- Associated Press - Tuesday, June 16, 2015

IOWA CITY, Iowa (AP) - Iowa’s state government has hired a company to track employee absences at a cost of $32,000 per month, seeking to improve its management of the Family and Medical Leave Act.

The move means state human resources employees will no longer determine when employees qualify for FMLA, the federal law that guarantees up to 12 weeks of job-protected leave annually for certain family and medical reasons. Instead, those decisions will be made by the Reed Group, Ltd., a Westminster, Colorado-based company that says it helps employers reduce the cost and legal risk of managing employee absences.

Some employees and a key state senator are questioning the cost of hiring the company and whether the goal is to make it harder to obtain needed time off. AFSCME Council 61, Iowa’s largest state workers’ union, is considering challenging the legality of the program by filing a union complaint or lawsuit, President Danny Homan said.

“To me, it’s an inappropriate use of state funds to pay a third-party administrator to do something that the HR people in this state should be trained to do,” Homan said. “I have received numerous phone calls and emails from people wanting to know why they heck are they doing this.”

But Iowa employment attorney Paige Fiedler said state officials have mishandled employees’ FMLA rights at great expense, and additional expertise could prevent problems.

“If they aren’t going to train anybody to make those decisions according to the law, at least they are hiring outside to do that,” said Fiedler, noting that her firm collected “hundreds of thousands of dollars” in taxpayer-funded legal fees in such cases.

While many companies have hired third-party administrators to handle FMLA-related matters, the Iowa Department of Administrative Services isn’t aware of other states with similar contracts, said agency spokesman Caleb Hunter.

Starting July 1, workers will have to report absences due to their own or their family members’ medical conditions to the Reed Group, even if they don’t intend to apply for leave. Visits to health care providers that result in treatment and absences due to child birth, adoption, foster care placement or military service must be logged online or by phone.

About 21,500 executive and judicial branch employees, who will still have to notify supervisors of absences, will be covered at a cost of $1.50 per employee per month, Hunter said. The three-year contract is worth $1.2 million, with options to renew annually through 2021. The goal was to “bring equity and consistency to FMLA administration, ensuring that qualifying leave is designated and curbing abuse,” according to the state’s request for proposals.

The Reed Group beat out four other companies for the contract. Its proposal promised to “reduce durations, incidence and abuse” of leaves and “decrease healthcare costs by controlling over-certification of leaves.” The company said it can reduce the number of lost workdays by 10 percent over two years and cut the time supervisors spend managing leaves by 75 percent.

Hunter said FMLA determinations were inconsistent across state agencies, where some supervisors struggled to comply with the complicated law.

Violating FMLA can be costly. Last year, the state paid $377,000 in back wages and benefits to a court clerk who was fired after taking unpaid leave to cope with anxiety and is still trying to get out of paying more than $270,000 in legal fees to her attorney, Fiedler.

The Reed Group will give employees “fair, consistent and impartial treatment,” DAS risk and benefits bureau chief Kevin Beichley told workers in a video introducing the change. He said the company would more closely monitor leaves to determine FMLA eligibility than the state did and relieve state officials from having to review employees’ medical documentation.

The Reed Group will also monitor potential fraud and abuse. At additional cost, the company will hire vendors to conduct second and third medical opinions of employee illnesses and surveillance.

Sen. Rob Hogg, D-Cedar Rapids and chair of the government oversight committee, said he had two major concerns.

“First, this looks like outsourcing another governmental function to an out-of-state contractor,” he said. “Second, I don’t want to see any unreasonable barriers placed in the way of workers who need family and medical leave.”

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