. Choose your TPA carefully, work closely with them, don’t neglect the roll-out, and you’ll be all set.

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