FMLA Outsourcing, Co-Sourcing, or Insourcing: Which is Right for My Organization? 

April 27, 2023

Efficiently and compliantly managing employee leaves covered by the Family and Medical Leave Act (FMLA) is essential for employers of all sizes. FMLA requires covered employers to provide employees with job-protected and unpaid leave for qualified medical and family reasons.

However, managing FMLA can be a complicated and time-consuming process, especially for organizations with a large workforce. The process has a lot of rules to follow, and it’s not that hard to make a mistake that can leave you open to a costly lawsuit. To meet these challenges, many organizations choose to manage their FMLA processes through one of three ways: outsourcing, co-sourcing, or insourcing. A 2021 survey from the Disability Management Employer Coalition (DMEC) shows that 45% of companies insource leave management, 32% co-source, and 24% outsource the process.

In this blog, we will learn about each of these options, and the benefits and drawbacks of each. As an HR leader, understanding your options for managing FMLA can help you streamline your processes, reduce costs, and ensure compliance with federal regulations.

What is FMLA outsourcing and co-sourcing?

FMLA outsourcing is a process by which companies hire external teams to handle their employees’ leave of absence requests. Similar to IT or software development outsourcing, this means that the people managing the leave administration process are not employees of the company themselves. For companies that have an overall strategy of keeping their core business units lightweight and outsourcing multiple functions, outsourcing FMLA can fit in well as a strategy.

Co-sourcing FMLA and other leaves of absence is a combination of insourcing and outsourcing, usually with a platform in place. Some providers leverage this approach, where a combination of technology and people are offered in a package to companies. Generally, there needs to be a dedicated point of contact or two within a company to facilitate leave requests and interact with the co-sourcing provider.

The main benefit of both of these approaches can be time savings, especially with the right vendor. When you reduce the administrative burden of FMLA, HR’s time can be spent on other, more strategic tasks. Unfortunately, sometimes issues arise with compliance, costs, and employee experience. For many organizations, this is why another, third option can be an even better fit.

A new, third alternative: FMLA insourcing with technology

Managing FMLA with your own HR team no longer means manual processes filled with errors, wasted time, and compliance risk. More employers every day are choosing to manage FMLA with their in-house team, leveraging purpose-built software like AbsenceSoft to automate many parts of the process.

By adding technology into your insourcing strategy, time spent on FMLA administration can be reduced by 66%. You can leverage FMLA leave software to improve your team’s operational efficiency by providing a way to centralize case management, automate eligibility calculations and packet creation, accurately track leave time, and much more.

In a 2022 survey by Spring Consulting, 31% of employers said FMLA outsourcing required more involvement than they originally expected, increasing their HR team’s workload. This means that often, the same number of HR staff is needed whether FMLA is insourced or outsourced.

What are the benefits of managing FMLA in-house with technology?

When you bring your outsourced FMLA management in-house with technology, you can transform the leave management experience for everyone involved. When you insource your FMLA administration with a centralized, automated leave management system like AbsenceSoft, your HR team will spend far less of their time on leave administration, and more time supporting employees during a time of need.

Insourcing your leave program can make it a lot easier to keep your leave program compliant, giving your HR team greater peace of mind. Systems like AbsenceSoft are kept up-to-date on every state’s constantly-changing leave laws. Automated reminders, pre-generated packets, eligibility calculators, and step-by-step checklists give your team members the tools to manage employee leaves in a streamlined and compliant way.

By using your in-house team and purpose-built FMLA management software, you can deliver a simpler, more personalized leave experience. Leave management software like AbsenceSoft lets employees make a leave request online, from whatever device works best for them, and see their eligibility in seconds. No more writing emails or calling around, hoping the right person responds. Because your team will spend less time on FMLA administration, they’ll have more time to talk with employees, and provide support during a stressful time.

Your team can also personalize your leave program by adding company policies directly into the system, and track them alongside FMLA. Any member of your team can see just what each employee is eligible for in just seconds. Your communications can be customized with your company’s logo and your unique work culture can be infused throughout the process. Even better, when your employees have a seamless, positive leave experience, they are more likely to return to work happy, healthy, and ready to contribute.

Which solution is right for my organization?

When it comes to managing FMLA, whether it is for sick leave, intermittent leave, or other types of leave, you want to make the choice that works best for your organization. If your organizational strategy is to stay as lightweight as possible by outsourcing multiple functions, FMLA outsourcing or co-sourcing can be a great choice.

If your organization places a high priority on employee experience, work culture, and leveraging technology to improve efficiency, insourcing with technology can help you meet those business goals. Your team gets 66% of their administrative time back, and employees don’t have to wait days to know policies what they are eligible for, and what they need to do to take a leave of absence under FMLA.

If you’d like to chat with our CMLS-certified FMLA experts to find out how AbsenceSoft can help you insource your leave program, schedule a demo today.