HR Management & Compliance

Weighing Paid Parental Leave? Consider These Points First

by Sushma Tripathi, vice president, Workforce Planning and Benefits Consulting at ADP

While the United States is still one of few developed nations that do not offer paid parental leave, Americans overwhelmingly support these policies. A recent poll shows that 82% of voters say it’s important to explore legislation that allows paid time off for medical and family reasons. Today, there is potential for change on the horizon. There has been a growing chorus of support for possibly amending federal unemployment insurance laws to guarantee 6 weeks of paid maternity leave.

Parental Leave

An increasing number of large companies are also realizing the value of paid leave. For example, Netflix® offers new parents unlimited paid leave for 1 year, while American Express® recently announced it will give employees 20 weeks of parental leave and offer benefits worth up to $35,000 for adoption and surrogacy events, as well as $35,000 for infertility treatment.

So what should your company think about when considering paid leave policies?

The Changing Face of the U.S. Workforce

Consider the current makeup of the U.S. workforce—it’s much like an hourglass with Baby Boomers at the top, Gen Xers in the narrow middle, and Millennials at the large base. Some 10,000 Baby Boomers are retiring every day, forcing companies to replace those employees quickly even as they face a talent shortage.

According to Pew Research Center®, there are 75 million Baby Boomers and Millennials in the United States, but only 66 million Gen Xers. This gap creates a basic supply-and-demand talent dichotomy, putting more pressure on companies to compete for top talent.

With this in mind, employers need to consider which voluntary benefits will help differentiate them from competitors in recruiting and retaining talent. Also, which benefits do Gen Xers and Millennials value that will attract them to work for your company?

Recent ADP research shows employees across the generational landscape strongly value work/life balance, but Millennials place a higher priority on being able to build downtime into their work schedules than Gen Xers and Baby Boomers. Further, paid leave is becoming increasingly important to Gen Xers as they juggle caring for their own children as well as their aging parents.

In addition to attracting and retaining talent, paid leave can also lead to happier and healthier employees. These policies can help ensure workers take the time needed to recharge their batteries to remain productive and avoid burn-out.

Managing Paid Leave Regulations

The proliferation of state and local leave laws can place employers who operate businesses in multiple locations in the position of offering leave to employees in specific states or cities while not offering the same type of leave to employees elsewhere. When companies look at federal, state, and local laws, the rules that apply are those most generous to the employee based on their location.

It’s also important to ensure your HR policies and procedures address leave entitlements and the interplay with related laws—like unpaid Family and Medical Leave Act rules, paid short-term disability, and workers’ compensation. Also, consider reviewing and updating employee handbooks and training employees and managers to ensure they’re handling employee leave correctly.

Remember: Employers have the right to determine eligibility for parental leave benefits. You don’t need to provide these benefits on day one of employment. You can require some period of service before accrual. Employers may also be able to require employees to use vacation time, sick time, or paid time off benefits before collecting parental leave pay.

If you do decide to implement a parental leave policy, it’s important to ensure employees feel comfortable actually taking that leave, and you make clear it will not impact their career advancement.

When clients ask me whether or not to implement paid leave policies, I tell them this: While paid leave can boost employee morale, highlight your company’s commitment to work/life balance and improve your attractiveness to top talent. At the end of the day, it’s about weighing your workforce needs and operational costs.

Sushma Tripathi is vice president, Workforce Planning and Benefits Consulting at ADP.