Although time away from work (TAFW) is valued by employees and can impact retention and engagement, it can be complicated for plan sponsors to communicate and administer, and emotional for participants. Optimizing TAFW administration is a worthwhile endeavor for plan sponsors that want to manage these benefits more effectively and improve their employees’ experience.
What is TAFW?
When employees hear “time away from work,” they usually think of holidays, vacation time or other routine paid time off (PTO) events. But TAFW can also be triggered by infrequent yet significant life events, such as major illnesses or injuries, the birth of a baby, caring for an elderly parent or serving in the military. TAFW policies may also cover unpaid leaves of absence, such as personal sabbaticals or time taken to pursue charitable activities, during which employees’ jobs are protected.
What makes it complicated?
It is important that benefits associated with TAFW events, such as short-term disability (STD), long-term disability (LTD), maternity leave and military leave, be administered consistently across the organization in a nondiscriminatory manner. Yet administration can be difficult, involving coordination among internal and external parties such as human resources (HR), human resource information systems (HRIS), payroll, benefits administration, legal, third-party leave administrators and the employee’s manager and medical care providers. TAFW can involve an employee’s personal health information (PHI) that is protected under the Health Insurance Portability and Accountability Act (HIPAA). There are regulatory issues to consider too, such as job protections under the Family and Medical Leave Act (FMLA) and Uniformed Services Employment and Reemployment Rights Act (USERRA), and plan sponsors must coordinate company benefits with workers compensation and disability insurance requirements in certain states. These issues can be further complicated for employers with a decentralized workforce or with both hourly and salaried employees. There is also an emotional component to consider, as employees utilizing TAFW benefits may be facing situations that strain their health, family and finances or may require special accommodations to return to work.
Taking steps to optimize administration of TAFW benefits can make these complexities more manageable. Here are some considerations for plan sponsors as they seek to streamline TAFW processes.
Establish policies and procedures to address the various administrative complexities of TAFW. For instance:
- Will employees be allowed to utilize sick time or vacation time to supplement their STD income or extended unpaid leave time?
- Will employees continue to be paid by the company while performing military duties?
- How will employees pay their medical premiums while they are away on an unpaid leave?
- What protocols will be established for employees who need to return from leave on a part-time basis or require special work accommodations due to an injury?
- How will any state disability benefits be coordinated with company-paid leave benefits?
- What steps will be taken when an employee’s job protection under FMLA has expired?
- Are there opportunities to automate leave administration in the payroll and HRIS systems?
- How will employees be transitioned from STD to LTD?
- In what situations should legal be involved (e.g., determining whether policy exceptions establish precedent)?
- How will unpaid personal leaves be approved or denied on a consistent basis?
Forming a cross-functional team to address ownership of these issues and coordination of responsibilities across the various departments can be helpful. Administration policies and procedures should be clearly documented with guidance from legal, and proper data protections should be in place for employees’ PHI related to leave administration.
Apply a soft touch
Employees who utilize TAFW benefits may be going through a significant life situation. Whether the occasion is joyful, such as adopting a baby, or tragic, such as a terminal illness, the employee may be facing new personal care, caregiving or financial obligations along with concerns about retaining their job.
Leave administrators, whether internal or third party, must treat employees who are utilizing TAFW benefits with great sensitivity, as interactions during this critical time can greatly affect employees’ emotional security as well as morale and impressions of their employer. It is important for administrators to understand the company’s culture and TAFW philosophy. They need to communicate clearly with employees about what is required to approve or extend their benefits (such as doctor’s statements or military papers), how long the benefits will be provided and what other company or statutory benefits may be available. And administrators must treat employees’ PHI with an appropriate level of care and discretion.
Find the right partners
When outsourcing TAFW administration, it is important to choose the right partners. Plan sponsors have different needs according to their culture, workforce and benefit offerings. An independent consultant can help plan sponsors identify the administration issues that are most critical and find partners that best fit the organization and its employees.
Above all, TAFW administrators must balance accurate and efficient administration with sensitivity to employees’ needs and privacy. The right partner should be able to clearly communicate with employees and address their concerns and questions so that employees do not have to seek assistance from multiple parties. Vendors should have expertise in state disability insurance benefits, if applicable to the organization, and regulatory expertise, such as job protection rules under FMLA and USERRA. Vendor partners should be able to produce data files that are compatible with the plan sponsor’s HRIS and payroll systems to help enable automation while reducing errors. Customer service representatives should be highly trained and provide accurate and consistent information.
Engage your employees
Employees who utilize TAFW benefits will have a favorable or unfavorable impression of the company based on their experiences during what is often a critical time in their personal lives. Providing accurate information, support and sensitivity during this time can greatly increase an employee’s engagement and loyalty to the organization. Therefore, optimizing administration of these complicated but highly valued benefits is a win-win for both the company and its employees.