2014 Employer Leave Management Survey

Transcription

1 2014 Employer Leave Management Survey DMEC/Spring Consulting DMEC White Paper Series January 2015

2 Authored by: Karen English, Partner Spring Consulting Group, LLC Terri Rhodes, Executive Director DMEC Analysis and Editing: Karen English, Partner Lai-Sahn Hackett, Associate Consultant Spring Consulting Group, LLC For more information on this report, contact: DMEC, , Spring Consulting Group, LLC, Table of Contents Executive Summary...3 Background...3 Current Environment...4 Best Practices...4 Survey Results and Discussion...7 How Leave Is Managed...7 Outsourcing Specifics...10 Administrative Complexity...12 Policy and Organization...13 Time Allocation...18 Challenges and Successes...19 Future Evolution...23 Appendix A: Survey Design and Methods...24 Appendix B: Survey Questions...27 Acknowledgements...41 Copyright Disability Management Employer Coalition

3 Executive Summary Background This fourth annual report provides a summary and an analysis of the 2014 Employer Leave Management Survey jointly sponsored by the Disability Management Employer Coalition (DMEC) and Spring Consulting Group (Spring). The survey tracks employer methods, challenges, and successes in the administration of the following leave types: n Family and Medical Leave Act (FMLA) n State family and medical leaves n Military leave (USERRA) n State military leave n Jury duty n Other state-mandated leaves n Municipal/County leaves n Other company-specific leaves (e.g., bereavement, administrative, personal) n ADA accommodation leave The survey, which had 44 questions, was released at the 19th DMEC Annual Conference, using a similar online format as in It was completed by 958 employers (more than double the number of respondents in 2013) from across the United States representing all organizational sizes (as noted below) and a broad range of industries, including healthcare, utilities/energy, retail/wholesale, education, and financial/insurance. Respondent Summary Employer Size Number Percentage Number Percentage Fewer than 50 employees 19 5% % 50 to 99 employees 6 2% 95 10% 100 to 249 employees 5 1% 94 10% 250 to 499 employees 9 2% 85 9% 500 to 999 employees 20 5% 57 6% 1,000 to 4,999 employees 83 21% % 5,000 to 9,999 employees 67 17% 67 7% 10,000+ employees % % Total % % Due to the large increase in sample size this year and the substantial response rate by smaller companies (those with fewer than 1,000 employees, but particularly fewer than 50, that may not even be subject to FMLA), the report focuses on trends for those with 1,000 or more employees, weighting the data to compare 2013 to 2014, noting statistically significant changes, and commenting on behaviors for those that are smaller. It is also important to note that all percentages shown in the charts are weighted and represent employers with 1,000 or more employees (unless otherwise noted), while the n, or number of responses, represents the actual number. 3

4 DMEC and Spring continue their partnership in an effort to provide meaningful and actionable information to the absence management industry through these types of survey reports. We therefore structured this survey and corresponding report to aid employers in their decision making by providing best practices, reference to tools and resources, and predictions on how they can expect their programs to evolve in the future. Current Environment The landscape of employer leaves continues to undergo significant change, with regulatory initiatives under the Patient Protection and Affordable Care Act continually looming, considerations under the FMLA frequently published, and guidance under the Americans with Disabilities Act (ADA) and the Americans with Disabilities Amendments Act (ADAAA) periodically clarified. When the FMLA turned 20 years old in February 2013, key survey findings circulated by the U.S. Department of Labor indicated that complying with the FMLA was very easy, somewhat easy, or had no noticeable effect for 85% of employers. Although our 2014 survey indicates that employers and employees are more confident in their understanding of the FMLA and are more smoothly incorporating it into their business processes, it is still very challenging, particularly with respect to intermittent leave, ADA/ADAAA, and coordination with municipal and county leaves. The results of the fourth annual 2014 Employer Leave Management Survey illustrate that employers of all sizes are overcoming challenges by outsourcing, developing solutions internally, or leveraging technology; the legal complexity has heightened; and the need for collaboration across business units and training of managers and supervisors has amplified. Programs are positioned for continual improvement, and employers expect to increase their use of systems and automation, tackle more return-to-work (RTW) and ADA/ADAAA issues, increase wellness awareness, and improve the employee experience. Best Practices While the survey details provide many insights into employers methods, we highlight and categorize a few best practices in the areas of people, process, and resources/technology. The intent is to provide employers and those in the industry with some thoughtful analysis, direction, and questions they can ask regarding their leave management practices and programs that are most effective relative to cost, process, personnel, and productivity. People Education and Training Element Description Findings Periodic and consistent training of managers and supervisors is critical to helping them understand the process and their responsibilities, limit liability, and uniformly administer the organization s leave policies. 44% of employers rate training supervisors as extremely difficult. Lack of training has become the number one challenge to employers in managing leaves of absence. Concern over getting supervisors to grasp the legal implications of mismanagement is frequently mentioned by respondents. 4

