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Sheila Bridgeforth
phone: 973-802-6852
11 November 2015

Employer disability compliance adoption lags recognition of importance

Prudential research finds many expect to seek outside help

NEWARK, N.J., November 11, 2015 - Employers recognize the importance of complying with disability and leave laws, but are less consistent in their adoption of services that effectively manage these programs, new Prudential Financial Inc. (NYSE:PRU) research has found.

“The complexity and nuances of disability and leave laws can be overwhelming. And as employers grapple with competing priorities, and limited resources, it can be challenging for them to fully outline and implement plans to keep them in compliance,” said Jake Biscoglio, vice president, Absence and Disability, Prudential Group Insurance. “It has reached a point where many employers say they are willing to outsource all or a portion of the administration of their compliance programs to ensure their employees have the best support available to them.”

The 2015 "Is ADA the New FMLA? Insights on Outsourcing Employer Compliance Support Servicesresearch found that despite the fact that the Americans with Disabilities Act (ADA) was enacted three years earlier than the Family Medical Leave Act (FMLA), employer FMLA practices are more advanced than those related to ADA compliance.

Biscoglio said part of the problem is that employer requirements under the ADA are not as clear as those required under the FMLA. Enacted in 1990, the ADA sought to prohibit discrimination based on disability. It compels employers to make “reasonable accommodations” for employees with disabilities, and was expanded in 2008 to cover a much larger segment of the population.

“Employers are willing to utilize resources to understand what is required and how to comply,” Biscoglio said. “They need assistance, and for some, working with external partners is the most efficient solution.”

Prudential’s survey found:

  • Virtually all employers, large and small, consider it important to have FMLA and ADA service capabilities in their organizations. The gap between employers’ importance ratings for these service capabilities and adoption rates suggests they need help in implementing their programs. For example, helping employees stay at work was considered important by 96 percent of employers, but only 77 percent have this capability as part of their ADA program.
  • A total of 5 percent of employers either do not provide ADA services at all or are not aware if they do, which is significant considering the cost of non-compliance.
  • Some employers may still be at risk of non-compliance with ADA requirements. Notably, the most commonly adopted ADA service capability facilitating an interactive process or dialogue between the employee and employer to agree upon reasonable accommodations that will help the disabled employee perform essential job duties is established by only 81 percent of employers, which may indicate a lack of understanding of compliance requirements.
  • To help meet the requirements, almost half of employers report outsourcing some or all of their FMLA and ADA services. About 40 percent of employers expect the importance of outsourcing these services to increase due to factors such as an increasingly complex regulatory environment.

“The adoption of FMLA services has matured beyond compliance and is now focused on effective administration and implementation, and we expect ADA to mirror this pattern in the coming years,” said Biscoglio. “As a group carrier, we’re working hand in hand with our client companies and their advisors to help them better understand the nuances of both ADA and FMLA, and to put plans into action for the benefit of their employees.”

The research was conducted for Prudential earlier this year by Greenwald & Associates, which surveyed executives who make decisions on group disability and absence management services. The survey involved a mix of private and public organizations with at least 500 employees.

Prudential Group Insurance manufactures and distributes a full range of group life, long-term and short-term disability and corporate and trust-owned life insurance in the U.S. to institutional customers primarily for use in connection with employee and membership benefit plans. The business also sells critical illness, accident, accidental death and dismemberment and other ancillary coverages and provides plan administrative services in connection with its insurance coverages. Group Insurance coverages strive to facilitate protection from risks that are difficult to predict, thus fostering overall financial wellness for employees and their families.

Prudential Financial, Inc. (NYSE:PRU), a financial services leader, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit http://www.news.prudential.com/.

Prudential, the Prudential logo and the Rock symbol are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide. Group coverages issued by The Prudential Insurance Company of America, Newark, NJ.

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