New Guardian Life research shows eight in 10 employers report keeping up with changes to federal and state leave laws is a challenge
Managing workplace leave of absence has historically been a challenge for employers, and with the onset of COVID-19 last year, and new federal and state legislation, there is a new layer of complexity.
The latest research from The Guardian Life Insurance Company of America® (Guardian Life) – “Absence Management Redefined: During the COVID-19 Pandemic and Beyond” – found that the pandemic has raised senior leadership’s awareness about the importance of effective absence management (77 percent), particularly during a very difficult time. While most organizations believed they were reasonably well-prepared for COVID-19 in terms of their disability and/or leave programs or policies, three in four employers changed their unpaid leave policies to paid due to COVID-19, while one in three employers created new and separate COVID-19 leave policies.
Guardian Life Study: 8 in 10 employers report keeping up with changes to federal and state leave laws is a challenge.
The study, which has been tracking trends in absence management since 2012, found that many organizations made significant efforts to preserve their business and protect their employees as a result of COVID-19, but it had an impact, nonetheless. At the time the research was conducted, approximately 56 percent of employers stated their staffing was impacted because of employees taking leave under the Families First Coronavirus Response Act (FFCRA). The FFCRA, which expired on December 31, 2020, required employers with fewer than 500 employees to provide paid sick leave or expanded medical leave time off for reasons related to COVID-19.
“As of last year, senior leaders have faced unprecedented challenges including shutdowns, managing employee absence and keeping up with new federal and state paid leave laws,” said Chris Smith, Head of Group Benefits, Guardian Life. “Our research shows that employers, ranging from 50-5,000 employees, are seeking permanent absence management solutions to address workforce challenges as a result of the pandemic.”
The findings also showed several leave trends emerged last year, such as revisions to existing leave policies, increased outsourcing of leave administration and greater use of technology to improve the employee experience. For example, sixty seven percent stated they were “very” or “somewhat likely” to outsource Family and Medical Leave Act (FMLA), and 74 percent want to centralize Americans with Disability (ADA) service with FMLA and Short-term Disability (STD).
Keeping up with Expanding Number of State Paid Leave Laws and Municipal Laws
One of the top challenges for employers, particularly those in highly regulated states, is keeping up with the many changes to federal and state leave laws in the past two years and coordinating different types of absences. For example, of companies with employees in four or more highly regulated states, 87 percent cited keeping up with the changes to legislation as a top challenge. As a result, more companies are creating their own leave policies to meet or exceed statutory requirements and standardize benefits across their organization.
As state paid leave laws are implemented, employers are faced with a choice – either defer to a state paid family and medical leave plan or opt out for a private plan, if available. Guardian Life’s study revealed that half of employers in states with paid family and medical leave laws expect to opt-in to a private plan. In addition to state leave regulations, employers subject to municipality-specific laws are also required to navigate these added complexities and re-evaluate their leave policies. Roughly half of those employers are managing them with in-house resources, while about a third are co-sourcing with an external resource or software.
Outcome Driven Absence Management Programs on the Rise
Guardian Life’s research shows that U.S. employers have continued to make progress and improve upon their absence management programs in the last two years.
Improvement was evident across Guardian’s five best practices, such as return-to-work programs and centralized intake/central leave reporting portal and reinforces that many of them are becoming industry norms in how to best manage employee absence. For example, employers using a centralized leave portal reached 54 percent, a135 percent increase since 2014; and 54 percent of employers said they use the same resource to administer leave for STD and FMLA – a 93 percent increase since 2014.
It also confirmed that best practice adoption results in better absence management outcomes. For example, six in 10 organizations that have made reducing absenteeism a priority and taken steps to address it self-reported positive results. One notable gain is 66 percent of employers reported increased return-to-work rates among employees.
The assessment is based on Guardian’s Absence Management Activity Index, which originally launched in 2012, and measures the degree to which an employer is implementing absence management best practices based on a series of questions. Employers are then divided into three categories according to maturity level. The Index showed that over a six-year period, the average maturity score in 2020 was 5.6 on a 10-point scale, improving by 51 percent since 2012 (Score – 3.7).