5 Staffing and Support Organizational Collaboration Ensuring that staff is qualified, trained, and experienced can make a big difference in how smoothly and efficiently the leave programs run. Internal processes, communication, and departmental collaboration are essential elements of an efficient leave management program. Interpreting FMLA regulations and tracking municipal/county leaves are less of a challenge in 2014 than Intermittent leave, ADA/ADAAA, and municipal/county leave coordination are still most difficult. 96% indicate HR is involved in tracking and managing leaves. 77% indicate managers are involved. 37% of organizations rate relying on managers for leave enforcement as extremely difficult. An increasing number (60%) of employers describe the relationship between HR/ Benefits and Risk Management as successful or positive. Legal has surpassed Employee Relations and HR as the most contacted department when employees are absent. More than half of respondents report using internal legal resources. Process Policy Consistency Element Description Findings Leave and absence policies should be as uniform and applied as consistently as possible across the organization regardless of size or geography, allowing for some flexibility. 74% of employers report applying leave policies uniformly, with some flexibility, across the organization. Operational Centralization Ongoing Improvement Regardless of department, division, or location, managers, supervisors, and employees need to be able to access one central place for all tasks related to leave administration. Given the constant changes occurring in leave laws and regulations, continual improvement and monitoring of current practices is key for a successful program. 66% of employers indicate their approach to leave management is centralized. Reported future changes to programs include implementing systems and increasing automation, tackling more ADA/ADAAA issues, increasing wellness awareness, and improving the employee experience. 25% of respondents report being able already to achieve improved return-towork rates by partnering closely with their vendor and employee health departments, accommodating restrictions, and improving employee satisfaction with the process. The impact of healthcare reform is uncertain, but employers feel it will make leave administration more complex and will require continual monitoring of programs for adherence. 5

6 Resources/Technology Element Description Findings Build-or-Buy Decision Employers should evaluate whether internal or external resources and systems are right for their organization from cost, cultural, consistency, and operational perspectives. This should take place for employers of all sizes but particularly once a company has 100 or more employees. The rate of employer outsourcing has remained constant over last year, with a slight increase for those with 100 to 499 employees. Federal FMLA and state family medical leaves are most commonly outsourced, at 32% and 34%, respectively. A small number of employers have begun to outsource ADA accommodation leave and have increased their rate of bundling it with other external vendor services. Rates of manual tracking leaves increased slightly. Employers with 100 to 499 employees are moving beyond homegrown to a mix of external, outsourced, and manual systems. Capability Sufficiency Measurement/ Tracking/ Reporting Once implemented, employers should monitor vendor products and systems to make sure they are keeping up with new requirements. Understanding key metrics of leave programs can help administrators and decision makers refine, improve, and enhance leave programs to further achieve company goals and objectives. Employers are generally satisfied with their outsourced vendor programs, particularly managing them in a compliant manner. Areas for improvement continue to be reports and metrics, customer service, legislative updates, and identifying opportunities for improvement. About a third of respondents are able to measure program metrics for elements such as decreased costs, lost time, RTW rates, abuse, and productivity. 6

7 Survey Results and Discussion How Leave is Managed Respondents were asked to think about how employee leaves are managed at their organization and whether the function is insourced or outsourced. Explicitly, the survey attempts to understand the type of management when participants have a policy in place and what the procedures they have for handling the leave. In 2012, we observed that mid-sized organizations (those with 500 to 999 and 1,000 to 4,999 employees) had a noticeable increase in the percentage of outsourcing for every leave type. In 2013, outsourcing across all employer sizes continued, and in 2014, we saw a slight increase for smaller organizations (those with 100 to 499 employees). The most common leaves being outsourced are: Leave Type % Outsourced Federal FMLA 32% 32% State family and medical leaves 37% 34% Military Leave (USERRA) 21% 20% State military leave 21% 20% Other state-mandated leaves 23% 24% Specific to federal FMLA, outsourcing by employers with 100 to 249 employees increased slightly; in 2012 and 2013, 100% of those with 100 to 249 employees and nearly 90% of those with 250 to 499 employees were managing FMLA internally. In 2014, between 3% and 7% of employers with 100 to 499 employees are now outsourcing FMLA. For those with fewer than 100 employees, some outsourcing is taking place, but many respondents are too small to be subject to federal law. BEST PRACTICE ALERT Employers of all sizes should evaluate whether internal or external resources and systems are right for their organization from cost, cultural, consistency, and operational perspectives. 7

