3
Agenda
The Big Picture
Family Medical Leave Act (FMLA)
Americans with Disability Act (ADA)
State Law
Should Your Organization Outsource?
Best Practices for Leave of Absence Administration
Concluding Thoughts
5
Why Are We Here? Why Absence Management?
It’s getting more and more complicated Employees are gaming the system Increased oversight, liability concerns
From the DOL on the FMLA From the EEOC on the ADA
Outsourcing solutions are evolving Lower minimum group size and lower price points Employers with benefit administration can feed required data Lots of different options available
Employers recognize the need to improve process Cost associated with employee abuse and mismanagement Liability related to compliance failures under the FMLA and ADA
6
Really, What’s So Complicated?
Employee Calls in Sick or Injured… What needs to happen?
If injured, was it a workplace injury?
Supervisor needs to be contacted – replacement labor needed
Duration of time off?
Does FMLA apply?
Does employer PTO/sick leave apply?
Should STD paperwork be sent?
Does state mandated disability apply?
Do any state leave laws apply?
Do any city leave or paid leave laws apply?
A “yes” answer to any of these questions triggers specific paperwork, recordkeeping and communication.
When employee should return to work or ineligible for FMLA leave
Does the employer need to engage in an interactive process under the ADA?
6
7
Top Employer Priorities – Absence Management
0% 50% 100%
Integrating absence management with healthmanagement programs
Managing ADA Compliance
More effective tracking/reporting sick days
Implementing consistent RTW approach
Redesigning plans to reduce cost
More effective tracking/reporting fordisabilities
Measuring and reducing impact of absenceson operations
Improving FMLA administration
27%
27%
28%
28%
30%
31%
43%
43%
Source: 2013 Survey on Absence and Disability Management, Mercer
8
Liability is a Big Deal
FMLA and ADA compliance failures are key focus of the DOL and EEOC
Are you covered for potential lawsuits?
How do you plan to finance a potential lawsuit?
Look under Management Practice Coverage Employment Practice Coverage
Covers Managers, Directors, and Officers of Organizations Protects against wrongful employment acts (discrimination, harassment and so on) Most policy terms and conditions include coverage for FMLA and ADA lawsuits Covers attorneys fees and potential judgment
Not automatically included – important to check that you have it
9
What Risk? - Losing an FMLA Case at Trial Assumes: $40,000 / year salary, 2 years of unemployment until trial
DAMAGES ITEM COMMENT TYPICAL AMOUNT
Back pay - 2 years Common award in termination case – lost wages up to date of judgment
$80,000
Front pay – 1 year Awarded if employee has not yet become re-employed at time of judgment – lost wages looking forward
$40,000
Pre-judgment interest – on back pay only
Always awarded; rate and whether compounded varies; estimate here
$8,000
Liquidated damages Similar to punitive damages – equal to amount of front/back pay plus pre-judgment interest
$128,000
Plaintiff’s attorney’s fees and costs
Employer pays if employee wins $125,000
Employer’s est. attorney’s fees and costs
Employer always pays (and is usually larger than employee’s fees)
$125,000
TOTAL
$506, 000
See Brown v. Nutrition Management Services Co. (E.D. Pa. 2009)
Source: 2015, The Reed Group
10
Recent EEOC Challenges
EMPLOYER DATE OF CONSENT DECREE
AMOUNT CHALLENGED PRACTICE
Verizon Communications
July 2011
$20 million
Disciplining or terminating disabled employees when they reached limits of “no fault” attendance plans without considering additional time off as an ADA accommodation
Supervalu, Inc., Jewel Food Stores, Inc. and related companies
January 2011
$3.2 million
Terminating employees with disabilities who were not 100% recovered at the end of medical leaves of absence without considering return to work with a worksite accommodation
United Airlines
December 2010
$600,000
Requiring reservation sales reps on disability leave either to retire or go out on extended leave, then terminating them when leave ran out without consideration of reduced hourly schedules as a reasonable ADA accommodation
Sears, Roebuck and Co.
Late 2009
$6.2 million
Terminating employees following exhaustion of workers’ compensation leave without engaging in the interactive accommodation process to consider workplace accommodations or leave extension as an accommodation
Source: 2015, The Reed Group
11
Absence Management Highly Technical
Absence management has become highly technical Compliance requirements related to FMLA and ADA State laws/city laws complicate matters Policy requirements – steps that carriers will require Return to work (RTW) process
Employees have learned how to game the system
Most employers want to improve their LOA process Different departments manage different aspects - siloed Concerned about what can be done without running afoul of legislative or carrier requirements
More interest in outsourcing to gain expertise
12
What Is MMA-MI’s Role?
Tough one – FMLA and ADA are employment laws with benefit implications
We review outsourcing options / manage implementation
Fluid market – we are focusing on vendor capabilities in the market
National MMA resources for policy review
We will doing workshops on absence management in 2016 to help clients interested in improving LOA
We are not employment law specialists – you will need to leverage employment law specialist for compliance issues
13
Summary Thoughts
Imperative that employers understand the compliance requirements related to leaves of absence
Best practices can be adopted that will: Improve compliance with legislative requirements Help identify potential employee abuse patterns Reduce length of disability-related leaves Improve employee accountability for following the process
Employers may be interested in outsourcing part or all of leave of absence management
Fourth quarter might not be best time to embark on improving the LOA process
Start process in first quarter 2016
14
Agenda
The Big Picture
Family Medical Leave Act (FMLA)
Americans with Disability Act (ADA)
State Law
Should Your Organization Outsource?
