Leave as a Benefit 101: The Ins and Outs of Paid Parental Leave

Seth Turner, AbsenceSoft

In the past few years, there has been an upward trend in companies offering new types of leave benefits. Whether it’s to recruit or retain talent, it seems that the future of US workplaces looks to be one where paid leave is commonplace. Campaigns such as #showusyourleave have taken the internet by storm, demonstrating just how prevalent modernized leave has become and how important transparent benefits are to both employees and job seekers.

In the 2023 Employee Leave of Absence Forecast Survey done by AbsenceSoft, 70% of respondents had either recently added or will be adding paid parental leave in 2023. In this blog, we will focus on the importance of paid parental leave and how you can implement a modernized policy of your own.

Why Is Offering Paid Parental Leave Important?

There is no federal leave law, FMLA or otherwise, that provides paid parental leave today. When an employee goes out on FMLA for maternity leave, their job is protected for up to 12 weeks, but they are not receiving a paycheck to be able to support their new family. Many employees will opt to take less than 12 weeks or use PTO to ensure they are getting partially paid for their leave.

Because FMLA is unpaid, it can deter fathers from taking paternal leave as well. Although they are eligible for up to 12 weeks of FMLA for the birth or placement of a child, 70% of fathers take ten days or less for paternal leave, according to the DOL. Logically this makes sense, as many families cannot afford for both parents to be unpaid, especially during the first few weeks of a newborn’s life.

Taking unpaid leave can be impossible for many parents, and unfortunately, it’s the only option that is federally guaranteed in the US today. But ensuring that employees get time with their newborn is vital not only to the parent’s health but the child’s health as well. The World Health Organization recommends a minimum of 18 weeks of paid leave maternity leave – and encourages raising the benefits to the full amount of earnings. Although we have yet to see those recommendations implemented federally, many employers are adopting policies that allow new parents to take the paid leave they need.

States Are Starting to Offer their Own Paid Parental Leaves to Residents

As many companies are catching on to the importance of offering paid parental leave, some states are as well. As of January 2023, there are eight states that have publicly funded parental leave. These states include California, Connecticut, Massachusetts, New Jersey, New York, Rhode Island, Washington, and Oregon.

Although each state has its own policy and set of qualifications, most do provide paid parental and family caregiving, as well as temporary disability. There are more states on the horizon planning to implement paid family leave in 2024. So far, each state implements maternity and paternity leave as one and the same, meaning fathers receive the same benefit as mothers.

Short-Term Disability (STD) Is an Often-Overlooked Option for Paid Parental Leave

Short-term disability can also be an option you can offer expecting parents for paid parental leave. Standard STD works like an insurance policy provided by your organization. STD offers two weeks of paid leave prior to delivery and six weeks after, but policies and coverage can vary greatly. It is not job-protected like FMLA, but it is paid instead of unpaid, so some new parents choose to use it.

There are five states that have state-mandated disability insurance requirements, but the other 45 do not. STD can be applied regardless of FMLA qualification. But it’s only good for those taking maternity leave – it does not cover paternity leave. It’s also important to keep in mind that STD can be stacked with FMLA or taken concurrently. This adds yet another complexity to managing parental leave. As a best practice, you should thoroughly communicate how STD interacts with other benefits to ensure your employees understand their options.

A Look at “Stacking Leave” and Its Complexities

To spend as much time as possible recovering after a birth and bonding with their newborn, many employees will “stack” their paid leave benefits.

We’ll use an example to walk through how leave entitlements can be “stacked” and how difficult it can make the process of managing parental leave. Let’s say an employee like Jennifer is pregnant and expecting. Her employer offers her six weeks of paid bonding leave. She also has short-term disability insurance through her employer, which entitles her to two weeks of paid leave prior to giving birth, and six weeks of paid leave after. To recover fully, Jennifer takes short-term disability leave first until she is no longer disabled by pregnancy. Then, she begins her company bonding leave after that ends, giving her a total of 14 weeks of paid leave.

To make matters more complicated, Jennifer also lives in the state of New York, which allows her to take up to 12 more weeks of paid family leave at 67% of her pay. Because her employer’s STD and bonding leave policies don’t have any restrictions regarding interactions with New York’s paid family leave, she uses it to extend her paid leave to 16 weeks total.

If you are Jennifer’s leave manager, you have quite a leave case in front of you. Knowing which policies she is (and isn’t) eligible for and keeping track of the time taken against different entitlements can be a huge challenge without the right tools. When cases like Jennifer’s aren’t properly managed, it leads to confusion around return-to-work dates, improperly denied leave benefits, frustrating employee experiences, and even lawsuits. Leave management software will ensure that you are keeping compliant with leave eligibility, as well as track leave usage accurately to be clear about their return-to-work date—even if an employee is stacking multiple policies.

Tips for Implementing a New Paid Parental Leave Policy at Your Organization

Let’s say your company has decided to implement a paid parental company policy, which is wonderful for prospective parents. But what comes next for those managing these new policies? Companypaid leave policies can come in all different shapes and sizes. Each policy will have its own eligibility criteria, and those criteria will likely be decided by HR executives within the company.

As a leave manager or HR leader, it will be your job to:

● Successfully implement the new paid parental policy

● Ensure it is fully compliant with FMLA, STD and state leaves

● Communicate the change with employees

When implementing a new policy, the first step is to gather all the information needed to calculate eligibility. You’re going to need to know if this policy will have rules such’s as years worked, hours worked and qualifying leave reasons. During the implementation process, it’s faster and easier when you have a leave management platform in place. Leave management software allows you to build this policy from the ground up on your own or with the help of our support team. You will be able to customize this policy exactly to your liking and test it before rolling it out to ensure it works as expected.

It’s always important to keep compliance in mind. Just because your company has a paid parental leave policy doesn’t mean that FMLA or STD cannot be applied. Employees may be able to stack different policies to get the outcome best for them. As we mentioned earlier, if an employee is stacking short-term disability with a state leave and a company leave, things can get really complicated, really fast.

Employee communication is a final, critical step in successfully implementing a new paid parental leave policy. Announcing the new policy to your employees is only the first step. Once people start to use the policy, it is vital that you communicate frequently before and during their paid leaves to establish expectations and return to work dates.

Employee self-service portals not only help you communicate with employees but also allow employees to easily communicate with you. When an employee wants to request parental leave, they will be able to do so directly from their phone or computer. The portal will guide them through a set of choices and show what their eligible for immediately, so you can get an accurate request right away. Communications can be added to each case in the software, so everything is kept documented and accurate. These types of leave management platforms ensure that you are keeping employees up to date with their leave so that they can focus on their families and not HR stuff.

Conclusion

As paid parental leave becomes more prevalent, not only through company policies but also through changes in state policies, it is important that your HR team has the tools in place to prepare for these transitions. The right leave management solution will ensure that every leave is compliant with federal, state, and company leave policies. These leave systems will be automatically updated anytime there is a change in the law, whether that be state or federal. This way your team does not have to worry about keeping compliant with numerous, ever-changing state leave laws.

Seth Turner is the Chief Strategy Officer at AbsenceSoft. He has over 20 years of experience working with clients to solve their HR and leave management struggles. Seth discovered early on that leveraging technology can revolutionize how HR approaches leave and set out to build an automated, scalable, and robust solution to make our customers’ lives easier.

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