Outsourcing FMLA: When Senior Living Providers Should Make the Switch

Employee Benefits, Senior Living & Social Services

Managing leaves are a part of a human resources department’s responsibilities, but when it comes to leaves that fall under FMLA (Family and Medical Leave Act), the work can be complicated and time consuming.

Human resources professionals are tasked not only with being experts in payroll, talent acquisition and retention, and key legislation that affects their employee population, but also with handling conflict within the workplace and boosting morale. Because of this, it’s expected that HR team members will develop strong professional relationships with other employees within the senior living organization in order to best address concerns and conflict that may arise.

However, these expectations create a difficult environment for a human resources team that needs to make the final call on whether an employee’s situation qualifies for FMLA leave.

Time and again, we’ve seen organizations make exceptions for employees when emotions have gotten in the way or turnover within the HR department has created discrepancies in employee records. In these instances, the organization has opened itself up to risk and liability, and left serious dollars on the table.

We work with several senior living clients who have experienced these scenarios to explore outsourcing FMLA administration as a solution.

What does it mean to outsource FMLA leave administration?

When an organization outsources FMLA leave administration, a vendor takes over the responsibility of determining whether an employee qualifies for leave under FMLA, and manages the paperwork and recordkeeping associated with this decision.

In this setup, employees call the vendor directly to request a leave of absence through FMLA, which takes your internal team out of the decision-making process, but keeps them aware of all comings and goings within your organization. Outsourcing leave administration can streamline your process, reduce hours that HR staff dedicate to this, while lowering your risk and liability.

Why is FMLA leave administration an issue for senior living providers?

The senior living industry has its own unique challenges, and managing FMLA leave has proven to be a common concern for these organizations. Higher rates of turnover and the global issue of attraction and retention are the main reasons why employers are experiencing issues with managing FMLA internally. Employers have always struggled with talent attraction and retention, and the COVID-19 pandemic added factors of burnout and a subsequent talent shortage to the mix.

It can be difficult to say no to an employee who requests FMLA (even if the reason behind the request does not fall into FMLA parameters) because you are wary of losing a much-needed member of your team. Outsourcing FMLA administration can help you tighten up your process, and takes the onus off of you.

What can happen if my organization doesn’t have a tight leave administration process?

We understand that it can feel unnecessary to outsource your FMLA leave administration. After all, your HR team understands the law and knows how to appropriately administer FMLA…right?

Even if your answer to that question is a resounding yes, things can go wrong – and they so often do when HR departments are strapped for time, experiencing high rates of turnover, or are prone to letting emotions get in the way of making the right call. Any of the following circumstances can cause your well-equipped HR department to navigate scenarios that can open your organization up to risk:

Labor-intensive process

In industries like senior living where FMLA leave is common, the administration process can be extremely time-consuming for your internal teams, leaving them little opportunity to focus on more value-added HR services that could address your employee population’s social determinants of health.

Abuse of FMLA leave policies

Employees are savvy. They understand the systems put in place by individual organizations (as well as the loopholes), and are able to take advantage of a lenient process to receive more leave than they are eligible for, which can cost your organization much-needed funds.

Emotional roadblocks

When you have a tightknit team, it can be difficult to say no to employees’ requests for leave under FMLA, even if their situation does not make them eligible. Emotions can get in the way, and your organization can suffer. This creates risk for the organization too since not all employees’ are being treated fairly and consistently.

High turnover

We’re experiencing an employee-led labor market, and turnover is high across the country. High turnover in your human resources department can lead to crossed wires, low scrutiny, and improper documentation, allowing employees to take advantage of a confused process.

Medical claims liability

A key part of the FMLA administration process is notifying your health insurance carrier that a specific employee is now on FMLA leave. If your internal department misses this step, you could be held liable for medical claims incurred during their leave. If the carrier is not notified that the employee is on FMLA leave, they can dispute that the employee was “actively at work” when the claims were filed, and therefore the claims are not covered by their employer-sponsored benefits. If this dispute is upheld, your organization could have to pay the claim amounts out of pocket.

Unemployment Claims Management & Administration

Another HR function to consider outsourcing is your organization’s unemployment claims management and administration. Third party companies can offer the expertise and knowledge of state regulations to better support your organization through the bureaucratic unemployment system while optimizing cost control. Moreover, opting to outsource frees up your HR team’s time to focus on other company-wide HR initiatives and strategies.

While each company’s service offerings may vary, unemployment cost control services may include:

  • Administration of unemployment claims management, including proprietary systems to manage and track unemployment claims and appeals in real-time
  • Appeal hearings representation
  • Actuarial forecasting of unemployment benefit claims
  • Expertise on the regulations associated with unemployment claims
  • Assistance in developing human resource strategies to impact future unemployment tax expense
  • Outplacement and career transition services

Unemployment claims can be complicated, requiring oversight and attention to detail. Many employers just do not have an HR team that has the capacity to manage the unemployment claim process which is often more laborious (and costly) then employers recognize. If left unchecked, erroneous unemployment claims could be costing your organization thousands of dollars

How do I know if I should outsource FMLA leave administration?

It makes sense for many organizations to outsource leave administration for the reasons listed above. One hesitation for some employers may be the size of their organization. Do you really need to outsource FMLA leave administration if you have a small team?

Here’s what we know: large employers are adopting this process at a large scale. These successful organizations are finding value in outsourcing their FMLA administration, and the trend is showing that it may be time for small organizations to take a page out of their book.

If you are on the fence about outsourcing, know that there are many benefits to taking this responsibility off of your team’s plate and utilizing a vendor to make these decisions, handle the logistics, and ensure accuracy.

Take emotions off of the table

There are clear cut, legal descriptions of what type of leave falls under FMLA. When you work with an impartial vendor, these decisions are made according to a black and white framework – not marred by emotional gray area.

Simplify different forms of leave

FMLA isn’t the only type of leave your organization’s HR department manages. Keeping track of the rules regarding state leaves and/or company leaves, and administering each appropriately and accurately, on top of FMLA is a high ask for a small department. Outsourcing this work can ensure your company isn’t prone to minor errors that can affect productivity and overall performance.

Better manage intermittent leave

Traditional leave is one thing, but managing intermittent leave associated with FMLA is a more complicated issue. With so many other responsibilities on their plates, HR professionals tasked with managing intermittent leave can become quickly overwhelmed, using systems like spreadsheets to try to track and organize information related to intermittent leave. Outsourcing FMLA administration means outsourcing these complex leave management tasks as well, and likely gaining access to a portal that simplifies information and can provide your team with answers at a glance.

Experience cost savings

Don’t let the cost of outsourcing sway you – M3 has developed a proprietary cost analysis tool to assist you in understanding what the real cost differences are between keeping this work in-house vs. working with a vendor. The analysis dives into the costs of the amount of time your employees are spending on FMLA leave administration in addition to the time associated with lost labor due to incorrect administration and compares it to the true cost of outsourcing.

Key Takeaway

FMLA leave administration can be a pain point for many organizations, especially senior living facilities. Outsourcing this task (and potentially unemployment claims management and administration as well) to an impartial third-party vendor can not only lighten your team’s workload, but also save you time and money while mitigating your risks.

Reach out to your M3 account executive to discuss whether your organization would be a fit for outsourcing FMLA leave administration.

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