Best Practices for Leave of Absence Administration
Concluding Thoughts
16
In General
FMLA provides eligible employees of covered employers to take unpaid, job-protected leave:
For reasons permitted under the law Allows employees to continue health insurance under the same terms of an active employee Most leaves 12 weeks permitted per 12-month leave year
FMLA is detailed with many responsibilities
This section will provide: Overview of FMLA Notice Requirements Administrative Challenges Interaction with STD, PTO and Workers Compensation
18
FMLA Overview
FMLA is tough to manage
Need to understand how to determine What employees are covered? What leaves are covered? How to determine leave time available? Employer requirements to continue health coverage Employer requirements to reinstate job
19
Covered Employers
Employer who employs 50 or more employees Measured based on each working day for 20 or more weeks in the preceding calendar year
Public agencies and public schools are subject to the FMLA regardless of number of employees
Integrated employer test - when you need to combine entities to determine if 50 threshold is met
Look at common management, interrelation between operations, centralized control of labor relations, degree of common ownership
Joint employer situations – add complexity Primary employer – notices, provides leave, continues benefits, job restoration Secondary employer – accept employee returning from leave
20
Covered Family Members
Spouse – defined by Federal law – state of ceremony Includes same-sex spouses
Parents – biological, adoptive, step or foster; anyone who in loco parentis to employee – NO INLAWs
Son or daughter – biological, adopted, step or foster, a legal ward or child of a person standing in loco parentis
Must be under 18 May be over 18 if incapable of self-care because of a physical or mental disability
Next of kin of a covered service member – nearest blood relative other than spouse, parent, son or daughter
21
Eligible Employees
Three step determination:
Step 1: Has employee been employed for at least 12 months? • Employment periods before a break in service count if break in
service less than 7 years (does not need to be consecutive) • Two exceptions – break required for military service or longer break
allowed if addressed in written agreement
Step 2: Has employee been employed for at least 1,250 hours of service during the 12 months immediately preceding leave commencement?
Step 3: Does employee work at a worksite where 50 or more employees are employed by the employer within a 75-mile radius? (tested on date of leave request)
FMLA does not apply to worksites with fewer than 50 employees within a 75-mile radius (even if employer has over 50 employees)
Employers are not obligated to extend FMLA protections to employees at these smaller worksites
22
Reasons for Leave
Birth of a son or daughter or to care for a newborn child
The placement with the employee of a son or daughter for adoption or foster care
To care for the employee’s spouse, child or parent with a serious health condition
Due to an employee’s serious health condition that renders the employee unable to perform the functions of the employee’s job
Due to a qualifying exigency of employee’s spouse, child or parent as a covered military member in support of a contingency operation
To care for a covered service member with a serious illness or injury – 26 weeks permitted
23
Maximum Leave Duration
12 weeks (26 weeks military caregiver leave) of FMLA per 12 month period (leave year)
Employer must designate how leave year determined Rolling “look-back” – 12 month period measured by looking 12 months back from first day of leave Rolling “forward” - 12 month period measured from first day of FMLA leave Calendar year or any fixed 12 month period
If not designated in employer policy, defaults to the leave year most favorable to employee
Beware of stacking – not possible with rolling look-back
Different leave year, different results
24
Rolling Look back • Employer would look back 12 months from second leave (6/1/15 to 6/1/16) to
determine eligibility for second leave (12 weeks used in that timeframe) • 0
For Example….Assume Eligible FMLA Leaves
Fixed Year (calendar year) – second leave approved • 12 weeks used in 2015 • 10 weeks used in 2016
Rolling Forward • Employer rolls forward 12 months from first leave (8/1/2015 – 8/1/2016) • If still an employee, if FMLA request made 8/1/2016, then recoupment of
leave would allow FMLA from 8/1/2016 to 9/15/2016
Second Leave
Second Leave
Second Leave
First leave 8/1/2015 – 10/31/2015
Second leave 6/1/2016 – 9/15/2016
25
Employer Requirement to Continue Coverage
Health plan benefits must be maintained as if employee is active
Can require employee to pay their contribution to continue coverage Employee can choose not to continue coverage
No other continuation or accrual of any other benefits required (vacation, sick time or seniority)
Some employers voluntarily extend life, disability and so on If employee contributions required, make sure to determine the method for payment
Once employee returns to work, all benefits must be restored at the point of return
26
Employer Requirement to Reinstate Job Position
Upon return from FMLA Employee must be restored to an equivalent position Position must have equivalent benefits, pay and other terms/conditions Leave cannot result in the loss of any employment benefit accrued before the date the leave began
Employer may not have to accrue benefits or seniority on leave Unless union agreement requires accrual during FMLA Employer credits seniority under other leaves
Non-performance bonuses may have to be paid – can’t penalize for FMLA
Perfect attendance bonuses or safety bonuses
27
Employers Don’t Have to Reinstate
But it can be tricky – employer can terminate Layoff – if an employee would have been laid off if he/she had not been on leave Termination
If employee would have been terminated for poor performance or violating company policy Fraud – employee fraudulently obtains leave If employee violates an employment policy while on leave If employee fails to provide a required fitness for duty certification
Take care here – adverse employment actions could be seen as retaliation for taking FMLA
Make sure your actions are consistent with other policies and past practices Make sure you have documented performance concerns and any other reason for termination
28
Employer’s Rights Under FMLA
Right to get advance notice (30 days) if foreseeable
Right to get immediate notice if leave not foreseeable (no more than one or two working days if possible)
Right to get medical certification for SHC (serious health condition) and re-certifications when needed
Right to get clarification and authentication of SHC
Right to get a second or third medical opinion if necessary
Right to delay FMLA leave if timely medical certification is not provided
29
Employer’s Rights Under FMLA
Right to require employee to report on status periodically
Right to insist employee try to schedule intermittent leave to avoid disrupting employer operations
Right to transfer an employee to another position to accommodate an intermittent leave
Right to require a fitness to return to duty report
Right to require an employee use vacation or sick leave concurrent with FMLA (must be same as similar leaves)
Right not to reinstate key employee (if rules followed)
30
Potential Penalties/Enforcement
DOL has investigative authority – potential for individual liability
Civil actions can be filed by employees Loss of wages, benefits or other compensation Monetary loss sustained by employee as result of violation Equitable relief, including reinstatement and promotion Attorney and court fees
2-year limit on filing actions; 3-years if willful violation
Employer can’t discriminate against employee Who has filed charges or instituted proceeding related to FMLA Who provided information or testified at FMLA inquiry
31
What is Being Asked For in a DOL Audit?
