FMLA absence-tracking improves Costco's productivity

SAN DIEGO—A “clinical” absence-tracking system adopted by Costco Wholesale Corp. provides an example for other employers that want to balance workplace productivity needs with Family and Medical Leave Act rights, an executive for the company said.

Costco's previous leave management efforts were “a real heartburn,” Cindy Schmertzler, director of leave administration for the Issaquah, Wash.-based retailer, said during a panel discussion at the Disability Management Employer Coalition's annual conference held Aug. 1-4 in San Diego.

Payroll clerks at each Costco location previously recorded absences manually while Costco approved most employee FMLA requests without verifying the adequacy of leave certifications provided by employees' doctors and without requiring much information from workers.

“Whenever (workers) said the magic word "FMLA,' we gave them as much time as they wanted,” Ms. Schmertzler said.

But a 2006 survey of Costco warehouse managers revealed that 75% of them found that intermittent FMLA leaves lowered morale while 65% said they compromised customer service. They also said the leaves increased overtime pay and affected workplace safety.

To improve its decentralized leave administration system without a lot of new and costly technology, Costco partnered with New York-based Buck Consultants L.L.C. and WorkCare Inc., an Anaheim, Calif.-based company whose doctors provide services that include helping employers enhance employee health and productivity.

The changes Costco launched at 40 warehouses beginning in 2007 are in place at about 55% of its U.S. locations, Ms. Schmertzler said. With 107,000 U.S. employees, the company decided to roll out the program gradually.

The changes include applying case management and clinical review practices to evaluate leave requests and assure they are appropriate, said Ophelia W. Galindo, principal and national practice leader of absence and productivity solutions for Buck Consultants in Orange, Calif.

Costco payroll clerks received training to help them evaluate medical certifications requesting the leaves by weighing them against screening criteria. Objective criteria also help them determine when to refer certifications on to WorkCare, the speakers said.

The evaluations look for forms with missing or inconsistent information or unusual circumstances, such as request for leave after a denial of vacation time off, and certifications provided by foreign doctors.

WorkCare's services include reviewing requests using clinical and nonclinical staff, sending letters to employees detailing additional action required, operating a help line to answer employee questions and monitoring the “cure process.”

WorkCare doctors also may contact an employee's medical provider to clarify information such as the frequency or duration of illness flare-ups or treatments an employee or the employee's family will need, said Elaine A. Tonel, assistant medical director for WorkCare and another member of the panel.

Frequency and duration information ultimately can help Costco managers plan for an employee's absence, the speakers said. Additionally, managers may be more sympathetic to workers who need FMLA time off because they know there is a screening process and such leaves are not frivolous or abused.

“With the addition of this clinical clarification...it gives our managers a level of confidence or trust that there is some objective third party” verifying a worker's need for an absence, Ms. Schmertzler said. “It's not just the employee getting whatever they want.”

WorkCare's conversations with medical providers treating Costco's employees also helped educate doctors about the law and some have reduced the frequency with which they provide certifications.

After reviewing about 4,000 leave requests, Costco has had only one employee complaint and learned of only 15 fraudulent cases, including one employee who posted information about his trip to Costa Rica on Facebook while on FMLA leave, the speakers said.

The vast majority of requests have been approved and many involve serious family-related issues, the speakers added.

While Costco eventually may migrate to an automated system, its efforts show that managing FMLA leaves can occur with little technology and the involvement of its payroll clerks shows that decentralized management also is possible, the speakers said.

“It was easy to implement in a decentralized environment, which was one of the challenges lots of employers have,” Ms. Galindo said.