Risk Insider: Carla O'Sullivan

Audit Leave Management Vendors

By: | August 8, 2016

Carla O’Sullivan is Education Programs Manager of the Disability Management Employer Coalition (DMEC), specializing in absence management. She can be reached at [email protected]

Outsourcing leave administration can save money and time, but outsourcing does not mean you wash your hands of the related responsibilities. Vendor management is critical.

The first step is to be clear on why you want to outsource.

Compliance that is timely, comprehensive and in line with federal and state regulations is a fundamental responsibility. Noncompliance can lead to problems for employees, management teams and the organization, resulting in legal and reputational risk not to mention penalties.

Vendors can provide expertise and systems that are often lacking for employers. Real-time reports and data aggregation provide insights for better decision-making. Improved communication among employees and managers generally results in better management leaves, especially intermittent leaves.

You should audit your vendor following six months of implementation, and then again annually, to ensure the program is performing to your expectations.

However, outsourcing also requires your own house to be in order. A regular internal audit is necessary. Following are key components of an internal audit:

Confirm and document program training took place. Survey employees about the training. Note necessary recommendations for improvement. Focus on training for new and existing supervisors. Train on practical knowledge, but also take the opportunity to meet key members who will help with your culture of compliance.

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Make certain policies are updated. Ensure changes have been communicated to vendor partners.

Review a few recent leaves. Gather all information available. Ideally, your provider can give a complete “audit report” of data, letters, emails, forms and call logs created during an employee’s leave. Interview employees for their perspective on the “customer experience.” Feedback of any kind will be very useful to your vendor.

Understand critical reports. Review weekly and monthly combined status reports, intermittent leave usage reports and reports that reveal key service times. The first two reports will give you insight into the current absence activity of your employee population and then department and regional trends. The third report will show your provider’s conformance to contractual and regulatory turnaround times.

Understand the employee experience. Canvass your employees and supervisors to gauge satisfaction with communications and the overall process. From supervisors and HR staff, you should be interested in the flow of information and communication.

Once you have a clear understanding of your internal processes and communication flow, you should then meet with your vendor. Oftentimes, this is reversed and employers want to meet with the vendors first to find solutions to a problem that may be present internally.

Inquire about how your vendor remains current with legal and regulatory changes. Learn how these changes are communicated internally and to your company. Walk through some recent cases. Are there are opportunities for learning and process improvement? Discuss how they intend to improve.

Your vendor should have self-audit processes in place and report findings to you on a regular basis. You should also audit your vendor following six months of implementation, and then again annually, to ensure the program is performing to your expectations.

You should work closely with your vendor to carefully track and resolve outstanding items that you uncover during this review. A summary of the audit with action items and timelines should be provided to you and should include a project plan for resolution.

Last, you cannot manage a program or vendor without data. Review the types of management reports available and understand what custom reports can be produced.

Expect reports to be clear, logical and actionable. The information should identify trends, include benchmarking data, and provide insight into how to address any issues.

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The R&I Editorial Team can be reached at [email protected]