Listing of FMLA requests/approvals/denials
Legal business names, DBAs, and EIN. Contact information for business owners/company officers
Contact information for all FMLA administrators
Start and end date of leave year
Copies of all FMLA/non-FMLA policies/distribution process
Copies of all FMLA forms and FMLA letters
All present and former employees with contact information
Timecards/payroll records which show gross/net wages
All independent contractors, subcontractors, day laborers
32
Summary Insights
FMLA adds a lot of responsibility to employers’ plates
DOL is actively auditing FMLA administration It is a fundraiser Standard response time for an FMLA audit – 72 hours Sample audit letter on the secured webpage
Be wary of offering FMLA when technically does not apply To an employee at a worksite with fewer than 50 This is seen as violation of FMLA – it can’t be counted as FMLA leave when employer actually is subject to FMLA (more than 50) Offer similar leave, just call it something other than “FMLA”
Documentation is critical with all things FMLA
34
Employer Notice Requirement
DOL requires employers to communicate FMLA rights
A number of notices required, they fall into 3 general categories
New Model Forms posted end of May 2015 - http://www.dol.gov/whd/fmla/
1. General Notice to employees of FMLA Rights
2. Notice of Eligibility, Rights and Responsibilities
3. Designation of FMLA leave
35
General Notice
FMLA Rights Poster Must post even if you don’t have eligible employees
FMLA Policy General description of FMLA policy must be provided at time of hire Can be provided within an employee handbook Can be provided separate from the employee handbook
Electronic posting of the policy permitted if Posting is conspicuous on employer’s website Accessible to all applicants and current employees All employees have access to computer at workplace
If electronic requirements not met, paper copy must be provided
36
Notice of Rights and Responsibilities
This notice is delivered when employee requests FMLA or employer suspects FMLA applies
Employer requirements Must provide employee with this Notice within five business days along with Serious Health Condition (SHC) Certification forms Notify employees whether they meet the eligibility requirements for an FMLA leave and if not, why Refer employee to employer’s leave policies, including any paid leave rules Notify the employee that paid leave may be designated and counted against any FMLA entitlement Notify the employee of right to maintain benefits, payment options and your right to recover premiums if employee does not return
37
Designation of FMLA leave
The employer must provide the designation notice within five business days
Must indicate if the reason for leave is qualifying
Must include If leave is qualified, the number of hours, days or weeks that are designated as FMLA leave If not qualifying, the reasons why Return to work requirements or fitness for duty certification requirements (list essential job functions)
If the amount of time unknown, employer has to provide number of hours counted toward FMLA every 30 days
38
Timing Rules of Various Notices
At Time of Hire
Specific rules apply to requesting recertification Failure to provide SHC – deny or delay FMLA leave
Employers can provide more time - be consistent
Within 5 Days of Request
ER Must Provide 15 days
Allow 7 Additional Days
At Approval or Every 30 Days
Can Request Every 30 days
EE Must Provide 2 Days
FMLA Policy
Completion of SHC
Incomplete SHC
Designation of Leave
Recertification
Notice of Return to Work
Notice of Rights/Responsibilities
39
Summary Insights
The last round of guidance (2009), the DOL emphasized the importance of communication related to FMLA
Critical to make sure You are providing all the required notices in the required timeframe You are giving employees the required time to return and complete forms You are clearly communicating with employees during the process You are documenting all communications
Failure to receive information needed to approve leave allows the employer to delay or decline request
41
ER Administrative/Compliance LOA Difficulties
0% 10% 20% 30% 40% 50% 60%
None
Obtaining Expert/Legal Advice
Evaluating Clinical Reasons forLeave
Managing/Tracking ADA
Managing/Tracking IntermittentLeave
Training Staff on How to BetterManage Leave/Absences
27%
11%
11%
28%
45%
54%
*Source: 2013 Survey on Absence and Disability Management, Mercer
42
Number of Challenges for FMLA Administration
Determining a serious health condition
Collecting payment/COBRA interaction
Intermittent leave management
Tracking time off related to FMLA
44
Serious Health Condition (SHC)
Means an illness, injury or impairment or physical or mental condition that involves
Inpatient care (overnight stay in medical facility) or Continuing treatment by a health care provider
Incapacity means inability to work, attend school or perform other activities due to SHC, treatment or recovery
Treatment includes, but is not limited to, examinations to determine if SHC exists and evaluations of condition
Use DOL’s Certification of Employee’s Serious Health Condition (Family and Medical Leave Act)
45
Incapacity and Treatment
Incapacity for at least 3 or more consecutive, full calendar days and treatment by a health care provider
Treatment 2 or more times within 30 days of incapacity unless extenuating circumstances exist or Treatment at least once by health care provider that results in regimen of continuing treatment (can be with prescription drugs)
Treatment by a health care provider means an in-person visit; the first in-person visit must take place within 7 days of incapacity Extenuating circumstances means circumstances beyond the employee’s control which prevent a follow-up visit to physician
Any incapacity due to pregnancy or prenatal care Incapacity or treatment for serious chronic conditions Permanent or long-term conditions Conditions requiring multiple treatments (chemotherapy) Substance abuse treatment
46
Birth/Adoption of a Child
Both mother and father are entitled to FMLA for the birth or adoption of a child (bonding time)
If both parents employed by the same company, company can limit FMLA to 12 weeks combined for mom and dad Both get 12 weeks if child born with SHC
Leave must be completed 12 months from DOB
FMLA leave may begin before birth, for prenatal care and if her condition makes her unable to work (automatic)
Husband can take FMLA to care for incapacitated spouse
Can include time to recover from miscarriage
FMLA can be taken before adoption, if needed for adoption, such as counseling or legal proceedings
47
More on Chronic or Permanent Conditions
A chronic SHC meets the following Requires periodic visits (at least twice a year) for treatment by a health care provider Continues over an extended period of time May cause episodic rather than a continuing period of incapacity Includes conditions like asthma, diabetes, epilepsy
Permanent or long-term health conditions Might be under continuing supervision rather than treatment Alzheimer’s, serious stroke, or terminal stages of a disease
Conditions requiring multiple treatments Chemotherapy, radiation, severe arthritis, kidney disease
48
Who Can Be a Health Care Provider?
