How Sparrow Saved Customers $100 Million in Payroll Costs

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Six years ago, Sparrow’s Cofounder & CEO, Deborah, was a Harvard PhD student in Artificial Intelligence. When six of her friends took leave (parental leaves, medical leaves, and caregiving leaves) in one six-month period, she was surprised by how much her friends and their People teams struggled with the process. Half of them experienced costly mistakes related to their pay and time off. All of them spent hours on notices and paperwork, or on the phone with medical providers, state agencies, and insurance companies. She knew there had to be a better way. Sparrow was founded with the mission of demystifying & simplifying the leave process for as many employees and employers as possible.

Today, we are proud to announce that our customers’ People Teams have trusted us to manage more than 1 million days of employee leave. With that, Sparrow’s innovative technology and process have facilitated over $100 million in payroll cost savings for our customers.

“Reaching this incredible milestone is a clear testament to the urgent need for Sparrow in the market,” said Jeffrey Katzenberg, Founding Partner at WndrCo who led Sparrow’s Series A. “Sparrow’s revolutionary approach enables companies to support their most valuable asset—their employees—during moments of need, while also driving large savings to their payroll costs.”

100M Cost Savings

Employee Pay During Leave

When employees take paid leave, their salary can be supported by various programs depending on the type of leave, where they are located, and many other factors. For example, consider an employee who lives and works in California taking a Birthing Caregiver leave. They may be entitled to salary support from the CA State Disability Insurance (SDI) program, the CA Paid Family Leave (PFL) program, and the employer’s private disability insurance carrier at various points throughout their leave.

While employees typically have already paid into these programs and are entitled to the benefits if they qualify, actually receiving those benefits is difficult and error-prone. Each program has its own unique set of complex paperwork and byzantine processes. Employees must navigate these complexities on their own while their attention is needed to focus on a major life event that necessitated leave in the first place. Imagine doing your taxes, by hand, without an accountant or tax software, while juggling a crying newborn or tending to a loved one’s health—would you get it right?

Unsurprisingly, we find that errors are common, leading to delays in payment, employees receiving less money than they are entitled to, or employees just outright giving up. These scenarios result in more employer top-up and payroll costs being passed along to employers. In fact, some companies simply always pay employees fully out-of-pocket to bypass the headaches of this process (which in turn creates even more complicated compliance issues).

By asking their employees to bear the brunt of managing this complex process, companies are often leaving up to millions of dollars per year of potential payroll cost savings on the table.

1M Days of Employee Leave

Payroll Cost Savings with Sparrow

This is where Sparrow can step in to help. We partner with employees and employers to streamline and manage the claims process to ensure employees maximize the benefits they receive from state programs and insurance companies.

For employees, this means peace of mind. Instead of spending precious time deciphering complicated paperwork and worrying about how they’ll be paid, they can focus on taking care of their loved one, bonding with their new arrival, or tending to whatever is happening in their lives during that critical time.

For employers, in addition to knowing their employees are well taken care of, working with Sparrow ensures that they maximize salary support for employees and reduce payroll costs for the company. Clearly, this represents significant savings: Sparrow’s customers have realized more than $100,000,000 in benefit payments to their employees. Quote

How Does It Work?

Much like filing your taxes, filing leave claims, such as private and state short-term disability and long-term disability claims and state-paid family leave claims, is complicated and error-prone. Most people would not try to file their taxes without expert advice from a tax professional or a software tool like TurboTax. Why would we expect people to file leave claims without support while they’re managing a stressful life event?

Sparrow streamlines the claims process and maximizes benefits by partnering closely with employees. With employees’ permission, we work directly with state agencies and insurance companies on their behalf to reduce administrative burden, ensure all claims paperwork is filed correctly and promptly, and maximize benefits.

When Sparrow partners with employees, we use proprietary technology to enable joint access to the claims process for both the employee and Sparrow. This means employees retain full access to the process throughout the leave, receive all correspondence, and have complete visibility into the status of their claims. And if they ever change their minds, they can revoke Sparrow’s access at any time.

Brex Quote

By partnering with Sparrow, our customers take a huge load off of their employees’ shoulders. We use our automated document preparation systems to fill out reams of complex claim paperwork. After review from the employee and their People team, Sparrow directly files claims on behalf of the employee. We then closely monitor the claim for any issues that could arise during the process and assist as needed throughout—interpreting correspondence from state agencies, communicating with agencies & insurance companies when required, handling appeals, and much more.

Just as working with an accountant can reduce errors in tax filings, with Sparrow’s software and leave experts, employee benefit claims are processed faster and with fewer errors. This results in maximal benefits for employees and maximal savings for employers. Pearl Lee, Global Head of People Operations at Brex, shares "Sparrow is the only leave vendor on the market that actually completes paperwork for employers and employees, resulting in a better experience for HR and the employees on leave.”

What’s Next?

While we are very excited and humbled to reach these milestones, we are just getting started!

We strongly believe that every employee who needs to take leave to tend to a critical moment in their lives deserves a simple and painless leave experience. They should be able to focus on themselves and their family, while still receiving the full complement of salary support that they have earned.

Sparrow has partnered with caring People teams, such as Headspace, Betterment, and, to already make this a reality for hundreds of thousands of employees and their families. But our job is not complete—we will continue to improve our product and services and expand our reach until this is a reality for everyone.

Get started with Sparrow