8 Exhibit 1: Management of Federal FMLA* Exhibit 1: Management of Federal FMLA* Internally Managed Externally Managed/Outsourced Not Managed Do Not Know / Do Not Provide This Leave Exhibit 1: Management of Federal FMLA* Under % 2% 2% 29% n = 358 Internally Managed Externally Managed/Outsourced Not Managed Do Not Know / Do Not Provide This Leave % 3% 4% n = 94 Under % 2% 2% 29% n = % 7% 1% n = % 3% 4% n = % 14% 2% n = % 7% 1% n = 85 1,000-4,999 69% 30% 1% n = % 14% 2% n = 57 5,000-9,999 60% 37% 3% n = 67 1,000-4,999 69% 30% 1% n = ,000-19,999 60% 40% n = 52 5,000-9,999 60% 37% 3% n = 67 20, % 37% 1% n = 97 10,000-19,999 60% 40% n = 52 *Note: Percentages 20,000+ are actual, not weighted. 62% 37% 1% n = 97 Some *Note: states Percentages have their are actual, own not variations weighted. for family and medical leaves. When comparing the Some states have their own variations for family and medical leaves. When comparing the management of these state leaves from 2013 to 2014, outsourcing percentages remained stable across employers management Some states of all have of sizes, these their with state own the leaves variations exception from for of 2013 those family to with 2014, and medical 500 outsourcing to 999 leaves. employees, percentages When comparing where remained a decreased the stable percentage across management employers outsourced of these of all (11% state sizes, in leaves with 2014 the from compared exception 2013 to 25% 2014, of those in outsourcing 2013), with and 500 those percentages to 999 with employees, 100 remained to 499 where employees, stable a across where decreased employers a slightly percentage of all increased sizes, outsourced with percentage the exception (11% outsourced. in of 2014 those compared For with those 500 with to to % fewer employees, in than 2013), 100 and where employees, those a decreased with a similar 100 to 499 percentage employees, outsourced where compared a (11% slightly in 2014 to increased 2013, compared but percentage an to increasing 25% outsourced. 2013), number and For either those those did with with not 100 manage fewer to 499 than or employees, did 100 not know employees, where (Exhibit a slightly a 2). similar increased percentage percentage outsourced outsourced. compared For those to 2013, with but fewer an increasing than 100 employees, number either a similar did not percentage manage outsourced or did not know compared (Exhibit to 2013, 2). but an increasing number either did not manage or did not Exhibit 2: Management of State Family and Medical Leave* know (Exhibit 2). Internally Managed Externally Managed/Outsourced Not Managed Do Not Know / Do Not Provide This Leave Exhibit Exhibit 2: 2: Management of State of State Family Family and Medical and Medical Leave* Leave* Under 100 Internally Managed 58% Externally Managed/Outsourced 2% 3% 38% Not Managed Do Not Know / Do Not Provide This Leave n = Under % 58% 2% 3% 2% 1% 23% 38% n = 93 n = % 74% 7% 28% 2% 1% 23% n = 83 n = % 65% 7% 11% 16% 28% n = 55 n = 83 1,000-4, % 73% 27% 1% 11% 17% 16% n = 144 n = 55 5,000-9,999 51% 33% 3% 13% 1,000-4,999 56% 27% 1% 17% n = 67 n = ,000-19,999 50% 40% 10% n = 52 5,000-9,999 51% 33% 3% 13% n = 67 20, % 36% 2% 9% n = 97 10,000-19,999 50% 40% 10% n = 52 *Note: Percentages are actual, not weighted. *Note: Percentages 20,000+ are actual, not weighted. 53% 36% 2% 9% n = 97 With *Note: respect Percentages to other are state- mandated actual, not weighted. leaves, which include leaves for volunteer firefighters, expectant mothers, blood donation, and so forth, the data reveals that although a large percentage (61%) of With respect to other state- mandated leaves, which include leaves for volunteer firefighters, expectant mothers, blood donation, and so forth, the data reveals that although a large percentage (61%) of 9 9 8

9 With respect to other state-mandated leaves, which include leaves for volunteer firefighters, expectant mothers, blood donation, and so forth, the data reveals that although a large percentage (61%) of companies continue to manage these leaves internally, certain employer groups increased their companies outsourcing continue levels. to manage For example, these employers leaves internally, with more certain than employer 10,000 employees groups increased slightly their increased their outsourcing outsourcing levels. of For these example, leaves (27% employers in 2014 with compared more than to 10,000 22% in employees 2013), and slightly those increased with 250 to their 499 outsourcing employees of these are beginning leaves (27% to outsource in 2014 compared (6% in 2014 to 22% compared in 2013), to and 0% those in 2013). with 250 For to those 499 with fewer employees than 100 are employees, beginning to an outsource increasing (6% percentage in 2014 compared (37% in 2014 to 0% compared in 2013). to For 13% those in with 2013) fewer did not than know 100 employees, or did not an provide increasing this leave percentage (Exhibit (37% 3). in 2014 compared to 13% in 2013) did not know or did not provide this leave (Exhibit 3). Exhibit Exhibit 3: Management 3: of of State-Mandated State- Mandated Leaves* Internally Managed Externally Managed/Outsourced Not Managed Do Not Know / Do Not Provide This Leave Under % 1% 5% 37% n = % 6% 22% n = % 6% 2% 30% n = % 4% 9% 16% n = 55 1,000-4,999 61% 18% 1% 21% n = 141 5,000-9,999 57% 20% 3% 20% n = 65 10,000-19,999 58% 27% 15% n = 52 20, % 27% 1% 8% n = 96 *Note: *Note: Percentages Percentages are are actual, actual, not not weighted. For USERRA military leaves, this year s results remain steady for most employer groups; however, an increasing For USERRA number of military employers leaves, with this 5,000 year s to results 9,000 remain employees steady are for internally most employer managing groups; USERRA however, leaves an (78% increasing 2014 compared number to of 70% employers in 2013), with and 5,000 a very to slightly 9,000 employees increasing are number internally with 100 managing to 499 USERRA leaves employees (78% are in 2014 outsourcing compared (1 to to 2% 70% in 2014 in 2013), compared and a to very 0% slightly in 2013). increasing For those number with fewer with 100 than to employees employees, are outsourcing an increasing (1 to percentage 2% in 2014 (7% compared in 2014 compared to 0% in 2013). to 4% in For 2013) those did with not fewer manage than this 100 leave employees, an (Exhibit increasing 4). percentage (7% in 2014 compared to 4% in 2013) did not manage this leave (Exhibit 4). 10 9