Doctors of Medicine and Osteopathy
Podiatrists
Dentists and Optometrists
Clinical Psychologists and Social Workers
Certain Chiropractors
Nurse Practitioners, Physician Assistants and Nurse Midwives
Certain Christian Science Practitioners
Foreign Doctors
49
Rules on SHCs
Employer verifies SHC by requesting the completion of an SHC certification
You can only ask for the information that is included in the SHC form - you can’t request information beyond that
You could forgo an SHC form if you get the information needed from an STD claim
Employers can contact physicians to clarify the details on an SHC
Can explain key job functions and ask how SHC impacts ability to do the work Employer can require an employee to provide a HIPAA authorization so the employer can contact physician
50
Re-certifications
Employers can request re-certifications in some situations Employer can’t request a re-certification during the initially approved FMLA leave timeframe Once the initial time period ends, the employer can request a re-certification every 30 days Employer can request more frequently if the circumstances of leave change significantly or employee requests extension of leave
Example: Employee approved for 4-week FMLA. The purpose is for knee surgery and rehabilitation. At the beginning of the third week, the employee shows up to play left field for the company softball team. Things that make you go…HMMM…Employer can request a re-certification.
Example: Employee approved for intermittent leave for migraine headaches. Reviewing the leave patterns, the employer discovers the employee only takes intermittent leave on Fridays and Mondays. Employer can request recertification and ask provider if the Friday/Monday pattern is supported by medical need.
51
Summary Insights
Verifying an SHC is tough – DOL has separate forms for employee, family members and service members
Use the DOL forms – you could violate the FMLA if you request information beyond what is permitted
Employers can request second and possibly third opinions Employer can choose physician for second opinion (can only be a physician they use for other purposes if located in a rural area) Employer must pay for second opinion If second opinion agrees with first, employer must approve leave Third opinion is always a tie-breaker, must agree on physician Employer can conditionally approve leave while additional opinions are sought
53
How Can Employees Pay for Coverage?
If leave is paid, payroll deductions can continue
If leave is unpaid - three potential options
FMLA and 125 allows employees to revoke coverage at beginning of FMLA leave
Coverage must be reinstated upon return
Pay As You Go – Post-Tax
Catch – Up Contributions Upon Return
Pre-Payment – Pre-Tax (don’t straddle plan years)
1.
2.
3.
54
What if Employee Does Not Pay?
At a minimum, employer must offer a 30-day grace period In order to terminate coverage after grace period
Employer must provide notice payment was not received at least 15 days before end of the grace period Notice must include the specific date that coverage will be terminated for lack of payment (at least 15 days from date of letter) Employer can retroactively terminate back to date premium was due, if this is how the employer handles the situation for other leaves Without such policy, coverage terminated at the end of grace period
Employer can recover their premiums paid if employee fails to return to work at end of the leave
Reserve the right in their FMLA policy If failure to return not due to a medical condition or circumstances beyond employee control
55
What About COBRA? Tricky, Tricky, Tricky
COBRA requires A qualifying event and A loss of coverage
Most cases, the beginning of the leave Qualifying event – reduction of work hours But no loss of coverage (even if employee revokes )
COBRA applies at the end of leave Still have the qualifying event – termination of employment Loss of coverage occurs when employer is not obligated to reinstate coverage upon return
Qualifying event date – Date EE failed to return from FMLA
One of few situations where gap in coverage can occur
56
Summary Insights
Last day of FMLA leave important When employee exhausts 12 week allotment Sooner if the employee advises you definitively that he or she is not returning from an FMLA leave
Qualifying event date is the last day of the leave
All COBRA notifications must be sent
Maximum benefit period should be measured from the qualifying event date (not loss of coverage date)
58
Intermittent Leave/Reduced Schedule
Applies to most FMLA leaves (not required for bonding leave with a healthy child)
Leave must be predicated on need for intermittent treatment Chemotherapy Prenatal doctor visits/severe morning sickness
May be used for physical care/psychological comfort
Employee must make a reasonable effort to schedule treatment to not disrupt employer operations
Employer can reassign if intermittent leave is based on planned medical treatment
Alternate position must have equivalent pay/benefits
59
More on Intermittent Leave
Make sure your organization provides written confirmation of all time that is being counted as FMLA
You can require employee to follow your normal “call in” procedures
Employee fails to follow reporting procedure, absence can be counted as unexcused Employers must make exceptions if the facts and circumstances warrant Make sure you clearly communicate “call in” procedures when training new employees Do not establish a pattern of approving absences when the normal “call in” procedures not followed
60
What Can You Do With Suspected Abuse
Employers need to tightly manage intermittent leaves Require employee to follow normal “call in” procedures (must educate employees on “call in” procedures) Confirm eligibility at each request (check the 1,250 hour requirement in most recent 12 months) Confirm FMLA time is available, not exhausted Request re-certification whenever possible Examine patterns of request – weekend wraps are a red flag – ask physician to verify illness required Friday/Monday absences Train supervisors on importance of following rules – do not allow anyone to deviate from normal “call-in” procedures
FMLA is very employee friendly – tightly manage to discourage potential abuse
62
Counting Time
Employer must count time in the lowest increment used to account for other leaves
No greater than an hour FMLA leave time can’t be reduced for more time than the employee has actually taken Actual work week should be used when determining leave taken
Assume employee normally works 40 hours per week If employee takes 8 hours of FMLA, that is 1/5th of an FMLA leave week If hours vary, use an average of the preceding 12 months to determine average work week
Generally, employers can count holidays as part of FMLA if they occur when employee is out, but not with intermittent leave Employers can’t count total operation shut downs if they last a week or more
63
How Do You Tag FMLA Time?
