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Balancing Leave and Absence Trends in the Workplace

Author

Anita Potter
Assistant Vice President, Workplace Benefits
LIMRA and LOMA
apotter@limra.com

April 2025

The priorities of the U.S. workforce are changing, with employees placing more emphasis on time away from work, especially younger workers. Additionally, employers must contend with new mandates required by ever-changing federal, state and local laws. In response, employers are offering enhanced leave benefit programs to attract and retain employees. Vacation and sick time have long been staples of many companies' leave programs; however, companies are now addressing additional situations, such as when an employee requires leave for parental care, family leave, or as a victim of crime. In order to remain relevant in this evolving landscape, workplace benefits carriers and service vendors will need not only to identify changing priorities but also to adapt their products and services accordingly.

While companies have always felt the need to offer competitive compensation packages to attract and retain employees, labor force trends, a tightening job market and technology advances make offering attractive leave management programs increasingly important.

Shifting Demographics

The civilian labor force participation rate peaked at 67.3 percent in January 2000 and has decreased to 62.4 percent in February 2025. Moreover, this rate is expected to continue its downward trend, reaching 60.1 percent over the next six years. Two key drivers behind this declining rate are the number of people reaching retirement age or choosing to retire early and an aging workforce. Both factors are expected to increase the demand for leaves as employees deal with increased caregiving responsibilities or their own potential or family health concerns, forcing many employers to develop more flexible leave options to combat the negative consequences of this demographic trend and provide a better work-life balance for employees.

While offering enhanced leave benefits helps attract and retain employees, some companies are also finding that absenteeism may be reduced through a holistic benefits strategy that allows employees to better manage their health and reduce stress levels through the programs they promote.

Key Considerations

As employees place greater importance on leave benefits, employers are adjusting their benefits packages to accommodate these changes. Even before the pandemic, employers realized employees were starting to prioritize their well-being. Two ways to address this are by expanding leave benefits to be more inclusive, such as incorporating more employees, and by addressing employees’ specific needs, including:

  • Emotional: Offering programs such as bereavement leave beyond just for immediate family members, time off when adopting a child, and foster care leave can help employees address stress and other mental health issues that can arise.
  • Physical: Creating programs that help employees return to work after an illness or injury with flexible schedules and plan designs or modified duties.
  • Social: Designing programs to help employees navigate life events beyond maternity and paternity leaves by addressing issues such as providing leave to care for a sick family member or to help with caregiving responsibilities for aging parents.
  • Financial: Offering both job- and income-protected leave, as well as flexible paid leave plans.

Unsurprisingly, employers are increasingly looking to their carriers to provide them with updated plan designs, integrated benefits and programs that allow them to deliver a comprehensive approach to their employees’ well-being.

Compliance and Regulatory Environment

As employers enhance their leave benefits, they must also navigate the increasing number of regulations and changes to federal, state and local laws governing leave. This has led to more complex compliance and risk challenges than ever before. Many employers, especially those in multiple states, find it harder to stay in compliance. Additionally, they face difficulties in developing consistent benefits or parity across their employee population. The more prominent challenges employers face include determining employee eligibility and covered reasons, understanding the impact on remote workers, coordinating all leave types, including paid and unpaid leaves, to ensure employees receive the leave they are entitled to, and tracking intermittent leave requests.

Administration Challenges

How employers administer and manage employees’ time off is often a function of the number of planned and unplanned absences they need to handle. The larger the firm the greater the challenges and needs. Currently, the average national absence rate for full-time workers is 3.2 percent, up from 2.8 percent in 2019. The leading causes of absences from work in both years are injuries and illnesses. With a growing number of employees taking leave, it is not surprising that employers believe administering their leave management program is an ongoing challenge.

There are various options available to employers when it comes to managing and tracking leaves. Some employers rely on manual processes like Excel or use web-based tools to manage their leave programs and administer claims in-house. Others have outsourced the process as a way to reduce errors and compliance risks, improve efficiency and enhance the overall employee experience. Regardless of the method used, as managing leave becomes more complex, employers will need help to evaluate the best course of action for them in the most cost-effective way.

The evolving needs of employees, shifting demographics, regulatory changes, and administrative challenges all highlight the growing importance of offering competitive leave plans and managing them effectively. This provides opportunities for carriers, brokers and vendors to assist employers by looking beyond compliance issues and offering enhanced platforms, plan designs and packages.

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