10 Exhibit Exhibit 4: Management 4: Management of USERRA of USERRA Military Military Leaves* Leaves* Internally Managed Externally Managed/Outsourced Not Managed Do Not Know / Do Not Provide This Leave Under % 1% 7% 30% % 92% 2% 3% 10% 1% 7% n = 351 n = 92 n = % 11% 2% n = 57 1,000-4,999 77% 19% 4% n = 145 5,000-9,999 10,000-19, , % 18% 4% n = 67 75% 67% 21% 31% 4% 2% n = 52 n = 97 *Note: Percentages are actual, not *Note: Percentages are actual, not weighted. Other Other company- specific company-specific leaves leaves (e.g., bereavement, (e.g., bereavement, administrative, administrative, personal) personal) that are that internally are internally managed managed remained remained relatively relatively the same, the same, regardless regardless of employer of employer size. size. In 2014, In 2014, 95% 95% of companies of companies internally internally manage manage these these leaves leaves versus versus 92% 92% in 2013 in 2013 and 91% and in 91% 2012, in with 2012, year- over- year with year-over-year sample sample sizes sizes so noted. so noted. Beginning Beginning 2013, in we 2013, asked we employers asked employers to indicate to indicate their rate their of rate internally of internally managing managing or outsourcing or outsourcing of of ADA accommodation ADA accommodation leave. Similar leave. Similar to last year, to last the year, majority the majority of companies of companies (80%) are (80%) administering are administering ADA leaves ADA leaves themselves, themselves, and only and 3% only indicate 3% indicate they outsource they outsource this leave. this leave. Companies Companies with more with than more 1,000 than employees, 1,000 employees, however, are however, most likely are most to outsource likely to outsource these services these and, services as shown and, as below, shown are below, likely to leverage are likely the to same leverage external the same vendor external to do this vendor that to they do use this for that leave they management. use for leave management. These findings These likely findings reflect the likely continued reflect the innovation continued in this innovation area, as in more this outsourcing area, as more providers outsourcing offer providers ADA offer ADA accommodation leave and related service as an option. accommodation leave and related service as an option. Outsourcing Specifics Best BEST Practice PRACTICE Alert ALERT Short- term disability (STD) and long- term Once Once implemented, employers employers should should monitor disability vendor products (LTD) are and by far systems the two to benefits make sure most they monitor are keeping vendor up products with new and requirements. systems to outsourced to the same vendor. Both continued make sure they are keeping up with new to experience increases over the past few years, requirements. suggesting continued movement by employers to Outsourcing Specifics utilize existing relationships with current vendors to outsource the management of leaves. Group Short-term disability (STD) and long-term disability health, (LTD) employee are by assistance far the two programs benefits (EAPs), most and wellness outsourced programs to showed the same similar vendor. rates Both of outsourcing continued to services experience to the increases same vendor, over the while past few ADA years, and ADAAA suggesting experienced continued an increase movement compared by employers to last year to (Exhibit utilize existing 5). relationships with current vendors to outsource the management of leaves. Group health, employee assistance programs (EAPs), and wellness programs showed similar rates of outsourcing services to the same vendor, while ADA and ADAAA experienced an increase compared to last year (Exhibit 5)

11 Exhibit 5: Outsourced Programs Exhibit 5: Outsourced Programs If you outsource your leave management to an external vendor, do you If you outsource your leave management to an external vendor, do you also outsource the also outsource the following programs to that same vendor? following programs to that same vendor? (Percent (Percent "Yes") Yes ) Marilynn 1/27/15 10:17 AM Comment: Change ampersand in ADA and. Short Term Disability Long Term Disability Workers' Compensalon Group Health EAP Wellness ADA & ADAAA 24% 30% 26% 25% 32% 30% 15% 18% 18% 10% 89% 87% 86% 80% Satisfaction rates (defined as those that are somewhat satisfied, satisfied, or extremely satisfied with Satisfaction rates (defined as those that are somewhat satisfied, satisfied, or extremely satisfied with their vendor s ability) for employers that outsource leave management programs show relatively their vendor s ability) for employers that outsource leave management programs show relatively positive experience with carriers and service providers. Consistent with 2013, compliance with positive experience with carriers and service providers. Consistent with 2013, compliance with regulations remains the number one satisfaction element of service provided by outsourcers. Also consistent regulations with remains 2013, the the lowest number ranked one satisfaction satisfaction element element of was service identification provided of by program outsourcers. improvement Also consistent opportunities. with 2013, According the lowest to ranked 2014 respondents, satisfaction other element areas was in identification need of improvement of program include improvement the sharing opportunities. of reports and According metrics, providing to 2014 respondents, legislative updates, other areas and delivering in need of effective improvement customer include service the sharing (Exhibit of reports 6). and metrics, providing legislative updates, and delivering effective customer service (Exhibit 6). Exhibit 6: 2014 Outsourcing Saasfacaon Rates (Saasfied or Extremely Saasfied) Exhibit If you outsource 6: 2014 Outsourcing your leave management Satisfaction to an Rates external (Satisfied vendor, how or Extremely saasfied are Satisfied) you with If you outsource your leave management to an external vendor, how satisfied are you your vendor's ability to: with your vendor s ability to: Manage the program in a compliant manner 92% Interact with my organizalon s internal departments Provide the right level of resources at the right lme Provide data feeds to/from various systems Work with other vendors we use Share helpful program reports, metrics and trends Deliver effeclve customer service Provide legislalve updates 76% 76% 75% 74% 73% 73% 73% 12 Idenlfy opportuniles for conlnual improvement 65% For comparison to previous- year survey results and consistency with numbering, please note that Exhibit For comparison 7 was intentionally to previous-year omitted survey from this results report. and consistency with numbering, please note that Exhibit 7 was intentionally omitted from this report. Administrative Complexity As in years past, employers continue to have the most difficulty tracking intermittent time during leave and intermittent leave previously taken for FMLA administration, followed closely by interacting with the ADA/ADAAA and transferring employees to alternative positions (Exhibit 8). 11 Exhibit 8: FMLA Acaviaes Ranked as Difficult or Extremely Difficult