Most employers do not have a consistent method for documenting time used as FMLA
Many employers have decentralized, paper process that maintains FMLA time documentation
Problematic especially if process is decentralized or not consistently followed Difficult to review FMLA time usage, patterns and any other information related to FMLA leaves
Employers should try to create a database of FMLA time used
Necessary if an employer decides to outsource FMLA – historical leave use needed
64
Summary Insights
Intermittent leaves drive employers crazy
Set up a process and procedures for managing the intermittent leaves – and follow them
Your FMLA policy should prohibit FMLA fraud and specify the penalty for the offense (termination)
Employers can investigate suspected fraud with the FMLA
Employers can terminate if they can prove fraudulent use of the FMLA
If the potential misuse of FMLA is not particularly clear cut, consult an attorney
66
FMLA and Other Leaves – in Silos, But Overlap
Paid Leave
Can allow employee to take paid leave concurrent with FMLA
Can require an employee take paid leave if required for other unpaid leaves
Must clearly notify employees and must be in FMLA policy
Short Term Disability
Typically STD would be considered FMLA
Two different definitions of disability
For example, disability may only pay 6 weeks for birth of child but employee can take 12 weeks FMLA (no pay the second 6 weeks)
Workers Comp
SHC can occur “on or off” job
Can designate workers comp leave as FMLA
Can’t force employee into light duty if protected by FMLA
Can discontinue workers comp benefits if light duty is declined
67
Summary Insights
STD, FMLA, workers comp are rooted in an inability to work due to a health condition, but benefits differ
It is critical that you understand they may have different definitions of disability, timeframes for leave and so on
In some cases, benefit protections overlap and in some cases they may not
Understand how each program works independent of FMLA
Make sure you document your choice to run leaves concurrently in policies (i.e. workers comp runs concurrent with FMLA)
Best to evaluate each situation and potential benefit plan/legal requirement that may apply
69
Agenda
The Big Picture
Family Medical Leave Act (FMLA)
Americans with Disability Act (ADA)
State Law
Should Your Organization Outsource?
Best Practices for Leave of Absence Administration
Concluding Thoughts
71
ADA
Federal law that protects rights of people with disabilities
Prohibits employers from discriminating against people with disabilities
Applies to all employers with 15 or more employees
Requires employers to provide reasonable accommodations to disabled employees
Expansion to the ADA in 2009 – broadened the law’s applicability
Today’s focus – the ADA and concerns related to leaves of absence
72
Expanded Definition of Disability
Basic definition – an impairment that substantially limits one or more major life activities, a record of such impairment or being regarded as having impairment
Changes in 2009 significantly broadened interpretations Clarified major life activities, added major bodily function category Lowered the threshold of what substantially limits a major life activity Established episodic impairment or impairment in remission as a disability if impairment substantially limits major life activity Redefined who is regarded as having a disability Dictated that disability determinations be made without consideration of the effects of mitigating measures (like medication, hearing aids)
Employers must provide accommodations unless it causes an undue hardship
73
What Employers Must Do
Look at each individual based on their own impairment or disability
Must assess the essential job functions of that employee’s position
Must engage in an interactive process with the employee to identify a possible accommodation
Must determine if any reasonable accommodations apply to individual
Must be ready to prove an undue hardship if they decide to deny an accommodation
1.
2.
3.
4.
5.
2.
3.
4.
5.
74
The ADA Process
Request from an employee (related to a leave or non-leave related)
Engage the employee to educate, assist and define accommodation needs
Review essential job functions and job description and provide to employee
Medical review-certification review with health care provider
Employer documents job options, certification, notes, actions and follow up
Employer and employee work together - interactive process
Communicate decision to employee and document interactive process
1. Initiate accommodation
2. Evaluate 3. Track 4. Follow-up
75
Key Items to Check
Do you document your ADA procedures?
Do you have a fixed date that employment terminates? Don’t jump to terminate or deny accommodations
Do you have job descriptions that detail the necessary functions of position?
Are accommodation decisions made centrally? Always put forth a good faith effort when considering requests for accommodations
Do you request medical documentation before approving an accommodation?
Do you engage in an interactive process with employees?
76
Things to Consider
How do you train managers, supervisors and HR staff?
How do you document a request for an accommodation?
How do you make the decision to grant an accommodation or document the denial of request due to undue hardship?
Do you have legal counsel assist you in making difficult judgment calls relating to accommodations?
How carefully do you consider each request for accommodation?
How do you communicate with employee?
How do you make sure you consider all possible accommodations?
77
Got Cash?
ADA is one of the EEOC’s six national priorities
EEOC statistics 260 investigations in 2014 118 found employer discrimination (45% of all investigations)
EEOC aggressively pursuing discrimination claims http://www.eeoc.gov/eeoc/newsroom/index.cfm Penalties of $109.2 M in 2013
Unlike DOL audits where they recommend corrective actions, EEOC investigations result in penalties Big penalties
$6.2M Sears Holding (235 plaintiffs) $3.2M SuperValue (110 plaintiffs)
78
Summary Insights
The interactive process is critical, especially when someone is returning from or not returning from leave
Job Accommodation Network (JAN) is DOL's Office of Disability Employment Policy
Provides information on the employment provisions of the ADA and other disability-related laws Help on specific job accommodations for people with disabilities JAN can be contacted by calling 1- 800-526-7234 or 1-800-ADA-WORK (1-800-232-9675) (V/TTY).
Engage an outside expert – accommodations are judgment calls
Many disability carriers provide access to experts free with your coverage – ask your carrier if they offer this service
79
Agenda
The Big Picture
Family Medical Leave Act (FMLA)
Americans with Disability Act (ADA)
State Law
Should Your Organization Outsource?
