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FMLA Outsourcing: 6 Key Employer Insights

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Organizations need help navigating employee leave of absence. With so many complex regulations, many employers consider outsourcing their employee leave programs to specialized third-party vendors. Compliance with the Family and Medical Leave Act, a federal law allowing eligible employees to take unpaid leave for personal reasons, is central to administering employee leave. 

In this blog, we'll go more than six insights employers need about FMLA outsourcing. Use this as your go-to list as you weigh the potential benefits against the drawbacks. 

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1. Third-party prowess 

Expertise is at the heart of the outsourcing question. Can your in-house human resource team competently manage the complexities of FMLA requirements? Or are there benefits to be gained from a third-party vendor’s specialized focus? 

In-house HR staff might need help with FMLA regulations, causing compliance errors and/or knowledge gaps. In this case, it would make sense for employers to search for a list of FMLA outsourcing vendors. 

Outsourcing to a dedicated FMLA administration service offers highly specialized knowledge. These vendors live and breathe the intricacies of FMLA, from employees’ eligibility to the specific nuances of each leave category. Their singular focus allows thorough compliance with the law and swiftly adapting to regulatory changes. 

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2. Cost and resource allocation 

Understanding financial implications and resource allocation is paramount when considering FMLA outsourcing. What trade-offs might you be making, and will the long-term efficiencies justify the change? 

The costs required to manage employee leave may differ from organization to organization, depending on the size and expertise of the HR department. In some cases, determining cost and resource allocation may need to be clarified for companies looking to manage FMLA internally. 

While it may seem counterintuitive, outsourcing FMLA can be more cost-effective for some organizations. For example, an internal HR team with less FMLA knowledge may generate higher costs because of errors or compliance issues.

Plus, depending on your current in-house administration, the fees paid to third-party vendors might be less than the hidden costs of managing FMLA in-house, including overtime and staffing expenses. Additionally, outsourcing vendors’ predictable, pre-determined fees can simplify budgeting for leave management.

Woman smiling.

3. Program flexibility and employee experience 

The employee experience is a critical consideration when exploring FMLA outsourcing. How will the process change for employees interacting with a third-party vendor? 

  • Program flexibility: In-house HR teams may need help replicating the around-the-clock support offered by some vendors. This can lead to potential leave management delays and inefficiencies that negatively impact employees. Conversely, third-party vendors may benefit from time and technology. This could streamline an organization’s leave application and approval process. 

  • Employee experience: Regarding employee experience, the decision to outsource comes down to your company’s culture and preference for service. An in-house HR team may offer a personal, company-focused touch. In contrast, a third-party vendor may provide an objective, regulation-centric service, providing consistency and avoiding conflicts of interest. 

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4. Implementing an outsourced system 

Transitioning to an outsourced FMLA administration system is a significant undertaking. Before starting, you must prepare for the transition and its associated actions. 

A successful transition to outsourced FMLA involves comprehensive planning. Outline an actionable plan to make this shift as smooth and effective as possible. Set clear communication channels, share expectations and develop a robust training program for employees to use the new system effectively. 

Once you’re done transitioning, set up regular evaluations and feedback in the post-transition phase. Continuous improvement will be necessary to ensure the third-party service is compliant and attuned to the nuances of your company’s specific needs. Taking this additional step will help you reap the full benefits of outsourcing. 

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5. Legal and compliance considerations 

Employers are responsible for meeting FMLA legal and compliance regulations, whether they outsource or not. While third-party vendors can alleviate much liability by managing and implementing FMLA compliance, the employer remains responsible for the vendor’s actions. Therefore, thorough due diligence in selecting a reputable, experienced vendor is necessary. 

Even with outsourcing, employers need to stay informed about FMLA developments. They should also conduct periodic audits of third-party services to ensure they’re meeting the necessary compliance standards.  

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6. Choosing a trustworthy vendor 

Not all vendors are created equal. The expertise and ethics of the vendor you choose will profoundly impact your FMLA program. Here are some things to consider when getting started:  

  1. Compile a checklist of critical criteria, such as industry experience, track record, client testimonials and the capacity to handle your volume of FMLA cases.  

  1. Engage in transparent discussions about service expectations, including communication protocols and service-level agreements. 

  1. Research the vendor’s history of compliance, operational procedures and security protocols.  

  1. Ensure the vendor can cater to your immediate needs and potential growth and changes in your FMLA program. 

The road to sound leave management. 

When used with foresight and careful consideration, FMLA outsourcing can be a strategic tool in an organization’s toolkit. It gives businesses the efficiency and expertise to manage employee leave effectively. Adding these insights to your decision-making process can help you develop a comprehensive leave management approach that balances compliance with employee support. 

However, for some organizations, keeping employee leave administration in-house may be the right choice for the reasons noted above or due to other considerations. 

If you have questions about the leave process, absence management or FMLA, contact TruePlan today. Today, we can walk you through your time off and leave administration under your employee benefits offerings

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