12 Idenlfy opportuniles for conlnual improvement 65% White Paper 2014 Employer Leave Management Survey DMEC/Spring Consulting For comparison to previous- year survey results and consistency with numbering, please note that Exhibit 7 was intentionally omitted from this report. Administrative Complexity As in years past, employers continue to have the most difficulty tracking intermittent time during leave leave and intermittent and intermittent leave leave previously previously taken taken for FMLA for FMLA administration, administration, followed followed closely closely by interacting by with interacting the ADA/ADAAA with the and ADA/ADAAA transferring employees and transferring to alternative employees positions to alternative (Exhibit 8). positions (Exhibit 8). Exhibit 8: 8: FMLA Activities Acaviaes Ranked as Difficult or Extremely Difficult Tracking intermioent lme during leave Tracking intermioent lme previously taken Interaclng with ADA and ADAAA Transferring employees to alternalve posilons Obtaining second and third medical opinions Obtaining medical cerlficalon(s) 60% 60% 58% 54% 55% 51% 52% 56% 47% 59% 42% 42% Facilitalng return to work 35% 31% 13 Similar to last year s survey, the understanding of the impact of and interaction with ADA/ADAAA continues Similar to last to be year s one survey, of the the top understanding leave absence of the management impact of and activities interaction that with employers ADA/ADAAA find difficult continues to be one of the top leave and absence management activities that employers find difficult or extremely difficult. Interestingly, tracking municipal/county leaves continues to be in the top five or extremely difficult. Interestingly, tracking municipal/county leaves continues to be in the top five most difficult activities, although a significantly smaller percentage of respondents in 2014 (37%) most difficult activities, although a significantly smaller percentage of respondents in 2014 (37%) find it find difficult it difficult compared compared to 2013 (55%). to 2013 (55%). Exhibit Exhibit 9: Leave 9: Leave and Absence and Absence Management Management Acaviaes Activities Ranked Ranked as Difficult as Difficult or Extremely or Extremely Difficult Difficult Understanding the impact of the ADA and the amended ADA (ADAAA) and the impact on employment praclces Interaclng with ADA and ADAAA when administering FMLA Tracking Municipal/County Leaves 37% 42% 41% 51% 51% 55% Coordinalng leaves (including FMLA) with Aoendance Policies Coordinalng State or Municipal/County Leaves with FMLA 27% 35% 33% 39% Policy and Organization For 2014, the Legal Department jumps to number one as the most contacted department when employees are absent, followed by Employee Relations, Human Resources, and lastly, Benefits; in 2013, Employee Relations was the top department, while in 2012, it was Human Resources. Also interesting in 2014, a much smaller percentage of respondents ranked the Wellness Department higher, percentage- wise, than in 2013 (Exhibit 10). 12

13 Policy and Organization For 2014, the Legal Department jumps to number one as the most contacted department when employees are absent, followed by Employee Relations, Human Resources, and lastly, Benefits; in 2013, Employee Relations was the top department, while in 2012, it was Human Resources. Also interesting in 2014, a much smaller percentage of respondents ranked the Wellness Department higher, percentage-wise, than in 2013 (Exhibit 10). Exhibit Exhibit 10: 10: Departments Corresponded with with When When Employees Are Are Absent Through Ad Hoc Discussion, s, and Phone Calls Absent Through Ad Hoc Discussion, s, and Phone Calls Legal Employee Relalons 54% 52% 64% 67% Human Resources Benefits Safety EAP/Work Life Risk Management Labor 45% 47% 42% 45% 39% 40% 36% 41% 35% 38% 31% 34% Wellness 26% 40% Other None it is not necessary 6% 12% 17% 13% As for the relationship between HR/Benefits and Risk Management, almost 60% of respondents indicate it is successful or positive, which is an increase from prior years. The percentage of employers rating the relationship as neutral (34%) is significantly decreased compared to last year, while the number of those that rate it as negative (6%) remains close to the number in 2013, with large representation by employers that have more than 10,000 employees (Exhibit 11). Best Practice Alert Internal processes, communication, and departmental collaboration are essential elements of an efficient leave management program. Regardless of employer size, companies that can remove barriers between departments so they can work together will achieve greater efficiencies and find ways to improve processes. Still, a low percentage of respondents (6%) indicated this relationship is negative or does not exist

