January 31, 2023

The Employer’s Guide to Parental Leave Policies

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Parental leave is a major consideration for both job seekers and employers who want to hire them. On one hand, employees want to know that their companies will support their family planning goals and accommodate a healthy work-life balance. On the other hand, parental leave—whether paid or unpaid—often presents significant business challenges.

Despite the logistical and financial obstacles, offering robust parental leave benefits can return many advantages for employers. Paid parental leave can help improve employee retention and satisfaction, lower overall healthcare costs, create a more equitable workplace, and increase productivity across the business. However, implementing a successful policy requires employers to understand the complexities and nuances of parental leave.

What is parental leave?

Parental leave, also referred to as family leave, is a benefit given to employees who need time away from work to care for their children. It is similar to sick leave and paid time off (PTO), but the stipulations for eligibility and entitlement are often more nuanced and subject to more legal requirements.

Parental leave is often conflated with maternity and paternity leave, but these terms only address a narrow set of parental experiences. Instead, parental leave addresses a wider range of scenarios, including adoptive parents and employees who don’t identify as mothers or fathers. Additionally, parental leave addresses more of the challenges working parents face long after childbirth.

Most countries guarantee some degree of parental leave to all workers, though the specific details of those requirements vary drastically.

Also read: Leave Management Tools and Best Practices

Federal parental leave requirements for U.S. employers

The U.S. is one of seven countries that do not offer guaranteed, nationally mandated, paid parental leave for all workers. Federal workers are entitled to 12 weeks of paid parental leave under the Federal Employee Paid Leave Act (FEPLA), but no such protection exists for non-government employees nationwide.

Private-sector protections under FMLA

The only federal protections for parental leave in the private sector exist under the Family and Medical Leave Act (FMLA). This measure allows eligible workers to take 12 weeks of unpaid, job-protected leave for a range of medical and family-related reasons.

In relation to family planning, FMLA applies to:

  • The birth of a child and to care for the newborn child within one year of birth.
  • The placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement.

This legislation guarantees that most workers will not lose their job because they need to take time away from work to care for their families. It also prevents employers from denying time off requests to eligible employees. However, it does not address some of the complexities and complications involved with parental leave.

Limits of FMLA

Only companies with more than 50 employees are required to comply with FMLA, which means employees at smaller firms have no legal recourse if their request for family-related time off is denied.

Furthermore, the employee taking leave must have worked a total of 1,250 hours (approximately 32 40-hour weeks) within the 12 months prior to leave to be eligible. Employers are not legally obligated to provide FMLA-sanctioned leave benefits to most new hires.

In addition, the conditions for taking unpaid leave don’t cover the full range of scenarios that working parents might experience, such as pregnancy loss or the death of the birthing parent. This means many employees who would benefit from taking time away from work to care for their families may risk losing their jobs or having their time-off requests denied.

Learn more: Leave Management Best Practices

State-level paid family leave requirements

In the U.S., only 11 states and Washington, D.C. have enacted laws providing paid family leave for qualified employees:

  • California
  • Colorado
  • Connecticut
  • Delaware
  • Maryland
  • Massachusetts
  • New Jersey
  • New York
  • Oregon
  • Rhode Island
  • Washington

These requirements vary from state to state. Rhode Island, for example, entitles each employee to six weeks of paid parental leave, whereas New York’s minimum requirement is 12 weeks. Each state also has different specifications for eligibility requirements, wage replacement rates, maximum benefits, and other details.

It’s worth noting that most employment laws depend on where the employee works. Therefore, companies that hire remote workers across the country should be prepared to comply with these laws and provide paid family leave to employees in those states.

International parental leave requirements

International employers are faced with the unique challenge of ensuring their parental leave policies meet the requirements of all countries where their employees live. The United States has relatively few requirements compared to other nations. Switzerland, for example, requires employers to pay 100% of an employee’s wages for eight weeks of parental leave.

The broad range of legal standards means global employers should take extra care to craft a policy that maintains compliance while also providing comparable benefits to all employees. To create a consistent policy, employers should consult legal experts as well as diversity, equity, and inclusion (DEI) committees. It may also be valuable to work with global professional employer organizations (PEO) that have familiarity with parental leave laws around the world.

