5 Benefits of Paid Parental Leave

Employee Benefits, Family, FMLA, Health Care, HR, Human Resources, Insurance, Wellness, Leave of Absence, PTO, Health Care Cost

5-Benefits-To-Paid-Parental-Leave

Approximately 93% of fathers and 72% of mothers make up the U.S. workforce, according to the Bureau of Labor Statistics. Because many of the men and women who are not currently parents will be at some point, family-friendly benefits are essential to offer as part of an organization’s employee value proposition.

However, in 2018, only 17% of workers had access to paid family leave, leaving approximately  80% of American workers without paid family leave. Further, 93% of low-wage workers who are in the bottom quarter of wage earners have no access to paid family leave, and 94% of part-time workers have no access to paid family leave. Almost all of the 193 countries in the United Nations offer paid parental leave to its citizens; the United States is one of the rare exceptions. The United States is also the only country out of the 41 in the Organization for Economic Cooperation and Development (OECD) and the European Union that does not mandate some level of parental leave benefits for employees.   

Family Medical Leave Act of 1993 Is Protection without Pay

Public agencies, public and private elementary and secondary schools, and companies with 50 or more employees are required to abide by the Family Medical Leave Act of 1993 (FMLA). FMLA provides workers with up to 12 weeks of job-protected family leave if they meet certain criteria. To qualify for FMLA, employees have to have worked for their current employer for at least one year and have worked 1,250 hours over the past 12 months. They also have to work at a location with 50 or more employees within a 75-mile radius.

FMLA grants leave to care for a newborn child, an immediate family member, or oneself. Leaves are also granted for the adoption or foster care placement of a child. Though it’s nice to have job-protected leave available for those who qualify, FMLA leave is unpaid, and a lot of employees can’t afford to take time off — even if their job and medical benefits are protected.

Paid Parental Leave Is Taking Hold in the U.S.

Fortunately, the times are changing, and paid family leave is becoming more common. To date, nine states have mandated some sort of family or paid parental leave. The Federal Government, the country’s largest employer, also reached a deal on paid parental leave for government employees in December of 2019. Also, more and more U.S.-based companies are developing and implementing paid parental leave policies.

Paid family leave offers benefits to both employers and employees:

  1. It increases employee retention.
  2. It makes it possible to attract and retain new talent.
  3. It can increase productivity and boost employee morale.
  4. It supports the mental health and well-being of parents.
  5. It provides an opportunity for private and public investment.

1. Increased Employee Retention

Turnover impacts the bottom line. Per American Progress, it costs an average of 21% of an employee’s base salary to replace them. Per the American University Department of Economics, close to 30% of women who work leave the labor force within one year after having a child.

However, paid parental leave policies encourage employees to return to work, providing companies with the benefit of retaining talent. In a study by the nonprofit Women’s Policy Research for the March of Dimes Center for Social Science Research, in states that implemented paid parental leave policies, there was a 20% reduction in female employees leaving their jobs within one year after their child was born. That number increases to a 50% reduction after five years.

A report from the Center for Women and Work at Rutgers showed that a woman who takes paid leave to care for a child after birth is more likely to remain employed for nine to twelve months after birth than a woman who takes no leave. Another study by the U.S. Department of Health and Human Services showed that paid family leave allowed low-income mothers the time needed to bond with their newborn and line up child care, eliminating a common barrier for women returning to work.

2. Attract and Retain New Talent

Companies that offer paid parental leave to their employees not only benefit by retaining talent, but they also benefit by attracting top talent. In a 2014 study of highly educated U.S. working fathers, nine out of 10 said it would be important for an employer to offer paid parental leave if they were looking for a new job, and six out of 10 said it was “extremely important.” In a competitive market, every benefit offered as part of the employee value proposition matters.

3. Increase Productivity and Boost Employee Morale

When employees have the opportunity to return to work after their leave, it provides a sense of job security and job satisfaction. Job satisfaction is linked to increased productivity and employee morale. Also, given that so many employees are parents, and that those who currently aren’t might be one day, it provides peace of mind to know that parental leave is available to them.

4. Improve Mental Health and Well-Being of Parents and Children

Having to choose between working and being a parent can be difficult. Parents who feel that they have the option to take paid leave to care for their children when needed don’t have the stress of finding childcare or worrying about their ill child when they’re not able to be with them.

Parental leave can also have a positive impact on the well-being and mental health of the children. Men and women alike have the opportunity to bond with their children through parental leave policies. When employees have the option to take paid family leave, children don’t need to be separated from their parents in the critical first few months of their lives, during important events, or when they’re sick.

Paid parental leave for fathers is associated with increased father bonding and engagement with children. Increased bonding and engagement can lead to improved health and development outcomes for children. Unfortunately, one study showed that seven out of 10 fathers only took 10 days of parental leave or less.

