Think Globally, Comply Locally: How Employers Navigate Leave Laws 

Nov 15 2018

In a previous post on the growth in paid parental and caregiver leaves, we touched on one factor driving the increase: more statutory paid leave mandates. New York implemented its paid family leave legislation at the beginning of 2018, joining California, New Jersey and Rhode Island as states that now have paid family leave regulations enacted. Over the last year or two, Washington, Massachusetts, and Washington, DC have passed but have not yet implemented paid family and medical leave laws. And that doesn’t include the states and municipalities that have adopted paid sick leave mandates.

How are employers responding to these new mandates – and the greater administrative burden they bring? In Mercer’s 2018 Absence and Disability Management Survey, 64% of respondents said they’ve had to devote additional overall resources to handle the increase in state and locally mandated paid leave over the past five years. Perhaps in some cases, this meant outsourcing. Outsourcing of STD administration increased from 61% of respondents in our 2015 survey to 67% in 2018. Outsourcing of FMLA administration increased from 40% to 44%.

When asked about their approach to complying with state and local leave laws, the majority of respondents – 65% -- simply track and comply with all laws and regulations that apply to their operations, with 38% using a third party to help. But some employers have chosen to make changes to their actual leave policies to help make compliance with state and local leave laws easier: 12% of respondents maintain a single national policy based on the most generous state/local leave law with which the employer must comply, and 27% have established a leave policy that meets or exceeds all state/local requirements.

Given the significant number of respondents that have increased resources devoted to handling state and local leave administration, it’s not surprising that over half of respondents would support the concept of a voluntary federal minimum standard under ERISA for paid leave that, if met, would shield employers from having to comply with state and local requirements. Such a law, called the Workflex in the 21st Century Act was introduced in Congress late in 2017. With the changes in Washington DC resulting from the midterm elections, the future of that law is unclear.

It seems likely that the pace of change at the state and local level will only increase. That puts the burden on employers to periodically review existing leave policies to ensure they align with current statutory mandates and to prepare to meet new ones.

Mercer’s 2018 Survey on Absence and Disability Management was fielded March-April and 423 employers participated. The survey covered broad range of topics, including absence management strategies, paid-time off plans, leave administration, and disability plans. A full report on the findings is being prepared, but we will continue to post articles on selected findings here in the meantime. Contact Rich Fuerstenberg if you have questions.

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