While Michigan employers are preparing for the new Michigan Paid Sick Leave Act that takes effect on March 29th, another paid leave benefit is on the rise. Employers offering paid parental leave benefits rose significantly between 2016 and 2018 according to SHRM. Employers offering paid maternity leave increased from 26% to 35% in 2018, and paid paternity leave increased from 21% to 29% during that same time period. Paid adoption leave increased from 20% to 28%, foster child leave increased from 13% to 21%, and surrogacy leave increased from 6% to 12% in the last two years.
Out of 193 countries in the United Nations, only a small handful do not have a national paid parental leave law: New Guinea, Suriname, a few South Pacific island nations, and the United States. In President Trump’s State of the Union address, he called for federally paid family leave that would allow every new parent a “chance to bond with their newborn child.”
Many employers have opted to implement or increase their paid parental leave programs as a way to differentiate themselves from competitors and to help retain key employees. According to Liz Supinski, Director of Data Science at SHRM, “Money is not the way to motivate people.” Benefits such as paid parental leave “may be more psychologically appealing” than a raise. Some of the larger employers that have recently increased paid family leave include:
- Cisco – Effective November 2017, their parental leave policy is gender-neutral and pays new parents for 13 weeks off, a change from the original policy which only offered four weeks just for new mothers. The change also includes unlimited PTO for appointments.
- Lowe’s – Effective February 2018, they will offer 10 weeks of paid maternity leave and two weeks paid parental leave, plus an adoption assistance benefit of up to $5,000. Previously, Lowe's offered no paid leave for new parents.
- Whirlpool – Headquartered in Michigan, Whirlpool announced in January 2018 that new mothers would be getting an additional four weeks paid leave at 100% to bring the total to 12 weeks paid leave. New fathers now get four weeks at 100% pay, as do domestic partners and adoptive parents.
- Walmart – Effective January 2018, they began offering full-time U.S. employees 10 weeks paid maternity leave and six weeks paid parental leave. Previously, Walmart gave salaried birth-mom employees six weeks partially paid leave while non-birthing employees did not receive any paid leave.
- TIAA – Effective January 2018, the organization changed their parental-leave policy to be gender-neutral. All full- and part-time employees have access to 16 weeks of fully paid leave to be with their child after birth, adoption, or after a child is placed with them for foster care. Before 2018, TIAA birth moms received 12 weeks of paid leave, while dads and adoptive parents received four weeks of paid leave.
- IBM – They have one of the most generous paid leave polices. In the fall of 2017, the organization increased their paid maternity leave to new birth mothers from a maximum of 14 weeks to 20 weeks. Fathers, partners, and adoptive parents receive 12 paid weeks off which is double the previous benefit of six. Parents have up to a year to take the leave, with extra flexibility for scheduling additional time off for employees whose children were born months ago.
While many employers have increased their paid parental leave programs, the Gates Foundation recently made news by slashing their parental leave program in half citing “unintended consequences.” In late 2015, The Bill and Melinda Gates Foundation increased their paid parental leave program from 16 weeks to a whopping 52 week paid parental leave for their employees. After implementing the program, the Gates Foundation discovered that providing coverage for employees out on a leave of absence that lasted a year was creating too much disruption to the organization.
According to Steven Rice, the foundation’s Chief Human Resources Officer, “Backfill positions had a ripple effect across the organization, in some cases extending two or three layers deep. While some backfills are hired externally, a large percentage are internal. Once we backfilled the role of an employee going on leave, we often needed to find a backfill for the backfill. On one team, 50% of the staff was either on leave or staffed by those in backfill positions, making the regular work of the foundation far more difficult than expected.”
Starting in 2020 the foundation is cutting their current paid parental leave program in half and will be giving employees access to six months of paid parental leave instead. It will also be adding a new benefit for parents which includes a $20,000 taxable stipend to help with child care costs and other family needs when they return to work. While the Gates Foundation’s paid leave policy is certainly an outlier in terms of the length of paid leave, it does illustrate the concerns employers have when considering paid parental leave programs.
While the cost of providing paid leave may seem out of reach for many employers, the positive effects of reducing turnover, increasing loyalty and engagement, and helping to attract top talent may make this a benefit worth considering.
Sources: Working Mother 6/29/2018, Employee Benefit News 2/6/2019, Employee Benefit News 6/22/2019, Bloomberg 6/28/2018