The must-have employee benefit for top talent

The must-have employee benefit for top talent

Paid parental leave policies are an excellent way to enhance employee benefit offerings and support the well-being of new parents within your Company. Offering robust benefits, including parental leave, can also help support more competitive recruiting and better retention. Employees often prioritize leave and benefits offerings when considering where to work. Many companies do not offer any form of paid family leave.

How to Build a Paid Parental Leave Policy For Your Business

There are many considerations when creating a paid parental leave policy for your business. Here are the key steps to work through while building a policy that fits your organization’s needs.

Check What Laws Apply To Your Company

Knowing what parental leave laws apply to your Company and its employees is helpful. Depending on your organization type, the number of employees you have, and where your business operates various federal, state, and local parental leave laws may apply.

If you live in a state such as California, New York, or Washington with paid family leave laws in place, your paid parental leave policy will generally be crafted around the state program rather than an individually-designed, company-sponsored program. State-led programs are paid and are typically funded through payroll taxes or short-term disability insurance plans bought by employees/employers. The payments made to your employees during parental leave may come from someone other than you, the employer, who has these programs. However, you’ll still want a parental leave policy outlining what is available.

If you are not a federal employer and do not have any state or local paid family leave laws that apply to your Company, the Family and Medical Leave Act (FMLA). The FMLA is a federal law that offers eligible employees up to 12 weeks per year of job-protected unpaid leave for qualifying family and medical needs. Employees often offer paid leave policies to help supplement the FMLA. It’s not financially feasible for many American families to take 12 weeks of fully unpaid leave.

The must-have employee benefit for top talent

Decide on the Amount of Paid Time Off You Will Offer

Paid parental leave policies in the United States vary widely in terms of the length of paid leave. Employers who do offer paid parental leave usually provide anywhere from two to 12 weeks off with pay.

Also, offering a shorter paid leave period will not necessarily mean employees will take less time off. The FMLA entitles them to 12 weeks off regardless. Those who have given birth often need 6-8 weeks to recover, so consider that when deciding on the duration of paid leave offered as well.

Clarify What Portion of the Employee’s Salary the Company Will Pay During Leave

If you’re offering paid parental leave independently, consider treating it like other forms of PTO, such as vacation or sick leave, and paying out the employee’s full wages during their leave of absence. Suppose your policy applies to paid leave through a state program such as California’s Paid Family Leave program. In that case, it may cover a percentage or reduced rate instead of the total salary.

Define What You Count as a “Parent”

Parental leave typically applies to biological, adoptive, and foster parents. The policy often only includes stepparents and grandparents if they adopt or foster the child (including through kinship care). However you define it, make that clear in the policy, as people may have different definitions of parenthood.

Also, note whether you differentiate between maternity leave and paternity leave. It was common practice to have different policies for mothers and fathers, typically granting mothers more time off. However, many companies have done away with gendered parental leave policies to promote gender equality and account for same-sex couples.

Some companies have replaced gendered leave policies with terms like “primary parent” and non-primary parent.” This language is better in terms of gender equality. However, it can still be problematic as both parents are often equal partners. They share the workload of caring for a newborn, adoptee, or foster child.

Set Eligibility Requirements

Aside from the requirement that they must be parents or legal guardians welcoming a new child, you’ll also likely want to set other eligibility requirements. Decide if there will be a required length of service, employment status, or other eligibility requirements.

Some companies use the eligibility requirements set under the FMLA. For example, the employee must have worked for the employer for at least 12 months. The FMLA also states that the employee must have worked at least 1250 hours in the preceding 12 months, though employers limit paid parental leave to full-time employees.

Clarify When Employees Can Take Leave After a Qualifying Event

Employees can take FMLA leave at any time within the 12 months following a qualifying event (i.e., when the new child was born or placed with the family). Employees don’t necessarily have to take the leave in one chunk. They may request to break it up into intermittent or reduced schedule leave, subject to employer approval.

Some companies take this same approach for paid parental leave policies. While others require that it be taken all at once within a smaller time frame following the qualifying event. Be sure to clarify any limitations or specific time frames for the parental leave benefit in your policy.

Make Notice Requirements Clear (But Offer Some Flexibility)

Suppose an employee plans to take several weeks off under your paid parental leave policy. In that case, you’ll want a heads-up so that you can prepare for their absence and facilitate coverage of key responsibilities. Tell employees how much notice they need to give you.