14 As for the relationship between HR/Benefits and Risk Management, almost 60% of respondents indicate it is successful or positive, which is an increase from prior years. The percentage of employers rating the relationship as neutral (34%) is significantly decreased compared to last year, while the number of those that rate it as negative (6%) remains close to the number in 2013, with large representation by employers that have more than 10,000 employees (Exhibit 11). Regardless of employer size, companies that can remove barriers between departments so they can work together will achieve greater efficiencies and find ways to improve processes. Still, a low percentage of respondents (6%) indicated this relationship is negative or does not exist. BEST PRACTICE ALERT Internal processes, communication, and departmental collaboration are essential elements of an efficient leave management program. Exhibit 11: Descripaon Description of of Relaaonship Relationship Between HR/Benefits and Risk Management Successful - we work closely to ensure concurrency on all leaves 16% 25% Posilve - we roulnely communicalon about relevant leave policy and protocol Neutral - we correspond on an as- needed basis 34% 30% 34% % Negalve - we do not have a working relalonship 6% 3% Consistent with prior years and considering all respondents, the majority of organizations leave policies are provided uniformly for the whole BEST PRACTICE ALERT Best Practice Alert organization (74% in 2014 and 80% in 2013). We Leave and absence policies should be as uniform and also applied observe as that consistently the majority as possible were managed across the Leave and absence policies should be as organization, regardless of size or geography, allowing centrally for some (66% flexibility. in 2014 and Regardless 70% in 2013). of department, uniform and applied as consistently as division, or location, managers, supervisors, and employees Uniformity need of policies to be able may to be access lower one for central possible across the organization, regardless place of size for or all geography, tasks related allowing to leave for administration. some employers with more than 10,000 employees flexibility. Regardless of department, due to the presence of unions, diversity of division, or location, managers, supervisors, departments/ business units, and overall levels and employees need to be able to access of flexibility that need to be incorporated. Mergers one central and acquisitions place for all may tasks also related play a role to as companies with disparate policies come together (Exhibit leave 12). administration. Exhibit 12: Leave Policy Structure* 14 Employer Size Leave Policies Are Uniform Approach to Management Is Centralized Under % 79% 100 to % 83% 250 to % 80% 500 to % 73% 1,000 to 4,999 73% 67% 5,000 to 9,999 83% 59% 10,000 to 19,999 71% 55% 20, % 63% *Note: Percentages are actual, not weighted.

15 Consistent with prior years and considering all respondents, the majority of organizations leave policies are provided uniformly for the whole organization (74% in 2014 and 80% in 2013). We also observe that the majority were managed centrally (66% in 2014 and 70% in 2013). Uniformity of policies may be lower for employers with more than 10,000 employees due to the presence of unions, diversity of departments/ business units, and overall levels of flexibility that need to be incorporated. Mergers and acquisitions may also play a role as companies with disparate policies come together (Exhibit 12). Employer Size Exhibit 12: Leave Policy Structure* Leave Policies Are Uniform Approach to Management Is Centralized Under % 79% 100 to % 83% 250 to % 80% 500 to % 73% 1,000 to 4,999 73% 67% 5,000 to 9,999 83% 59% 10,000 to 19,999 71% 55% 20, % 63% *Note: Percentages are actual, not weighted. When legal support is required for the administration of leaves, more than half (53%) of respondents use internal resources. The next most used resources are a combination of both internal and external legal support (25%). Only 3% of respondents relied solely on external legal support (law firm), which is comparable legal support to (25%). what respondents Only 3% of respondents reported in relied 2013 solely (Exhibit on external 13). legal support (law firm), which is comparable to what respondents reported in 2013 (Exhibit 13). Similar to past years, smaller organizations continue to use external legal support much more than Similar to past years, smaller organizations continue to use external legal support much more than larger organizations. Over half of employers with fewer than 250 employees use external legal support larger organizations. Over half of employers with fewer than 250 employees use external legal support compared to 10% of companies with more than 10,000 employees. compared to 10% of companies with more than 10,000 employees. Internal Legal Support Exhibit 13: Legal Support Exhibit 13: Legal Support 53% 54% Marilynn 1/26/15 12:03 P Comment: Categories: Lowe word. External Legal Support - Law Firm External Compliance Support Combinalon of internal and external 3% 1% 19% 20% 25% 25% Not surprisingly, Human Resources staff continues to be the most utilized in the tracking and managing of leaves (Exhibit 14). When compared to the previous year, these rates are relatively consistent with the exception of administrative personnel, which saw a lower percentage in 2014 compared to Exhibit 14: Type of Internal Staff Involved in Tracking and Managing Leaves Human Resources 96% 93% Managers 77% 77% Marilynn 1/26/15 12:04 P Comment: Categories: Lowe and Staff. 15

16 3% External Compliance Support % White Paper 2014 Employer Leave Management Survey DMEC/Spring Consulting 25% Combinalon of internal and external 25% Not surprisingly, Not surprisingly, Human Human Resources Resources staff staff continues continues to be to be the the most most utilized utilized in in the the tracking tracking and and managing managing of leaves of (Exhibit leaves (Exhibit 14). When 14). When compared compared to the to previous the previous year, these year, these rates are rates relatively are relatively consistent consistent with the with exception of administrative the exception personnel, of administrative which saw personnel, a lower which percentage saw a in lower 2014 percentage compared in to compared to Exhibit 14: Type of Internal Staff Involved in Tracking and Managing Leaves Human Resources 96% 93% Marily Comm and St Managers 77% 77% Administralve Personnel 57% 67% 2014 Risk Management 27% 30% 2013 Clinical Staff 23% 25% Other 19% 23% For 69% of all 2014 respondents, the same people who handle leave also track incidental absences For 69% of all 2014 respondents, the same people who handle leave also track incidental absences (e.g., unscheduled individual days or even hours). As expected, the smallest employers (those with (e.g., unscheduled individual days or even hours). As expected, the smallest employers (those with fewer than 500 employees) reported the highest prevalence of using the same staff for tracking leave fewer than 500 employees) reported the highest prevalence of using the same staff for tracking leave and incidental absences. This is most likely due to the lack of resources and lower volumes of 17 incidental absences in the smaller organizations. The rates The rates of manual of manual tracking tracking across across all all leave leave types increased slightly or stayed relatively steady, regardless regardless of of employer size size (Exhibit 15). 15). Exhibit 15: 15: Technology to to Support Leave Management Home Grown Internal Externally Developed Run Internally Outsourced Manual Do Not Know FMLA 20% 24% 32% 20% 4% Maril Comm one wo Also, i Lower and hy State FMLA 18% 21% 29% 19% 12% Military (USERRA) 24% 26% 17% 25% 8% State Military 21% 24% 17% 21% 17% Jury Duty 35% 33% 4% 20% 7% Other State Mandated Leaves 19% 23% 17% 21% 20% Municipal/County Leaves 20% 20% 9% 17% 35% ADA Leave as an Accomodalon 25% 19% 7% 39% 9% Other 34% 34% 6% 22% 3% 16 Examining FMLA separately by employer size (Exhibit 15a), however, illustrates that as company size increases, so does the use of outsourced vendor tools. Furthermore, employers with 100 to 499 employees and even those with fewer than 100 employees are expanding their options beyond homegrown internal tools, as we saw in the past, to a mix of externally developed systems but run internally, outsourced tools, or manual methods.

