Paid Family Leave Policies: Employers Have Their Eye on the Wrong Ball

While U.S. companies seem to be engaged in a paid family leave arms race, the amount of time offered may not be the most important factor to employees, a new study has found. Instead, flexibility may be of greater value to workers than a more rigid policy that provides a longer duration of leave, the Boston Consulting Group (BCG) says.

The organization reviewed policies at more than 250 companies and conducted in-depth interviews with 25 HR professionals, releasing its findings February 7 in Why Paid Family Leave is Good for Business.

The Report

BCG’s report largely shows what other reports have found: paid family leave improves retention, diversifies leadership teams, and attracts quality candidates. And while many of the country’s large employers don’t offer paid family leave, some big names have adopted such policies in recent months. American Express^®, for example, recently adopted a 20-week leave policy. Ikea^® now offers 16 weeks and Etsy^® employees receive 26.

Employers, lawmakers and advocacy groups are struggling to nail down the “right” amount of paid time off—14 weeks is a minimum suggested by the U.N.’s International Labor Organization—but stakeholders might be giving that detail too much attention, BCG says. “The recent trend is toward more time off, but flexibility—offering nonconsecutive weeks off, for example, or the option to take a longer leave at less pay—can sometimes be just as important to employees.”

In fact, flexibility may be of even greater value than a longer but inflexible policy, the report notes. Etsy, for example, allows new parents to use up to 18 weeks of their leave any time during the 2 years following a child’s birth or adoption.

Perhaps most notably, this allows two-parent households the opportunity to stagger their leave. Flexibility also may be particularly important for employees who need to care for a family member with a chronic illness that requires intermittent care, the report notes.

Aside from the recommendation regarding flexibility, the report offered four more takeaways for employers looking to adopt a paid family leave policy:

1. The policy should reflect the company’s values. Recently, there has been a trend toward more inclusive policies—providing equal amounts of leave for male and female parents, covering birth, adoption, and surrogacy, and covering both salaried and hourly workers. A few companies also provide paid leave to care for an ill family member, ensuring that all employees—and not just parents—have equal access to the benefit.
2. Company leaders should set the standard by encouraging the use of the policy and taking time off themselves when they need it. As visible champions, they can foster a sense of normalcy around paid family leave and let employees know that they will be supported when they take advantage of it.
3. Support systems are crucial, both for those on leave and for those covering for them while they are gone. These can include HR processes and checklists for managers handling leaves, and systems to help employees ramp down before they go on leave and ramp up once they return.
4. Just a small number of metrics are needed to measure the success of a policy. These can include statistics on usage, employee replacement costs, retention rates among employees who have taken leave, and employee perceptions of the program.

Looking Forward

Legislation proposing paid family leave has been proposed in Congress numerous times. Most recently, Sen. Kirsten E. Gillibrand (D-NY) introduced S. 337 which, according to the National Partnership for Women and Families, proposes 12 weeks of paid time off.

The bill, introduced February 7, would provide for compensation at 66% of an employee’s pay, up to a certain amount. Those payments would be funded by a combination of employee and employer payroll taxes.

The employee leave needs covered by S. 337 appear similar to those covered by the Family and Medical Leave Act (FMLA): an employee’s own serious health condition; to care for a family member; for military caregiving or leave purposes; or for the birth or adoption of a child.

Unlike the FMLA, however, workers at all companies would be eligible, regardless of the company’s size. Even self-employed workers would be eligible for benefits.

Despite a Republican Congress, experts have predicted that paid family leave could, in some form, become a reality under President Trump. During his campaign, Trump proposed 6 weeks of paid maternity leave for new mothers. The developing patchwork of state and local laws also could create support for a national policy, economic experts for the Brookings Institution noted last month in a blog post. Employers may well prefer one federal law to 50 state laws, they said.

The graphic below highlights the differing views on how much time off is acceptable. Click on the image for a larger view.

Kate McGovern Tornone is an editor at BLR. She has almost 10 years’ experience covering a variety of employment law topics and currently writes for HR Daily Advisor and HR.BLR.com. Before coming to BLR, she served as editor of Thompson Information Services’ ADA and FLSA publications, co-authored the Guide to the ADA Amendments Act, and published several special reports. She graduated from The Catholic University of America in Washington, D.C., with a B.A. in media studies.