You know, back in the day it was called Maternity Leave. But thank goodness we’ve all figured out that biological mothers aren’t the only ones that need time to bond with a new child in their home. No matter how that child got there – whether through birth, adoption or something else. Acclimating to a new member of the family takes time.
And trying to do that while working can really be a struggle. But many people just don’t have any choice – they can’t afford to take time off of work to settle in to being a new parent. That’s why Parental Leave policies are becoming more and more popular. And probably why you’re thinking of putting one in place – after all, it’s a great big feather in your cap of Employer of Choice.
In fact, the US is the only industrialized nation without paid parental leave. And while some US employers have tried to address the issue, the 2019 Mercer survey revealed that only 40% of employers offer any form of paid parental leave.
So, congratulations – you’ve decided to become part of the elite 40% (by the way, that number is up from appx. 25% in 2015 – so we’re moving in the right direction).
But what should go in this type of policy, what will it even look like. And – because after all, we are business owners – how much will it cost you.
OK – well first let’s look at who it should cover. It should be gender neutral – because everyone should be entitled to parental leave. And it’s a nice idea to let your employees take the time off for birth, adoption, or placement of a child in the home for foster care. Because, after all, each of those situations mean there’s a new family member that needs attention and care.
And don’t forget, depending on the size of your company and where you’re located, there may be employment laws that protect your employee’s job.
For instance, if you have 50 or more employees, you have the Family Medical Leave Act or FMLA to think about. It gives up to 12 weeks of unpaid leave to your employees, to take care of themselves or a family member, or to bond with a new child.
And even if you have less than 50 employees, depending on your state, you may still have protected leaves to think about. Here in California, we have our version of FMLA, called the California Family Rights Act or CFRA. And it covers companies with as little as 5 employees.
It provides all the same protections FMLA does, but (and this is really important to keep in mind), in some cases it’s not concurrent. Meaning the FMLA clock and CFRA clock may not run at the same time in all cases. So you potentially could be looking at giving CFRA time and then FMLA time after that. That could be a lot of time.
“…It should be gender neutral – because everyone should be entitled to parental leave. And it’s a nice idea to let your employees take the time off for birth, adoption, or placement of a child in the home for foster care. Because, after all, each of those situations mean there’s a new family member that needs attention and care.“
As you have probably noticed, the laws around leave are really complicated – and you really do need to stay on top of them because if you miss something, the penalties could cost you a lot of money.
But, you don’t have to worry on that front – I have something that can take care of that worry. More on that later.
For right now, back to your proposed Parental Leave policy.
You’ll notice that all these mandated leaves are unpaid – so that’s the reason a company Parental Leave policy is such a great thing. Most times it doesn’t extend the time off, but it does provide for some level of pay. And to top it off, you get to decide, since it’s not mandated.
So, if you wanted to give 6 months and stairstep the salary, something like the first 3 months is full salary, and the next 3 months is half salary, or no salary – well, you could do that. Or 4 months, the first 2 at full salary, the 3rd month at half salary and the 4th month unpaid.
Again, because it’s your policy, you can design it any way you want to. As long as you don’t make the available leave time less than the mandated leave of, say 12 weeks.
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Of course, the more generous the policy, the better outcome you have with your team. Giving 4, 5 or 6 months of full salary is a huge benefit, and one that potential hires will really take note of.
Now, on to the money. Well, it’s important that you take full advantage of any paid programs that are available. For instance, many states have some version of Paid Family Leave. So, coordinate that state financed leave time with your parental leave policy – let them work together so the state does some of the heavy lifting for you.
Also, because things seem to constantly be in flux, make sure to check in with your accountant to see if there are any tax credits that can ease the burden. You never know, you can find business tax credits tucked in the oddest of bills these days.
But the real bedrock answer? Well, it’s a cost of doing business. Just like payroll taxes, and technology. You have to factor in the cost, make it part of your budget, build up a line item so you have the funds, if and when you need them.
And remember – the return on investment will be huge. You’ll have a better chance of retaining high performing team members, and you get to wear the ‘best of employer’ jacket and attract highly skilled people.