5. Increased Public and Private Investment

Offering paid parental leave policies has a positive impact on society and the economy. Paid family leave can also help reduce racial disparities in wage loss for minority populations. Studies also show that there are health benefits for parents who have the time to care for their child after birth, including reduced rates of hospitalizations among infants and improved maternal health. Parental leave improves public health by allowing parents to care for their children and themselves, reducing the spread of illness and improving mental health.

Designing a Parental Leave Policy

There are several factors to consider when designing a paid family leave policy. Some questions employers might ask include:

  • How much will the employee get paid while on leave?
  • How many days can the employee take off from work?
  • Does time off need to be consecutive, or can it be intermittent?
  • What is the leave approval process?
  • How will the leave be administered?
  • What’s the process for the employee to return to work?
  • What type of leave policy (e.g., parental, maternity, paternity) will you create?
  • Who is covered under the policy?
  • Will parental time-off policies coincide with other paid leave policies?
  • How does parental leave compare to other time-off policies offered to all employees?
  • What are the legal considerations or implications of offering a family leave policy?

As employers review their options to offer paid family leave, there are three common types that many organizations choose to provide:

  • Paid parental leave
  • Paid maternity leave
  • Paid paternity leave

Paid Parental Leave

Paid parental leave is offered to both fathers and mothers. It often works similarly and coincides with family medical leave. A common practice is to provide paid leave at 100% of the employee’s base pay for a specified period. Paid parental leave typically allows:

  • A parent to take time off after giving birth to a child.
  • The spouse or partner of the individual who has given birth to take time off to care for the child after birth.
  • Time off to adopt or foster a child and care for the child after the adoption or placement.
  • Parents to take time off to care for a child beyond the period directly following the birth.

Paid Maternity Leave

Paid maternity leave allows mothers to take paid time off from work after giving birth to a baby. It can also be taken during the placement of a child following adoption or foster care. Similar to paid parental leave and paid paternity leave, maternity leave is often taken at the same time that FMLA leave is taken. In other words, maternity leave would also count against an employee’s FMLA balance. If the organization has a sick leave or short-term disability policy, maternity leave might coincide with those types of leaves, as well.  

Paid Paternity Leave

Promundo and Dove Men+Care conducted a study of 1,700 men and women between the ages of 25 to 45. The report, Helping Dads Care, indicated that 73% of fathers felt that there was little workplace support for dads, and 69% said that they would switch jobs to spend more time with their kids. Additionally, one in five said they were afraid of losing their jobs if they took the entire amount of paternity leave allotted to them. These stats indicate that working fathers want time off to care for their kids as much as mothers do, though they have concerns about actually doing so, even when the time is permitted per company policy.

Paternity leave is essentially maternity leave for fathers. Paternity leave allows fathers to take time off after the birth of a child or for the placement of a child from foster care or adoption.

Tips to Encourage Parental Leave Policy Utilization

To encourage employees to return to work after parental leave and increase the use of parental leave policies, the policy should:

  • Allow for family schedules to readily and easily be combined with the employee’s work schedule.
  • Encourage both fathers and mothers to take parental leave equally.
  • Implement a use-it-or-lose-it component to ensure that the time off is utilized.
  • Ensure that job protection is in place, as well as income and benefit protections.
  • Provide equitable work-life parental leave benefits to fathers and mothers.
  • Ensure that employees know there will be no negative consequences when taking leave.
  • Use incentives to encourage participation in parental leave benefits.

Some best practices in designing a parental leave policy include:

  • Offering a minimum of 14 weeks of maternity leave.
  • Providing a set number of weeks for paid time off for fathers or same-sex partners.
  • Allowing leaves to be intermittent.
  • Offering a replacement rate at a minimum of two-thirds of an employee’s base salary while on leave.
  • Clearly identifying the right time to return to work once the leave has ended.

Additional Family-Friendly Benefits

In addition to paid parental leave, there are many additional family-friendly benefits an organization could offer to employees. Childcare that is available on-site or nearby is a great perk for parents with children. Other family-friendly perks include having a nursing room for mothers and hosting family-friendly events.

Employees Want Paid Family Leave

The majority of the U.S. workforce is made up of working parents, and they want more time off to care for their families. A 2017 Pew study showed that 82% of Americans were for mandatory paid maternity leave for mothers after giving birth or adopting a child. Offering paid parental leave can increase productivity, improve employee morale, help employers retain and attract top talent, and have a positive impact on social disparity and the health and well-being of employees and their children.

Begin your parental leave benefits Package with KBI Benefits

If you’re ready to review your current parental or family leave policy or would like to implement a new approach, KBI Benefits is here to help. Our team of professional experts will take the time to understand your needs and support you in creating a policy that meets the goals of your organization and employees.

If you are ready to explore your health insurance options, contact us today by submitting our online contact form or calling us at 408.366.8880. We look forward to working with you!

By Chris Freitas

Tagged: Employee Benefits, Family, FMLA, Health Care, HR, Human Resources, Insurance, Wellness, Leave of Absence, PTO, Health Care Cost