17 Examining FMLA separately by employer size (Exhibit 15a), however, illustrates that as company size increases, so does the use of outsourced vendor tools. Furthermore, employers with 100 to 499 employees and even those with fewer than 100 employees are expanding their options beyond homegrown internal tools, as we saw in the past, to a mix of externally developed systems but run internally, outsourced tools, or manual methods. Exhibit 15a: Technology to Support Leave Management - FMLA By Company Size* Exhibit 15a: Technology to Support Leave Management FMLA By Company Size* Home Grown Internal System Externally Developed System, Run Internally Outsourced System Manual Do Not Know Marilynn 1/26/15 12:08 Comment: Blue label: Ho one word Under % 11% 5% 52% 10% 100 to 249 employees 14% 26% 9% 48% 3% 250 to 499 employees 11% 25% 13% 52% 500 to 999 employees 16% 27% 14% 39% 4% 1,000 to 4,999 employees 19% 25% 31% 22% 3% 5,000 to 9,999 employees 24% 14% 38% 18% 6% 10,000 to 19,999 employees 15% 29% 37% 15% 4% 20,000 or more employees 27% 25% 39% 6% 3% *Note: *Note: Percentages Percentages are are actual, not not weighted. weighted. When asked which systems employers used, some of the most frequently mentioned externally developed When asked but which internally systems run systems employers noted used, were some payroll of the and most time frequently and attendance mentioned systems. externally developed but internally run systems noted were payroll and time and attendance systems. For employers that indicated having an externally developed or an outsourced system and 1,000 or more For employers employees, that 21% indicated document having their an FMLA externally data in developed their time or and outsourced attendance system and through 1,000 a or data feed more from employees, the FMLA 21% system document to the time their and FMLA attendance data in their system; time another and attendance 27% receive system a report through from a the FMLA data system feed from and the then FMLA manually system enter to the the time data and in the attendance time and system; attendance another system. 27% receive Still another a report 33% state from that the they FMLA do system not have and an then FMLA manually system and enter that the the data data in the is manually time and entered attendance in the system. time Still and attendance another 33% system. state that they do not have an FMLA system and that the data is manually entered in the time and attendance system

18 Time Allocation White Paper 2014 Employer Leave Management Survey DMEC/Spring Consulting Only very slight changes are found over the past two years for Time Allocation of the percentage of respondents capturing time for both FMLA The most frequently cited of and non- FMLA absences. The most frequently cited increment increment of time capture to be 15 Only very slight changes are found of over the past two years for the to percentage be 15 of continues to be 15 minutes, with about one third of continues to be 15 minutes. respondents capturing at time for both is FMLA and non-fmla absences. The most The most frequently respondents cited tracking absences at this level. Next is 1 hour (22% frequently cited increment continues to be 15 minutes, with about one third of increment of time for capture FMLA; 16% for non- FMLA), then 1 minute (14% for both respondents tracking to of absences at this level. Next is 1 hour (22% for FMLA; 16% for FMLA and non- FMLA). Only 2 to 3% of companies indicate they continues to be 15 in non-fmla), of then 1 minute or (14% for both FMLA and non-fmla). Only 2 to 3% of track absences in increments of 4 hours or more. This might companies indicate they track absences in increments of 4 hours or more. This might pose minutes. a potential compliance risk for these organizations pose a potential compliance risk for these organizations (Exhibits 16a and 16b). (Exhibits 16a and 16b). Exhibit 16a: FMLA Absence Tracking - - Smallest Increments Exhibit 16b: Non- FMLA Non-FMLA Absence Tracking - - Smallest Increments Marilynn 1 Comment: 44 hours. hours. 1 minute 5 minutes 6 minutes minutes minutes 1 hour 2 hours 4 hours over 4 hours Other 3% 4% 3% 4% 6% 6% 7% 7% 8% 3% 8% 3% 1% 0% 1% 0% 7% 3% 7% 3% 2% 1% 2% 1% 3% 3% 3% 3% 14% 14% 22% 22% 36% 43% 1 minute 5 minutes 6 minutes minutes minutes 1 hour 2 hours 4 hours Over 4 hours Other 3% 3% 4% 4% 6% 6% 7% 7% 6% 6% 5% 5% 1% 1% 0% 0% 7% 7% 3% 3% 3% 3% 4% 4% 6% 6% 3% 3% 14% 14% 16% 19% 37% 42% Nearly of all of to all Nearly half half of of all all employers employers (48%), (48%), regardless regardless of of size, size, allow allow employees employees to to apply apply paid paid sick sick leave leave for for all all FMLA of all to to FMLA absences. absences. Over Over three three fourths fourths of of all all employers employers (77%) (77%) are are willing willing to to allow allow employees employees to to apply apply paid vacation time for FMLA absences (Exhibits 17a and 17b). These results are consistent with last year s paid vacation time for FMLA absences (Exhibits 17a and 17b). These results are consistent with last findings. year s findings