The FMLA requires at least 30 days’ notice for foreseeable events. and paid leave typically runs concurrently with unpaid FMLA leave, so that’s a good starting point. However, you can ask for more advance notice for company-sponsored paid leave. If offering paid leave through a state program, check your state requirements.

Don’t expect employees to always stick with their planned start date for leave, but do ask them to alert you as soon as they can when plans change. For example, sometimes emergency foster placements occur, or someone goes into labor weeks ahead of their expected due date,

Sample Paid Parental Leave Policy

[Company Name] recognizes the importance of taking time off to rest, bond, and adjust after welcoming a new addition to the family. For this reason, we offer eligible full-time employees paid parental leave following the birth of a child, adoption, or new foster care placement.

Policy Scope and Definitions

This policy applies to all in-house employees at [Company Name]. This policy does not cover contractors and consultants.

For this policy, a child refers to an individual under 18 years of age for whom you are the biological parent or a primary legal guardian.

Under this policy, the term parents include biological parents of all genders, adoptive parents, and foster parents. Companies generally limit paid parental leave to parents who are the primary caregivers of the child. However, other family members such as grandparents, stepparents, aunts, and uncles may qualify if they are the child’s legal guardian and primary caregiver, and can provide supporting documentation.

Employee Eligibility

To be eligible for paid parental leave, employees must have worked for [Company] for a minimum of [required service period] in a full-time capacity by the start date of the parental leave.

Please note that verification of the qualifying event, such as the birth, adoption, or foster placement, may also be requested to verify eligibility.

Salary and Benefits

Employees will receive 100% of their base pay during the leave period. Health insurance and other employee benefits elections will also continue. Payroll deductions for health insurance premiums will be taken out on the established schedule.

Duration of Leave

Under this policy, employees are entitled to [amount] weeks of paid parental leave for family bonding. This may be taken at any time within the [time frame] following a child’s qualifying birth, adoption, or placement. Employees may take the leave all at once or intermittently.

The FMLA also entitles employees to 12 weeks of unpaid leave. Your paid parental leave must run concurrently with FMLA leave, reducing your balance of FMLA leave. If the child’s parents work for [Company Name], you may [both take the entire duration, share the leave, etc.]

Employees may take a maximum of [offered amount] paid parental leave within a 12-month period. Additional leave is unavailable for multiple births (including twins or triplets) or placements.

Notice Requirements

Employees must notify the human resources department of their intent to take paid parental leave under this policy at least [requested notice period] before the planned start of leave. Should unforeseen circumstances such as premature delivery necessitate changes to the planned leave schedule, employees must notify their direct supervisor or an HR representative as soon as feasible.

Return to Work

Upon returning to work, the employee will be appointed to the same role or an equivalent position with equivalent pay and benefits. Employees who would like to request work accommodations or flexible work schedules upon returning to work should contact human resources. If you have any questions about this policy, your eligibility, or how to request paid parental leave, please contact HR.

Paid Parental Leave Policy FAQs

Does My Business Need a Paid Parental Leave Policy?

In most states, employers are not required to offer paid family leave unless your organization is subject to the Federal Employee Paid Leave Act (FEPLA) or a state law that requires paid parental leave benefits. Having a paid parental leave policy is optional for employers.

Should Paid Parental Leave Cover Stillbirths or Miscarriages?

The FMLA and many state pregnancy leave programs do cover pregnancy loss. So it’s worth some consideration as you build your policy. Pregnancy loss is an emotionally and often physically challenging event, and employees may understandably need some time off.

There are a few different routes that companies can take when offering leave for miscarriages and stillbirths. Some classify them as part of parental leave, bereavement leave, or under separate pregnancy loss policies. Some companies also split them up, with miscarriage falling under bereavement and stillbirths falling under parental leave. The stillbirths can have a longer physical recovery time as the birthing parent still goes through the labor and delivery process.

Should Part-Time Employees Be Covered Under a Paid Family Leave Policy?

The employer may extend paid parental leave to part-time employees at their discretion, unless a government or insurance program offers the leave. Many companies only offer paid leave to full-time employees who have given birth or welcomed a new child.

Though the FMLA offers unpaid parental leave to part-time employees who worked 1250 hours during the preceding 12 months. Some employers use the FMLA eligibility requirements to determine eligibility for their paid parental leave policies.

If part-time employees are not eligible for paid leave under your company’s policy, managers should encourage them to use accrued sick leave or other PTO balances to receive payment while on parental leave.