Absence Management

What is Absence Management

A structured process that organizations follow to track, manage, and reduce employee absence, in alignment with the defined company policies, is called absence management. Organizations use absence management to monitor employee leaves – both planned and unplanned, in order to maintain productivity and remain compliant with the prevailing labor laws.

Why it matters

Absence management directly affects labor costs and budgeting. As a result, it is a vital component of payroll and HR. If employee absence is not managed properly, businesses risk costly payroll errors, such as missed deductions or overpayments.

On the other hand, with accurate tracking, organizations can monitor trends and patterns such as frequent sick leaves or irregular shift reporting times, and use these insights for more efficient workforce planning to ensure optimum staffing levels are maintained at all times. These insights also inform decision-making and strategies such as leave policies, fair workplace practices, employee development, and improved compliance with labor laws, while reducing disruptions.

Use cases

When it comes to small to mid-sized businesses, typically with an employee count of anywhere between ten and 500, absence management assumes an even more crucial role. This is because employee absence can derail projects and impact operational efficiency, productivity, and customer service. For example, a construction company, say with 50 employees, would heavily rely on availability of skilled laborers. The sudden absence of several workers can disrupt, or in worst case, halt one or more projects. Furthermore, with a limited employee count, the construction company will have little to no flexibility to cover shifts. This can lead to delays in project completion and potential penalties. However, with a robust absence management system in place, this company can track sudden leave requests, ensure shift coverage, and use data-backed insights to plan for busy or lean periods, as required. Managers can temporarily shift workers between sites to ensure project continuity, productivity, and unhindered business growth.

To cite another example, consider a dental clinic chain, with multiple branches and about 125 employees. If on a given day, a dentist doesn’t show up unannounced, several appointments would be cancelled, causing revenue losses and distress to patients. An absence management system would allow clinic managers to find an available replacement from across the branches and reassign staff to maintain patient satisfaction and prevent revenue loss, while also ensuring compliance with the prevailing health regulations.

Similarly, an accounting firm with around 200 employees would witness disruption in servicing clients if several team members took unplanned leaves together. Especially, in the peak tax season, the firm would face delays and challenges in meeting client demands. This is where a centralized absence management system can help HR track leave patterns, anticipate shortages, and create backup plans, such as arranging additional resources or announcing cancellation of all non-emergency leave during peak seasons. This will ensure that the firm maintains workflow continuity, on-time client delivery, and improved employee accountability.

Legal considerations for compliance

When implementing absence management tools, there are certain legal considerations and labor laws that small businesses must be mindful of. This is especially true for businesses that operate across States in the US, as each State has specific leave laws that must be complied with. Failure to comply with State-specific laws exposes businesses to risks of facing lawsuits, fines, employee claims through the US Department of Labor or State labor boards. In addition, businesses stand to lose market reputation, a rather long-term damage.

In the U.S., several federal laws govern absence management. These include:

• Family and Medical Leave Act (FMLA): Guarantees all eligible employees up to 12 weeks of unpaid, job-protected leave for family or medical reasons.
• The Americans with Disabilities Act (ADA): Mandates employers to offer reasonable accommodations for disabled employees.
• Fair Labor Standards Act (FLSA): Governs paid vs. unpaid leave and wage calculations during employee absence. The law varies from one State to the other. For instance, in California, employees accrue paid sick time, with carryover and usage rules as specified in California’s Paid Sick Leave Law. Similarly, the New York State Paid Family Leave (PFL) includes provisions for paid time off for patient care, bonding with a new child, or managing military family needs.

Considerations affecting absence management

Because absence management relies heavily on payroll, time tracking, and employee classification, any impact on these considerations can affect the overall efficiency of the absence management system. For instance, any impact on payroll can translate into inaccurate leave balances or pay discrepancies, such as making payment for unpaid sick days or inaccurate deduction of unpaid leave. If there are discrepancies in time tracking such as human errors or oversight, it can result in unrecorded employee absence, inaccurate calculation of overtime, or wage disputes over the number of hours worked for hourly workers. Similarly, any change or error in employee classification, such as considering an exempt employee as non-exempt, can mean applying the wrong leave policies or pay cut, resulting in violation of labor laws.

Common misunderstandings

Common misunderstandings that many businesses have regarding absence management include:

• Believing that absence management only involves tracking sick days. The reality is that absence management includes all types of leaves – vacation, personal time, medical leave, and so forth.
• Assuming that only the federal laws like the FMLA will apply to all the States they operate in. In fact, each State has unique – and stricter – laws that govern employee classification, mandatory leaves, and paid vs unpaid time off.
• Misclassifying employees and treating all employee absences the same. Many businesses mistakenly fail to distinguish between protected leave (like FMLA) and unexcused absences, exposing them to discrimination claims and labor law compliance risks.
• Not tracking leaves of the salaried employees; whereas the truth remains that their leave must also be documented for legal and policy reasons.
• Manual tracking, using spreadsheets, is sufficient, even though these methods are often laborious and prone to errors.
• Believing that absence management is an HR issue, whereas it has a cascading effect on payroll, compliance, and business continuity.
• Absence policies don’t require regular assessment and fine-tuning. Regular reviews provide an opportunity to adjust leave policies according to evolving regulations, the latest workforce dynamics, and operational needs.

Common pitfalls and how to avoid them

Businesses may face complications when adopting absence management systems due to:

• Inconsistent policy enforcement: Lack of uniform policies for all employees or random policy application. This can cause employee discontent and raise claims of discrimination at the workplace. Businesses must therefore, document all leave policies clearly and train the managers on consistent application of the policies across all departments.
• Inappropriate recordkeeping: Inability to track employee absence accurately can lead to payroll errors or noncompliance. Businesses must consider using a centralized, automated absence management system that can log employee absence and leave balances for up-to-date documentation and audit readiness.
• Overlooking State-specific leave laws: As mentioned earlier, each State in the US has unique laws that govern employee leaves and off times. Therefore, assuming federal laws will suffice for operations across different States can result in violations of stricter State or local requirements. Businesses must stay updated on relevant jurisdiction-specific laws and adjust company policies accordingly.

How Fingercheck Helps

Keeping pace with evolving State-specific laws can be a tedious job. Small businesses, operating on limited budgets, often lack the resources and expertise needed to ensure compliance with diverse laws. This is where an expert absence management platform, such as Fingercheck, can help businesses automate leave tracking to manage employee absence and ensure accurate payroll with real-time data.

By integrating absence data with payroll and timekeeping systems, Fingercheck ensures faster, more accurate, and seamless operations. With in-built dashboards and granular reporting, Fingercheck not only helps managers gain visibility into trends, such as recurrent absences or overlapping requests, but also manage documentation workflows for more complex situations, such as FMLA or ADA-related leave. It reduces compliance risks by enabling businesses to configure policies that align with federal, State, and local leave laws.

Fingercheck’s user-friendly platform streamlines processes, reduces time cheating, and alleviates administrative burdens, enabling businesses to focus on business growth without worrying about project delays or regulatory compliances. Contact us now!

Fingercheck and any related entities do not offer tax, accounting, or legal advice. This content is designed for informational purposes only and should not be considered a source of tax, legal, or accounting advice. It is recommended that you consult your tax, legal, and accounting advisors before undertaking any related activities or transactions.