Six leave management pitfalls and how to avoid them

Are your employees entitled to paid leave if they are expecting a baby? What about if a spouse has been called up for military service? In the case of domestic violence, does an employee get “safe time” to cope?

Are you sure?

In our experience, most mid-sized employers struggle with keeping up with the ever-changing leave landscape at the federal, state, and local levels, which may require an employer to provide paid or unpaid leave for a wide range of personal circumstances. Notably, if a single remote worker moves to one of the more than 20 states or dozens of municipalities with leave laws, your company could be subject to their rules, even if you do not have operations there.

Here are six of the most common leave management pitfalls—and how to avoid them.

1. You can be subject to requirements you may not be aware of

Leave laws are always complex, change rapidly, and are often enacted without any fanfare to notify employers. At least six states have new requirements that start this year, and more than 250 bills related to leave mandates could be pending at any given time. Many companies are not organized to keep up with such changes. Rather, responsibility for sick days, vacation time, parental leave, disability leave, and other types of leave is spread among local managers, payroll processing, human resources, and outside vendors.

What to do:

• Create a structure to coordinate all kinds of leave. This could be a central leave-management function or a cross-functional committee that regularly brings together HR, payroll, and benefits leaders to look at leave policies, administration practices, and compliance.
• Engage an outside resource that will both alert you to changes in leave laws and help you understand how to comply with them.

2. You need to know where employees actually perform work

Many leave laws apply if even a single employee is performing work in a state, county, or city, regardless of whether their employer has a brick-and-mortar location there. With the rise of remote work, it is easy to lose track of employees’ locations. Using incorrect information not only subjects the company to potential enforcement actions, but also could deny the worker leave benefits they are entitled to.

What to do:

• Track and monitor where employees perform work. Do not simply rely on the address you have on file, the cost center for the employee, or the business unit where they report.
• Audit and verify employee locations at least once a year and more frequently if possible.

3. Leave rules can overlap and conflict

Sometimes, an employee situation may be covered by several leave types, each with its own rules and potential payment amounts. New babies can be particularly tricky. The parent giving birth may be entitled to short-term disability for their medical condition(s), which should not run concurrently with parental leave that is meant for caring for or bonding with the newborn. Sometimes parents can choose to take paid time off concurrently with parental leave benefits to get paid up to 100% of their normal wages. Sometimes an employee has only unpaid but job-protected leave, other times they may have paid leave but no job-protection, or they could have both job-protected and paid leave. The potential for overlap is endless and confusing.

What to do:

• Work with an experienced advisor to determine how various benefits interact, specifying which run concurrently and whether the leave is paid or unpaid.
• In general, allow employees to use accrued paid leave alongside state benefits, but do not require it, as it could conflict with federal and state laws.
• Clearly distinguish policies for leave related to an employee’s medical condition(s) associated with pregnancy/birth from those that offer parents time to bond with or care for a new child.

4. Even small errors can subject you to audits, fines, and lawsuits

Employers can face audits and penalties if they fail to provide certain required notices to employees, keep specified records, and, of course, deliver the mandated leave and/or benefits. These state and locally imposed leave requirements may kick in on the first day of employment. Increasingly, leave laws enable employees to bring civil suits when their rights are violated—and violations can be expensive. State and local agencies across the country regularly assess claims against employers in the six or seven-figure range. Being subject to a class or collective action for violating leave laws can subject an employer to costly and time-intensive litigation that could result in payment of backpay, double or triple damages, attorneys' fees, interest, and more.

What to do:

• Maintain up-to-date procedures for how to comply with all applicable rules.
• Conduct regular compliance audits.
• Regularly train managers on all relevant federal, state, and local requirements, the distinctions between them, and how to legally respond to leave requests.

5. Do not solely rely on a third-party vendor to keep you in compliance

Many companies solely rely on third-party administrators, insurance carriers, and/or payroll vendors to navigate employee leave complexities. While these vendors are a great start and can help with various aspects of navigating the leave landscape, there is no single option for outsourcing 100% of an employer’s leave requirements. Rather, these third-party relationships should be thought of as co-sourcing, where they help to reduce some, but not all, of the leave burden off an employer.

What to do:

• Determine whether your short-term disability insurance carrier also provides leave management services. A bundled offering can be cost-efficient and assist with some of your leave obligations.
• Consider working with a third-party administrator to process leave claims, but also understand where their work begins and ends.
• Ensure you are not relying on a vendor to cover all your leave obligations. While vendors can offer great support, there are pieces of the leave process that the company must continue to own. Work with a trusted advisor to understand any leave gaps and monitor the performance of any vendor.

6. Mishandled leave can increase turnover and absenteeism

Many prospective employees consider generous leave policies among the most valuable benefits a company can provide. Moreover, research shows that companies with more generous leave programs have lower absenteeism. Conversely, when employees expect leave they are not provided, they are more likely to complain to regulators or take legal action.

What to do:

• Communicate your leave policy to employees regularly. This entails going beyond mandated legal notices to clearly explain the full range of benefits, when they apply, how they interact, and how to use them.

How Alliant can help

Alliant offers a combination of expert consulting and proprietary technology to ensure employers keep up and comply with federal, state, and local leave requirements and offer attractive, cost-effective benefits. Our team of attorneys and leave consultants can identify ways to streamline your internal processes while reducing your exposure to costly regulatory and legal actions.

Through our partnership with key disability carriers, the Alliant Leave Advantage team of experts can offer proactive, practical, and best-in-class compliance and consulting services tailored to your needs and aligned with your organization’s goals at no additional cost.