Common barriers to parental leave

Despite legislative protections, employees in the U.S. often underutilize parental leave benefits for a variety of reasons. They may face financial hardship if they take unpaid leave, be ineligible to receive leave benefits, or fear the indirect career impact of taking extended time away from work.

Employers should consider these obstacles when crafting or revising parental leave policies.

Financial barriers

From a financial standpoint, most employees (70%) can’t afford to take 12 weeks of unpaid leave, as it would deplete their savings. FMLA, therefore, remains out of reach for employees in financially precarious situations and low-earning positions. These financial barriers to utilizing unpaid leave put eligible employees in positions where they must continue working despite the physical and psychological demands that come with being a working parent.

Eligibility barriers

Many parental leave policies are geared toward mothers and pregnant women, which inadvertently excludes a large population of employees who would benefit from similar accommodations. Revising policies to include non-binary, adoptive, and non-birthing parents helps ensure a broader group of employees are able to care for their families.

Eligibility requirements may also reserve paid parental leave benefits for employees with more tenure or seniority. New hires, hourly workers, and junior employees may be unable to take paid leave despite their family planning goals.

Additionally, most parental leave policies don’t give time off to parents dealing with pregnancy loss or infertility issues. Expanding eligibility to include a wider range of family planning scenarios allows those employees to take the time off they need to be more present and productive while at work.

Cultural barriers

Parental leave policies may not be effective if the company culture makes it difficult for eligible employees — especially women and minorities — to take time off. In many cases, working parents are hesitant to take leave that’s available to them if they fear how it will affect their job security and prospects for career advancement.

This is often regarded as the “motherhood penalty,” where implicit biases mean women with children are less likely to receive promotions, job offers, and other opportunities because they are perceived as less committed to their work. Equitable policies that give all parents generous time away from work reduce these cultural challenges.

Learn more: Strategies for Cultivating a Diverse Talent Pool

Paid parental leave FAQ

Though it isn’t required by law in most cases, many employers have started offering substantial paid parental leave as part of their benefits packages. As such, more businesses are questioning whether they, too, should add paid parental leave to their benefits offering.

How many companies offer paid parental leave?

SHRM’s 2022 Employee Benefits Survey found that leave (82%) and family care (70%) benefits were the third and fourth most important benefits employers offered after health-related (88%) and retirement (82%) benefits. Interestingly, the proportions of U.S. employers offering some type of paid leave for working parents were notably smaller:

  • Paid maternity leave: 35%
  • Paid parental leave: 33%
  • Paid family leave: 31%
  • Paid adoption leave: 28%
  • Paid paternity leave: 27%
  • Paid foster child leave: 22%

The largest reason employers gave for not offering paid parental leave was cost. Without federal legislation to support working parents, the burden of funding paid leave falls squarely on the employer. This expense is often too large for some businesses, even if they recognize the value of paid parental leave.

As paid parental leave requirements become more common around the world, the number of companies offering such benefits will inevitably increase. Therefore, businesses that can afford to offer paid leave before it’s mandated will set themselves up for long-term success.

What are the advantages of offering paid parental leave?

A 2021 poll from YouGov found that the majority (68%) of adults in the U.S. believe companies should offer paid parental leave to both mothers and fathers. Because nearly two-thirds of employers still do not offer paid leave, those that do are uniquely positioned to set themselves apart from other companies in an increasingly competitive labor market.

To that end, SHRM and Oxford Economics published findings in 2020 that revealed the competitive advantages employers gained by offering paid parental leave:

  • Employee health and wellness: 61%
  • Employee engagement: 60%
  • Ability to attract talent: 58%
  • Employee retention: 55%

Supporting working parents beyond parental leave

The obstacles employees face as parents don’t stop after their eligibility to take parental leave expires. Quite the opposite, in fact: When working parents return from leave, they often experience difficulty maintaining a healthy work-life balance, finding affordable childcare, and avoiding burnout among other challenges.

With this in mind, family-friendly employers who want to create a supportive work environment for their employees should consider offering some extra benefits in addition to paid parental leave. These include perks like on-site childcare, mental health services, family planning services, and more.

Furthermore, some HR software providers like Gusto and Freshteam offer features that help businesses support parents through 529 college savings plans, reimbursement programs, and paid leave alongside traditional benefits.

Read​​ next: Policies & Benefits That Support Working Parents

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