Best Practices for Leave of Absence Administration
Concluding Thoughts
81
State Law is A Mess
Employers need to be aware of state / local laws that impact leave of absence
Challenge as there are over 240 laws that could impact leave of absence Wait…last I checked there were only 50 states…what?
Laws that impact Leaves of Absence come in many varieties State FMLA-type laws (more generous than FMLA) State mandated disability laws State ADA laws Pregnancy Nondiscrimination laws State paid leave laws City or municipality laws that address leave requirements, paid leave and disability leave rules
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State Law Activity is Increasing
14 states have state FMLA laws or proposed amendments
20 states have proposed paid sick leave laws
11 states have proposed military leaves
11 states have proposed crime victim leaves
Source: 2015 July, the Reed Group
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State Mandated Disability
Several states/territories have state mandated disability California Hawaii New Jersey New York Puerto Rico Rhode Island
You need to address if you have employees in these states
States and carriers approach differently Some states require participation in state plan Some states will allow approved carriers to provide state benefits Some states require the carrier to provide state benefits
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The Potential Impact of State Law Intense
Employers need to be aware of any state or local laws that impact their employees
Resources are hard to come by State DOL contacts – http://www.dol.gov/whd/contacts/state_of.htm Employment law attorneys State leave laws - http://www.ncsl.org/research/labor-and-employment/state-family-and-medical-leave-laws.aspx SHRM offers members resources
State employment law charts State Workplace Law News Links to various state and federal website resources
Findlaw - http://employment.findlaw.com/family-medical-leave/state-leave-laws.html
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Summary Insights
State laws are often more generous than FMLA
Can’t limit your knowledge to state leave laws State ADA Municipal / City leave laws State disability laws Paid sick leave
The complexity and impact of these state and local laws are driving more and more employers to outsource
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Agenda
The Big Picture
Family Medical Leave Act (FMLA)
Americans with Disability Act (ADA)
State Law
Should Your Organization Outsource?
Best Practices for Leave of Absence Administration
Concluding Thoughts
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Outsourcing May Be An Option
The landscape is complex FMLA is a challenge-especially intermittent leaves ADA is vague and difficult – must have interactive process Multi-state employers struggle to keep up with impact of other laws
Market options have expanded over the last several years Options through life/disability carriers Stand alone options Software options
Many factors determine what is available
Important - most administrators will require data feeds Historical usage needs to be provided or start with clean slate Data feeds from number of systems (payroll/benefits)
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Why Outsourcing Might Be For You?
HR capabilities are stretched Increasing leave requests or legislative activity is a burden Staffing issues may create opportunity (your FMLA guru retiring)
Resources needed to manage process What is your leave activity? How many states do you have employees? How complex are your absence management rules?
Can outsourcing add value? Add consistency to your process Concern about liability of current administration process Removes you from day-to-day legwork – be involved in oversight Allow you to be more strategic in absence management
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Can Outsourcing Save Money?
Maybe, depends how well you are administering LOA
Sample FMLA Savings Opportunities
Current Program Metrics
Projected FMLA approved leaves (1,000 employees) 101 Leaves
Average Leave Duration 25 days
Total Days Lost 2,525 days
Total Lost Time Cost (avg. sal - $40,000) $481,348
Projections Using ABC Administration
Projected Approved FMLA (80% approval rate) 88 Leaves
Average Leave Duration 21 days
Total Days Lost 1,848 days
Total Lost Time Cost (avg. sal - $40,000) $285,615
Source: MetLife Management (ComPsych)
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Potential Savings
Lost time savings expected due to fewer approved FMLA leaves and shortened leave duration
Employer also saves administration time
If you tightly manage LOA currently, you may not see as dramatic savings
If the administrator takes liability for FMLA management, that should be a consideration as well
Potential Savings with ABC Administration Lost Time Savings $195,733 FMLA Administration Fees $26,664 Net Potential Savings $169,069
Source: MetLife Management (ComPsych)
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Many Life/Disability Insurance Carriers Offer Help
Makes sense as many leaves are also short term disability leaves
All carriers offer different services and options FMLA administration Software for administration ADA administration or advice Concierge service/access to experts for questions
Most carriers require the disability business or at least one line of coverage
Options limited by group size
Pricing ranges from $2 - $5 pepm
Need to consider you are tying LOA to the disability vendor
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Carriers Pricing/Size Limits/Service Options
Carrier Size Line of Coverage Options
Fees range from $2.00 - $5.00 PEPM and are based on expected incidences of FMLA claims
Aetna 300 + Fully Insured STD or ASO STD with an insured line
FMLA ADA - Additional Fee Standalone Concierge
Cigna 250+ STD FMLA ADA – Included in Fee
Hartford 200+ One insured line of coverage
FMLA ADA – Additional Fee
Liberty Mutual 100+ One insured line of coverage
FMLA ADA – Additional Fee
MetLife 500+ STD FMLA ADA – Included in Fee
Reliance Standard
2000+ 500+
ASO or Fully Insured STD/LTD
FMLA ADA – Included in Fee
Unum 100+ Fully Insured STD or LTD
FMLA ADA – Additional Fee (2,000+) Standalone Concierge late 2016
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Understand What You Are Buying
Important to understand the details How do they account for FMLA history in takeover? Important for history and take over of intermittent leaves What liability do they take for their administrative issues? What clinical resources are available for leave purposes? How proactively is state leave law tracked and managed? Will you have a dedicated leave management team? What are process steps to identify abuse? What training do they provide to staff? Managers? What is the intake process and how are all leaves managed? How do they address union rules? (carve-out union decisions)
Understand lead time and termination notice requirements
Understand all potential fees
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ABC Company – Cost to Outsource
ABC Company is a Manufacturer with 400 Employees (Moderate Activity) Monthly Fee First Year Annual Cost $3.00 Per Employee Per Month
$3,500 Implementation Fee
$17,900 Annual Cost
Additional Considerations
• Implementation fees may apply (vary by vendor) and range between $3,000 - $5,000 • Takeover fee for active leaves (intermittent) • Fees for formatting data files when transferring history? • Do you need ADA services? Additional fees may apply if not included in base monthly fee • Outsourcing may result in reduced incidences due to tighter policies/procedures • Understand the reports offered by vendor (track abuse, estimate direct and indirect cost of LOA) • Implementation process is intense – lots of details to consider • Coordination with State laws imperative for multi-state employers • Access to advice from experts • Who takes legal liability for administration process?
