Should you outsource your FMLA administration?

3 benefits of outsourcing FMLA administration

HR leaders might find that shifting FMLA responsibilities to another provider frees up HR staff for other tasks. Learn more.

1. Lightens HR's administrative burden

Hiring an outside expert that specializes in FMLA administration can significantly decrease the leave management workload for HR.

Handling FMLA claims requires practitioners to carry out the following, said Julie Stich, vice president of content at the International Foundation of Employee Benefit Plans, a nonprofit organization that provides research and education to benefits professionals and is located in Brookfield, Wis.:

• Determine an employee's eligibility for leave.
• Track and document employees' FMLA leave times.
• Handle FMLA requests that are tied to ADA requirements.
• Oversee an employee's return to work once the employee's claim is closed.
• Process intermittent FMLA leave.
• Ensure their company remains compliant with all applicable laws related to FMLA.
• Stay up-to-date on how FMLA integrates with any applicable federal and state leave requirements.

"[An outsourced provider] can handle some of those administrative tasks that seem overwhelming sometimes or just seem very time-consuming," Stich said.

2. Brings in FMLA-related expertise

FMLA administration providers are focused on claims management and processing, so their employees are likely more familiar with how to handle unusual FMLA-related situations than in-house HR generalists.

"[FMLA administration providers] can help approve, deny, or make recommendations on a path forward," said Matthew Burr, HR consultant at Burr Consulting LLC, an HR consultancy located in Elmira, N.Y.

However, HR leaders should remember that an internal employee will need to be in charge of managing the relationship with the third-party provider and potentially answering questions from employees.

This individual should be knowledgeable enough to explain the applicable rules to managers and supervisors who have employees out on FMLA leave, said Karen Young, founder and president of HR Resolutions, a consulting firm in Harrisburg, Pa.

"There should always be someone on staff who understands the intricacies [of FMLA]," Young said. "The outsourcing is merely the administration and paperwork piece of it."

3. Can improve employee experience

Employees might find it challenging to navigate their leave-related rights and responsibilities. Delegating employee communications to an outsourced FMLA administrator can improve employee experience because the administrator's employees are likely used to providing easy-to-understand FMLA-related information in a timely manner.

"If outsourcing means more attention, more efficiencies, and faster service, that might be a good thing," Stich said.

3 disadvantages of outsourcing FMLA administration

However, handing off FMLA administration to another organization does come with complications. HR leaders should be aware of the following:

1. Lack of early questions can lead to issues later

A smooth integration between an internal HR department and an external FMLA administrator requires companies to thoroughly vet third-party providers before signing up for their services.

HR leaders should ask prospective FMLA administration companies the following questions, Stich said:

• How often will you be in contact with our team?
• How quickly will you share changes to FMLA-related laws and regulations so we can take steps to remain compliant?
• How responsive will you be when our employees reach out with questions about their leave?
• What is your response time when our HR or benefits staff reaches out with an inquiry?
• Will you create communications for employees that are designed to help them better understand their leave benefits and how claims are processed? Or is that something that we're expected to handle in-house?

Asking early in the process about communication could help prevent problems later.

One of the biggest problems with FMLA administration outsourcing is that providers don't always respond to companies in a timely manner, Burr said.

"If it's taking [the third-party provider] a couple days for them to get back to us on somebody taking fifteen minutes to go to a doctor's appointment on intermittent leave -- that, to me, is totally broken and inefficient at that point," he said.

Asking about the provider's past might also be helpful.

HR leaders should ask if the third-party provider has had to deal with any FMLA discrimination cases in the past, Burr said.

Finding an FMLA administrator that specializes in certain areas will likely result in the best fit.

Companies should seek out providers that focus on their industry, Burr said. In addition, a company's current payroll vendor might be able to recommend FMLA administration providers, including ones that integrate easily with the payroll vendor's platform.

2. Third-party providers don't know the company

A third-party provider is not going to be as familiar with an employer's operations, culture and employees as its internal HR department.

HR leaders should communicate with the third-party provider about how their company wants FMLA administration handled, Stich said. Talking with the outsourced provider about the company's culture and operations can also be helpful.

3. Companies give up control

While outsourcing FMLA administration can reduce tasks for in-house HR staff, the company's lack of control over the process might become a problem.

One potential issue is claims approvals, Burr said. For example, the provider might be approving claims that HR staff might want to examine more closely before sign-off occurs. Companies must establish clear expectations and processes with the third-party provider for how the two parties will work together.

Doing so can help avoid problems that could arise with communication about more complex processes. For example, intermittent FMLA claims are more difficult to keep track of when more parties are involved.

"Intermittent is challenging for anybody, but when you outsource [it], you have that extra level of complexity," Young said.

Technology adds another complication.

Regardless of who is conducting the FMLA administration, keeping the associated technology internal is best, Young said.

Doing so helps limit how much access the third-party provider will have to employee data.

Carolyn Heinze is a Paris-based freelance writer. She covers several technology and business areas, including HR software and sustainability.