Leave from work to care for children or seriously ill family members has moved to the center of legislative action. In particular, activist groups, policymakers and others are now pushing for paid family leave. This would represent a significant evolution of protections afforded employees under the Family and Medical Leave. Adding an additional layer to the cake, the US Department of Labor has explicitly stated it will increase FMLA enforcement, including more on-site visits by federal investigators.
The cost of complying with the FMLA is already significant. According to the Employment Policy Foundation, compliance with FMLA costs employers more than $21 billion in lost productivity, continued health benefits, and labor replacement.
While the potential for increased regulatory enforcement and its costs, as well as the prospect of paid leave, loom over the horizon, neither is very likely to impact many small and medium sized businesses anytime soon. The real FMLA-related risk faced by small to medium employers is that of litigation. Sources report the average verdict for FMLA cases related to wrongful termination is nearly $335,000.
This can be a devastating amount for a small business, especially a newer enterprise investing for growth rather than immediate profitability. Almost as damaging as the direct costs of litigation are the indirect costs diverted management time, recruitment impacts and reputational risk.
The management actions that can trigger these lawsuits are rarely a matter of intent. Rather, they usually result from lack of knowledge and resources. The FMLA challenge is even more daunting when a related law, the American with Disabilities Act, is added to the picture. These federal laws, along with state laws are complex, and they interact in numerous ways.
These are not uncommon questions faced by small business owners confronting these laws for the first time: Can requests for medical leave fall under FMLA and the ADA as a reasonable accommodation? How does an employer determine which law applies to a particular employee request, given the ADAs restrictions on disability-related questions?
Many employers, especially small businesses, simply do not possess the resources to manage FMLA and state leave laws and regulations.
So what should SMBs do to deal with these laws and mitigate litigation risk?
First, business owners should invest the time to learn the basics of these laws and regulations. Yes, entrepreneurs trying to grow revenue have little time - or extra funds -as it is. The good news is there are numerous associations that understand the reality of running a business, and assist employers to tailor their leave-related programs.
The Society for Human Resource Management, the Disability Management Employer Coalition and others provide low or even no cost overviews of FMLA and ADA. Opportunities range from online PowerPoints to local seminars designed for, and often presented by, business owners.
At the very least, such introductory training can outline the most important actions to avoid, and point SMBs to additional resources.
Second, business owners should regularly communicate to employees the importance of FMLA and ADA, and owners and managers should embrace the laws goals and the need to comply with them. Communicating and documenting proper intent is not only important should litigation ever occur. It also tells employees that management is open to discussion about the laws requirements. This is helpful to ensure compliance and has the added benefit of reducing fraudulent leave requests.
Finally, small and medium sized businesses should consider automating their entire absence management process. There are numerous reasonably priced solutions that enable managers to track and manage absence in compliance with FMLA, ADA and other state laws and regulations.
Industry groups like Spring Consulting estimate that comprehensive absence management solutions can reduce direct, indirect and return-to-work costs by 11%. For many small and medium sized businesses, these labor cost savings reduce the effective cost of automated absence management to zero.
Perhaps most important, todays absence management solutions nearly eliminate litigation risk.
Balancing work and non-work life is more challenging than ever. Government at various levels is playing an ever larger role in this arena. Employers who take simple steps to help their employees achieve work-life balance will not only attract and retain more committed people. They will also go a long way to remaining on the right side of government policy and, in the process, take possibly ruinous litigation risk off the table.
Angie Brown is the FMLA product manager for ClaimVantage.
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