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Summary Insights
Carriers are enhancing service models all the time Some offer training, job description support, etc.
Understand their expertise Some carriers have built “in-house” capabilities Other carriers outsource or share common ownership with absence management specialty venders
Costs are coming down and services are improving If you haven’t gotten a quote recently, might make sense to check out in the next year
Ask detailed questions – understand your responsibilities, the carrier’s responsibilities and the process
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Stand Alone Options
Creates a separate process from STD
Handful of stand alone vendors offer leave of absence management services
ADP (purchased SHPS several years back) ComPsych Basic Discovery Benefits Sedgwick Matrix Reed Group
Specialty vendors work only with very large groups (1,000+)
Specialty TPAs that specialize in absence management
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ABC Company – ComPsych FMLASource
ABC Company is a health care services company located in MI with 475 employees.
Monthly Fee Annual Cost FMLA Administration $1.65 pepm $9,405 Non-FMLA leave tracking (jury duty, bereavement, military and so on)
$0.06 pepm per leave tracked – 3
leave types
$1,026
Start Up Fee $1,950 Total Expected Cost – Year 1 $12,381
FMLA administrative services includes verifying FMLA eligibility, facilitating certification process, communicating approvals/denials, tracking employee requests and leaves, evaluating state leave law potential, providing return to work assistance and utilization reports. ADA assistance is also available through ComPsych. Basic ADA administration (assistance with interactive process) roughly $1.00 pepm. Advance ADA administration (more proactive, more services) roughly $1.25 pepm
Software Solutions
Software solutions used to be limited As the LOA process became more challenging, the software options have improved Software solutions help organize process and provide resources – employer still manages LOA process
0% 10% 20%
Use TPA or CarrierSolution
Use HRIS
Attendence Tracking
Use In-HouseSystem
Use Stand Alone
18%
15%
10%
7%
3%
53% use LOA Software
Source: 2013 Survey on Absence and Disability Management, Mercer
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Scope of Services Vary by Solution
Tracking types of leaves common
FMLA administrative functions also common
Some solutions allow input for union rules, corporate absence policies and will assist in determining leave types
Some solutions will automatically generate FMLA forms when needed and include library of other communications
Different LOA software solutions offer different reporting functions – make sure reporting meets your needs
Some solutions offer access to state/city laws – answering series of questions will direct you to laws that apply
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Array of Options
You still might be limited by group size
Some specialty TPAs lease their software/ad hoc services – The Reed Group offers
Leavepro provides leave management and tracking MD Guidelines provides general guidelines related to specific disabilities – provides ammunition when leave request is excessive Leave Advisor – online database/resource of leave laws (Federal, State and City) Clinical consultant access – per case fee
Some software targets mid to small group markets AbsenceSoft – cost effective, robust tracking, leave management software
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Affordable with Real Capabilities – AbsenceSoft
Software option provides FMLA and all State Leave Laws administration Concurrently tracks company policies Provides real-time calculation of time used and time remaining Automates workflow, tasks and reminders Stores all correspondence and documentation electronically Easy entry and upload of employee data ADA tracking interactive process/ADA accommodation option
Cost is attractive Under 1,000 lives - $299/month unlimited users 1,000 – 3,000 lives - $599/month unlimited users Implementation fee may apply (self-implementation free) – scalable Buy–up option medical guideline access
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Summary Insights
Can save money by instituting a tightly managed process – addressing abuse
Access to experts for complicated labyrinth of rules
Understand the process the outsourcer takes in managing all aspects of leave process
Expect at least 120 days for implementation
Ask about reporting and communication regarding leaves in process, expected return dates, etc.
Be prepared – transition to outsourcing or changing vendors can be rocky for the first few months
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Agenda
The Big Picture
Family Medical Leave Act (FMLA)
Americans with Disability Act (ADA)
State Law
Should Your Organization Outsource?
Best Practices for Leave of Absence Administration
Concluding Thoughts
109
Absence Management Highly Technical
Really?
If you administer LOA in-house, you should develop written procedures to document process
If you outsource, you should look for a vendor that adopts as many best practices as possible
As you develop your LOA process, use as many best practices as you can
Consider reviewing your current process and improving it based on best practice recommendations
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Best Practices
Include necessary FMLA information, including leave year determination, potential payback of premiums, etc.
Address plans that may provide benefits – disability plans, workers compensation and so on.
Address the interaction of these plans – will FMLA run concurrent with STD? Workers Comp?
Include information on the ADA, right to accommodations, and the interactive process
Develop a Leave of Absence Policy 1.
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Best Practices
Critical not to include a hard stop termination date – problematic with interactive process Include a discussion of the interactive process Include any notification requirements as part of the return to work process Document each return to work situation – noting any accommodations for disabilities
Develop a Return to Work Policy 2.
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Best Practices
Create a process to address ADA potential accommodations
At end of leave and Create a process of requesting accommodations that do not involve leaves
Engage in the interactive process Keep documentation of all meetings and discussions Determine potential accommodations – do any result in undue hardships? If accommodation is made, evaluate it over time to determine if it remains reasonable
Address ADA Accommodations 3.
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Best Practices
In the ideal, all absences would be reported through this central system Create “call in” procedures – follow them Internal notifications will go out from central source Experts should operate this system
Know when FMLA paperwork should be sent Know when to run WC absences concurrent with FMLA Able to send STD paperwork
Develop a Central Leave Reporting Process 4.
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In some situations, your employee may be facing a difficult situation due to a SHC Reminding employees of additional benefits that may provide valuable assistance is helpful
EAP – to help with the stress of the employee’s SHC or perhaps a family member’s SHC Patient Advocate Program – to help with claims, finding specialists, issues with parents’ claims, elder care resources Telemedicine – might be a helpful resource
5.
