No easy feat: administering leave benefits across state lines

September 28, 2022

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By Adam Morell, AVP, product compliance, and Brice Caswell, director, product compliance and statutory administration

There is no federal requirement for U.S. employers to provide paid leave benefits to their employees. While the Family and Medical Leave Act (FMLA) offers leave with job protection to eligible employees for qualifying events, employers are not required to pay employees when they take this leave. In response to the lack of a federal paid leave law, several states throughout the U.S. (and some municipalities, too) have enacted their own programs to provide residents with paid family leave. However, these mandates differ widely from one another, resulting in a confusing patchwork of benefit and leave policies that creates major compliance challenges for employers in multiple jurisdictions.

Different states, different rules

Alana and Betty work for XYZ Inc., and both women are pregnant. Their due dates are in the same week. Before going into labor, each is trying to sort out the logistics of her maternity leave — how long she can take off work to recover from childbirth and bond with her baby, whether the time will be paid or unpaid, etc. Even though they work for the same company, fall under the same benefit plans, and will deliver babies around the same time, Alana and Betty qualify for very different benefits because they live in different states. As a Texas resident, Alana is only eligible for XYZ’s short-term disability benefits, but that leave covers her recovery from childbirth and not the bonding time that will follow. However, Betty, who lives in New York, is eligible for paid leave benefits provided by the state during her bonding time.

This is one of the many scenarios that can arise in a workforce that spans multiples states. In addition to pregnancy, there are other leave situations that lead to interstate discrepancies when it comes to employees missing work time (e.g., caring for a grandparent or domestic partner, organ donation, jury duty, etc.). The inconsistencies across jurisdictions lead to widespread confusion. Employees don’t understand why their leave eligibility is not the same as their colleagues’, and employers struggle to comply with the various governing regulations — which, to further complicate matters, evolve on a regular basis.

Compliant communication

A particularly challenging area of leave law compliance is fulfilling the related communication requirements. States differ on what kind of leave information must be shared with employees at specific intervals. An employer operating in all 50 states and Washington, D.C., for example, may be required to send various notices to employees at the time they join the organization, annually and/or when they take a qualifying leave; if the organization has an employee handbook, they must include certain information related to state leave benefits there, too.

It’s difficult for employers to determine what notices must be sent when in order to comply with every jurisdictional requirement, and failure to get it right can have serious consequences. Some governments are more diligent than others in monitoring and confirming the delivery of required notices. Employers caught being noncompliant can be fined or subject to government audits. We recommend that those responsible for these communications review their organizational messaging and distribution plans with employment counsel to ensure compliance with all applicable requirements.

Simplifying complicated processes

The confusion facing employers trickles down to the employees trying to make use of their leave benefits —especially those who have never before requested a leave of absence. Employers have the unenviable task of conveying complex details about the interplay between their benefits and applicable state-provided benefits, such as eligibility for job-protected leave as opposed to paid leave, varying leave types that may run concurrently or successively, use of paid time off (PTO) while on leave and so on. These are difficult concepts and distinctions for the average person to grasp — particularly when they’re going through a challenging situation which is prompting the need for a leave of absence in the first place.

Employers that want to provide a caring and seamless leave experience will be well-served to think beyond compliance requirements and focus also on clear and effective communication to employees. Benefit and leave terms should be defined in the simplest language possible, even if that means supplementing legally approved, fully compliant paperwork with a clearly worded letter of explanation. It’s beneficial to have multiple people — including some who are not experts in this area — regularly review your scripts, prompts and packets for all states, with an eye toward improving the employee experience. Some organizations are experimenting with breaking down large benefit and leave packets in favor of delivering just-in-time segments. This kind of simplification can set employee expectations of timelines, rules and approval processes and help them feel less overwhelmed.

The tangled leave of absence web is why so many U.S. employers (particularly those with employees in multiple states) opt to outsource administration of their programs to an expert solutions provider. Click here to learn more about how Sedgwick can help you and your team navigate the complex world of leave benefits administration and compliance.

Learn more — refer to our statutory disability insurance matrix for the latest details on benefits and leave discrepancies by state.

Tags: Benefit management, benefits, communication, Compliance, Compliance and regulatory issues, Disability, Disability and leave, Employee, Employees, employers, Leave, leave law, leave of absence, paid family leave, paid leave, People, State law, State leave laws, United States, View on people