As leave programs grow more complex, so does compliance and administration
Up until the last 5 years or so, paid time off and leave policies were the glaciers of employee benefits – they changed, but so slowly that you couldn’t really see it happening. But as our latest Absence and Disability Management Survey makes clear, we’re in a new era now. The employers surveyed said they are struggling to handle the complexity of constantly changing leave laws that vary from state to state. At the same time, they reported making bold changes to their leave policies that reflect organizational values and provide greater workforce flexibility.
The survey was conducted in the first quarter of 2024 and 630 employers participated, of all sizes and from all industries. Here’s some of what we learned.
The flip side of expanding leave policies
In the very first version of the survey, conducted in 2000, we asked employers about their priorities for their disability and leave programs. Back then, just 27% of employers indicated that compliance was a top priority, which put it last on the list. In our 2024 survey, however, compliance with state and local paid leave mandates is first on the list, with 68% of survey participants calling it one of their top-three priorities. This finding is not a surprise given the explosion we’ve seen in the number and breadth of these mandates. It is also not a surprise that 72% of employers report that they have had to add resources to ensure compliance with state and local paid leave mandates.
As state and local paid leave mandates have strained employer resources, so has compliance with the Americans with Disabilities Act. In our 2021 survey (the first time we asked), 15% of employers reported that ADA compliance was a top priority. In 2024, the number almost doubled to 27%.
Improving leave administration ranks right behind compliance on the list of employer concerns; it is cited by 66% of survey respondents as a top priority, up from just 41% in 2021. What are the biggest challenges employers face in administration? Training their insourced or outsourced team on how to better manage absences and leave was the most common problem, with 55% of employers citing it as an issue. Difficulty in managing/tracking intermittent leaves and in managing/tracking statutory leaves were next on the list, with 40% of employers noting each of those issues.
Outsourcing is not the silver bullet
At the same time that employers say they are focused on compliance and improving leave administration, they seem to be struggling with their current outsourced vendor options. Nearly one in five survey respondents report that one of their top priorities is to find a different administrative vendor partner for leave administration. Some employers appear to be reducing their reliance on outside vendors. The move to outsource FML administration, which began a decade ago, has slowed significantly. From 2021 to 2024, the overall prevalence of FML outsourcing inched up from 56% to 57%. Notably, among employers with 5,000 or more employees, the prevalence of outsourcing FML administration actually declined from 72% in 2021 to 68% in 2024. The decline is a sign that outsourcing of FML has its limitations, as the vendors that employers turn to for support are not always equipped to meet their evolving needs.