19 Exhibit Exhibit Exhibit 17a: 17a: 17a: Application Applicaaon of of Paid Paid of Paid Sick Sick Sick Leave Leave Leave When When Individuals Are Are Absent Absent for for for FMLA FMLA Exhibit Exhibit Exhibit 17b: 17b: 17b: Application Applicaaon of of Paid of Paid Paid Vacation Vacaaon Time Time When When Individuals Are Are Absent Are Absent for for FMLA for FMLA Don't Don't Know Know Other Other Not Not 5% 5% 13% 13% deducted deducted from from FMLA FMLA 2% 2% Own Own serious serious health health condiaon condiaon 32% 32% All FMLA All FMLA leaves leaves concurrent with with FMLA FMLA 48% 48% Don't Don't Know Know 5% 5% Other Other Not Not 12% 12% deducted from from FMLA FMLA 7% 7% All All FMLA FMLA leaves leaves concurrent with with FMLA FMLA 77% 77% Challenges and and and Successes Successes Employers Employers continue to face challenges in administering leave of absences. Although the top challenges Employers for continue employers to have remained essentially the same for all years of the survey (Exhibit 18), a few continue to elements face have swapped positions year over year. Most notable are Training that Training training supervisors supervisors supervisors and and managers managers face and challenges managers on FMLA has risen to be the top challenge (it was number on on FMLA FMLA two is in is the 2013), the number number and one one challenges challenge challenge in in Training supervisors and interpreting FMLA regulations seems less burdensome (ranked at 13 versus 10 in 2013). in Managing administeri intermittent leave continues to be tough, followed by controlling employee managers on FMLA is the administeri abuse, ng leave and relying of on managers for leave enforcement. These shifts may indicate that number one challenge ng leave of employers absences. feel more comfortable with their skill sets and those they leverage from vendors absences. in but Although need the rest of their organizational support functions, particularly Best Practice Alert Although Best Practice supervisors Alert and managers, the top to be more knowledgeable. Periodic and consistent training of the top Periodic and consistent training of challenges managers and supervisors is critical challenges managers and supervisors is critical for to helping them understand the for to helping them understand the employers process and their responsibilities, employers BEST PRACTICE ALERT process and their responsibilities, have limit liability, and uniformly have Periodic and consistent training of managers and supervisors is limit critical liability, to helping and uniformly them understand remained administer the organization s leave remained the process and their responsibilities, limit liability, and uniformly administer essentially policies. administer the the organization s leave essentially leave policies. policies. the same for all years of the survey (Exhibit 18), a few the same for all years of the survey (Exhibit 18), a few elements have swapped positions year over year. Most elements have swapped positions year over year. Most notable are that training supervisors and managers on notable FMLA are has that risen training to be the supervisors top challenge and managers (it was number on FMLA two has in 2013), risen to and be interpreting the top challenge FMLA (it regulations was number seems two less in 2013), burdensome and interpreting (ranked at FMLA 13 versus regulations 10 in 2013). seems less Managing burdensome intermittent (ranked at leave 13 versus continues 10 in to 2013). be tough, Managing followed intermittent by controlling leave employee continues abuse, to be and tough, relying on followed managers by controlling for leave enforcement. employee abuse, These and shifts relying may on managers for leave enforcement. These shifts may

20 Exhibit 18: Ranking of Challenges to Organizations Exhibit 18: Ranking of Challenges to Organizaaons Rated as Extrememly Challenging Rated as Extrememly Challenging Training supervisors and managers on FMLA Managing intermioent leave Controlling employee abuse Relying on managers for leave enforcement 44% 44% 41% 37% 43% 37% 39% 50% Lack of or minimal number of internal resources/staff to manage FMLA Ensuring consistency of applying FMLA across the organizalon Keeping up with new federal, state and/or municipal/ county laws Granlng too much lme away from work (being lenient in management of program) Lack of educated/trained internal resources/staff to manage FMLA Receiving adequate documentalon to substanlate requests Communicalon with employees while out on leave Maintaining adequate records Interprelng FMLA regulalons Communicalon with supervisors when employees are out on leave Communicalng amongst departments when employees are out on leave Granlng too liole lme away from work (being aggressive in management of program) Understanding employee rights and our responsibililes under FMLA 26% 28% 24% 29% 21% 22% 20% 26% 16% 20% 16% 17% 13% 15% 13% 16% 12% 17% 12% 8% 9% 8% 7% 7% 3% 3% BEST More than PRACTICE 88% of employers ALERT rated their leave programs as mature/highly successful or. Ensuring that staff is qualified, trained, and experienced can make a big difference in how smoothly and efficiently the leave programs run. Best Practice Alert Ensuring that staff is qualified, trained, and experienced can make a big difference in how 23 20