Best Practices
Adopt a Process to Refer to Other Resources
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Best Practices
Most employers don’t create a leave database Without data, it is difficult to assess the financial impact of absences in total Data will also help you identify possible areas of abuse
Intermittent leave potential abuse Abuse for consistent leaves – employees that may take six weeks each year about the same time
Historical information needed if you outsource
Create a Database to Track Leave Information 6.
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Best Practices
Central reporting insures your experts are handling the leave process Key personnel are affected and interact with employee These individuals need to know what is permitted
Best to share minimal medical details Supervisors must not pressure individuals to come back to work Supervisors will need to work with you on possible ADA accommodations Supervisors must require employees to follow “call in” procedures
Educate Key Personnel 7.
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Summary Insights
Time should be spent developing an absence management process using best practices
Document your process and the path of various leaves of absence
Make sure the individuals handling your LOA process are well trained on your policies, FMLA, ADA, WC, and so on
Make sure your forms are up to date and available
Have a tracking process to make sure all your FMLA notifications meet required timeframes
Maintain documentation of all compliance steps
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Agenda
The Big Picture
Family Medical Leave Act (FMLA)
Americans with Disability Act Amendments Act (ADAAA)
State Law
Should Your Organization Outsource?
Best Practices for Leave of Absence Administration
Concluding Thoughts
120
Wow – There is A Lot to Consider
Absence management has gotten tough over the years Expansion of FMLA rights ADA broadening with a lack of specifics More and more state/local laws that impact employers
Increased focus from both the DOL and the EEOC DOL is conducting FMLA audits – 72 hours is standard turnaround time EEOC is investigating complaints and fining employers for discriminatory actions
How can you manage the maze surrounding leave of absence management?
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It Takes Time
Take stock of your internal resources Who manages leaves in your organization? Think of everyone involved from sick pay, vacation, FMLA, workers compensation and so on
Map out your current process How are absences reported? How are absences tracked? How is FMLA administered? How do you manage accommodation requests or engage employees upon return from leave? How are you managing state law requirements?
Any issues brought up today that you may need to address?
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What Do You Want to Do?
Run screaming from the room?
Me too!
It is a serious question Do you feel confident in your LOA abilities? Do you have resources to help manage the process? Are you understaffed? Do you have employees in many states?
If you are concerned, check out outsourcing options
If outsourcing not an option, check out software solutions
If you keep LOA in-house, improve your process
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Compare Your Current Process to Best Practices
Review your leave of absence policy What policy??? Umm, you need one of these Make sure it includes all the information necessary
FMLA specifics Clearly identify that FMLA runs concurrent with other leaves Does it include ADA information, interactive process?
Review your return to work policy What policy??? Umm, you need one of these Make sure it does not include a hard stop termination date
Ever had an attorney review your policies? Probably a good idea
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How Do Employees Report Absences?
It is critical to have a reporting process that will capture all the details needed to determine the type of absence
If FMLA eligible, you need to send out the Notice of Eligibility, Rights and Responsibilities You need to properly classify the absence on the details collected when reporting the absence – what information is asked? Do you have a formal process for reporting absence? Do you have a process to handle STD, workers compensation and FMLA requirements?
Do you have LOA experts managing the absence reporting process?
Is the process centralized? Can it be?
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Areas to Consider
Look at your communication materials Use DOL forms – make sure you have the latest ones (updated May 2015) Make sure you are using a designation of FMLA notice so you have communicated clearly what time is FMLA leave How are you documenting the interactive process under the ADA? Make sure you are formally documenting
Where do you go with questions? Set up resources Have an attorney you can go to with questions Can you set up an arrangement to get professional opinions on complicated situations? Leverage the government resources Be ready to handle questionable situations, before you have one
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Areas to Consider (continued)
Consider setting up a database to track leave types and timeframes
At some point, you may be asked to provide a financial analysis of leaves of absence Helps identify potential abuse Helpful if you move to an outsourcing arrangement
Need to think about how to bring leadership along Need support to approve budget for the whichever solution you choose In some cases, HR will need leadership assistance to create supervisor accountability HR needs supervisor assistance but typically has no authority over the supervisor
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Areas to Consider (continued)
Training staff is critical Employees need to know how to report absences Intake personnel need to understand how to classify absences, send proper notifications, get proper paperwork, etc. Supervisors need to be trained on leave and return to work procedures, also on how to identify requests for accommodations
Review your liability coverage FMLA and ADA are areas of high activity for audits and compliance reviews Review your Management Practice Coverage- does it include Employment Practice Coverage? Consider this liability coverage as a means of financing defense costs and potential judgments
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You Can Do It! (or Hire Someone to Do It)
Employee Calls in Sick or Injured… What needs to happen?
If injured, was it a workplace injury?
Supervisor needs to be contacted – replacement labor needed
Duration of time off?
Does FMLA apply?
Does employer PTO/sick leave apply?
Should STD paperwork be sent?
Does state mandated disability apply?
Do any state leave laws apply?
Do any city leave or paid leave laws apply?
A “yes” answer to any of these questions triggers specific paperwork, recordkeeping and communication.
Does the employer need to engage in an interactive process under the ADA?
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When employee should return to work or ineligible for FMLA leave
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Summary Thoughts
Leave of absence management is technical and complex
Most employers are not completely confident in their leave of absence management process
Outsourcing options and software solutions have improved over the years
If you need to keep LOA management in house, make sure to review and improve your processes
Set up resources to assist with ADA, difficult FMLA cases
You can manage LOAs responsibly if you set up thorough processes and procedures
MARSH & McLENNAN AGENCY LLC
William D. Wentworth Vice President, Health & Benefits Marsh & McLennan Agency LLC
3331 W. Big Beaver Rd., Ste. 200 Troy, MI 48084
(248)822-6201 / (248)822-4131 [email protected]