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Think you have little control over payroll costs? Think again. The costs of employee absenteeism represent 35% of total payroll expenses, according to the Insurance Educational Association. These costs include paying absent employees, finding and paying replacements, and the administrative time required to do so.

While you can’t make those costs go away completely, you can reduce them. Start with these three steps:

  1. Assess how you replace absent staff. Last-minute replacements are expensive; how urgent they are depends on the business you’re in and the role of the employee you’re replacing. Replacing an emergency room nurse is more urgent than replacing an administrative assistant in an office. Are you spending more to replace non-critical staff than necessary?

  2. Track and address the root cause of total absences. Are the majority of your employees’ intermittent absences related to disability, Family and Medical Leave Act (FMLA), or another area? If your company isn’t yet tracking this information, establishing a system for doing so will be a major win. Once you understand the reasons for employee absences, you’ll be much better positioned to manage the costs.

  3. Implement creative approaches to keeping employees at work. Legislation has changed both the definition of and acceptable response to disability. For instance, when the ADA Amendments Act (ADAAA) was signed into law in 2008, it expanded the list of disabilities the act covers. This, in turn, has added to the number of people eligible for disability. However, few medical conditions preclude working altogether. Employees who can’t perform their normal functions may be able to work with additional accommodations. “Return to work” and “stay at work” programs can help save employers money and avoid fines for noncompliance; they also help employees by keeping them connected with their employers. Consider the employee who requests six weeks of FMLA leave to care for his ill father. Would changing his work location to be closer to the father be a viable option for him?

In short, get the facts you need to better understand your challenges, and then brainstorm ways to address them creatively. Reducing employee absences and their related costs can be good for your company—and your employees.

—Sonja Teague, AIC, ARM, CPDM, is Assistant Vice President and Integrated Disability Management Practice Leader at ESIS, Inc., a Chubb company.

This article originally appeared as “Industry Exposure” on the Risk Conversation blog on October 12, 2016.

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