It seems like everyone I speak to these days is seeing a spike in requests for PTO leave, parental leave, FMLA, and the like. After a year of lockdown, it makes sense that people are now jumping at the urge to take some time off. And, if the requests haven’t started coming in yet, everyone on your team will need time off in the future, whether it’s planned vacation time or an unplanned absence due to personal circumstances. Yet, despite the ubiquity of this task, leave administration can be one of the most complex processes to manage in HR when you have a large employee population.
There are so many moving parts in any leave administration policy. You first have to consider your obligations to the employee under:
- Federal laws
- State laws
- Local and municipal laws
- Your internal leave policy
- Any exceptions that might exist in the individual employee’s terms of employment
Plus, you need to consider the nature of the request, the types of leave available to the employee, and their recent absence history. Many companies run into difficulty when they’re processing a leave request. Here are some of the most common challenges.
The 5 Biggest Leave Administration Challenges
Every employer needs a coherent leave policy, and a team that executes that policy with consistency. It’s easier said than done. You may run into issues such as these:
1. Staying compliant with leave laws
Every company exists within a complex framework of local, state and federal laws. Take the Family Leave Medical Act (FMLA), for instance. This federal law guarantees a certain amount of time off for qualifying employees who need time off for medical or family reasons.
Federal FMLA is unpaid, but some states have introduced ancillary legislation that provides for paid time off. For example, District of Colombia’s FMLA law means that some employers must provide up to eight weeks of paid leave, depending on the nature of the leave request. However, to qualify for these payments, the employee must spend at least 50% of their time working in the D.C. area.
This means that every employer must have a compliance expert to lean on who can answer the following questions:
- Which laws apply to our company?
- Which employees are eligible under each statute?
- What are those employees entitled to?
It’s your responsibility as an employer to understand all applicable laws.
2. Educating employees about leave benefits
Most employers find leave laws confusing, especially with the influx of new leave laws being passed, so you can imagine how employees feel. To complicate things even more, your company will have a unique set of internal rules about how people can use time-off allowances.
Can employees use their Paid Time Off (PTO) allocation to cover illness-related absence? Is paid sick leave a state requirement in their locality? What is your Short-Term Disability (STD) policy? These are the kind of questions that you'll need answers to, especially when welcoming new hires who are familiarizing themselves with your organizational culture.
Ideally, all employees should have access to:
- An employee handbook that lays out the leave policy in plain language
- A digital portal that allows them to track their remaining leave allocation
- Live support from an HR expert who can help with any queries
Leave is a core benefit, which makes it one of the big drivers of employee engagement. But to realize the benefit of this engagement tool, you need to communicate your leave policy to all employees.
3. Processing leave requests
Leave requests come in many shapes and sizes. An employee absence might be:
- Planned or unplanned
- Open-ended or fixed duration
- For personal reasons or for medical or family reasons
- Paid, unpaid, or eligible for payment under a scheme such as STD
- Covered by company policy, covered by law, or not covered
When employees ask for time off, the relevant local manager will often have to make a snap decision about whether to grant it. Then, typically either the manager or HR will advise the employee about what paperwork they need to file, and offer some guidance on whether the employee can expect to get paid.
All of which means your business needs to have in place easy-to-follow leave policies and procedures with clear guidelines about any requirements, such as additional paperwork.
4. Processing medical paperwork
Speaking of paperwork, medical leave can raise some privacy problems within your organization. As an employer, you have a right to request some medical documents, such as:
- Certification of illness
- Certification of fitness to work
- Clarification of any conditions that might hinder the ability to perform certain tasks
However, employees have an equal right to privacy. Discrimination may also be an issue if managers have access to sensitive medical documents.
The ideal solution is to implement a system that allows employees to securely share documents with the HR team. The team can assess these documents and confirm the employee’s current status with the local manager. Such a system will allow leaders to do their job while protecting confidentiality and avoiding discrimination.
5. Tracking available leave allocations
Allocation tracking is perhaps the most challenging aspect of leave management. A typical employee will have a number of different entitlements, such as:
- PTO from the employer, which may include bonus allocations or carry-over from past years
- Sick leave allowance from the employer
- Guaranteed disability payments from the STD scheme
- Statutory entitlements under relevant FMLA laws
To make matters more complicated, all of these allocations might follow different calendars, such as:
- 12-month cycle: All leave requests are relative to each other. For example, if someone uses their leave allocation in April of one year, they will get their next allocation in April of the following year.
- Measure forward: As above, but looking forward to the coming year’s allocation.
- Calendar year: These allocations reset on January 1st, regardless of events in the past year. This can lead to “stacking”, where an employee uses one year’s allocation up to December 31st, and then immediately rolls into the next year’s leave allocation.
- Anniversary year: As above, except each year starts on a fixed date, such as the employee’s initial start date.
As you can see, this makes any leave management system inherently complex. That’s why it’s so important to educate both employees and managers about how the leave system works. But there’s something else you’ll need too.
Making sense of leave administration
The most important part of leave administration? Having the right HR team in place. They need an exemplary understanding of your leave systems, and they’ll need the right tools to administer that system.
Building such a team has always been a challenge, but it’s even tougher in a world where everything is changing. Remote work is transforming the way we think about leave – plus, it’s allowing employees to move out-of-state, which can make compliance even trickier.
That’s why many employers turn to a dedicated Leave Administration service. By outsourcing this vital function, you can avoid the stress that comes from a mishandled leave request and having to keep up with the ever-changing compliance regulations. Employees can simply get connected straight to a Leave Specialist who will help them with questions and take care of the entire process. This frees up your managers and your HR team’s time to focus on other core initiatives.
