Momentum for Paid Family Leave Benefits Is Growing. So Why Are They Still Underutilized?

By: | August 21, 2022

Terri L. Rhodes is CEO of the Disability Management Employer Coalition. Terri was an Absence and Disability Management Consultant for Mercer, and also served as Director of Absence and Disability for Health Net and Corporate IDM Program Manager for Abbott Laboratories.

Our world has changed dramatically since 1993, when the Family and Medical Leave Act (FMLA) ensured that some employees had a federally protected right to take unpaid, job-protected leave for their own and/or their family members’ medical reasons.

There are a lot of caveats (or limitations) to the FMLA in terms of eligibility, how family is defined, and what medical needs are covered. And since employees rely on paychecks, it is still difficult for most people to take unpaid leave even when it is available.

Today we see clear demand and momentum for expanding access to this type of leave with paid family leave (PFL) and paid family and medical leave (PFML) laws.

More than 30 states have passed bills relating to PFL and PFML in some way, shape, or form; 10 states have enacted programs; and three have passed laws that are not yet effective. Delaware was the most recent state to join the pack on May 10.

Practical Realities

In addition to statutory PFML leaves, integrated absence management (IAM) professionals must consider state FMLA, whether a leave request qualifies for coverage under the Americans with Disabilities Act, and if or how employer-sponsored leaves work in tandem.

We still can’t rule out a federal PFML law (though it seems increasingly unlikely it will be any time soon), but don’t expect it to override state legislation, which could make things even more complicated if and when it happens.

In addition to monitoring and communicating statutory PFL and PFML leaves (plus differences in programs for multi-state employers), IAM professionals must consider equity and fairness (perceived and real) issues across employee populations.

The relatively new patchwork of these laws creates or exacerbates unintentional disparities in the amount of pay, eligibility, definition of family members, and length of leave just to name a few.

Within companies, there are disparities with which employees have access to leave, an issue we discussed during the 2022 DMEC FMLA/ADA Employer Compliance Conference in March when speakers noted that one in five employees experiences a benefits shortfall.

To prevent that shortfall, IAM professionals must not only assess equity and fairness for salaried and hourly employees with their leave programs, but they also need to consider how the information is communicated so employees understand what is available to them.

Transparency is key here. In 2021, 40% of respondents to the DMEC pulse survey said the new PFML laws had raised equity concerns but hadn’t heard specific complaints. It’s important to get out in front of this issue before it affects employee morale.

Sharing Perspectives

We received some helpful perspectives on how employers are adjusting to new PFL and PFML laws during the “Employers See Opportunities Amid Waves of PFL and PFML” episode of Absence Management Perspectives: A DMEC Podcast with Regina Stringer, director, Integrated Absence Management, Walmart; and Jessica Bolar, product manager, The Standard.

It was interesting to hear the nuances to these laws that IAM professionals track, communicate, and implement since they must also consider how the laws complement short-term disability (STD) and other leaves that can run concurrently.

Some insurance carriers are combining STD, which doesn’t have a family component, with PFL to provide a competitive edge to employers in an increasingly competitive employment market.

The pace for new legislation has been fast and furious. “It’s been all paid family and medical leave all the time since 2018,” said a subject matter expert during a recent DMEC webinar. And we don’t expect that to change.

The 2021 DMEC Paid Family and Medical Leave Pulse Survey shows that 81% of respondents do business in states with statutory PFML laws, and 73% believe PFML should be an employee benefit.

For context, 34% of employers offer PFL, and less than 30% of American workers have access to it.

A Holistic Perspective

It was encouraging to hear our podcast guests say that employers of all sizes are using statutory PFL and PFML laws as an opportunity to think about how company leave policies align with their mission, vision, and value statements. In other words, they’re questioning whether leave policies (and benefits overall) align with and represent cultural goals.

We discussed how employees are encouraged (or discouraged) to take available leave. One example: Do they have to burn accrued vacation and sick time before accessing leave benefits? And if so, does that reflect an organization that supports employee well-being? And if not, will that influence an employee’s decision to join or stay with an employer?

Some discussions on LinkedIn and other social media channels suggest it does. And considering the difficult employment market and the cost of recruitment, there is a business case for being generous.

However, only 10% of respondents to the DMEC pulse survey said their PFML programs were more robust than state programs; 42% have a hybrid approach and offer a richer benefit than required; and others meet the threshold.

This is useful information to have especially as I see an increasing number of employers developing family friendly, non-statutory, paid leaves such as parental leave, which is increasingly common, according to the 2021 DMEC Employer Leave Management Survey. Some employers offer one to three months, and a portion of that time is paid at 100% of an employee’s salary.

In addition to recruitment and retention benefits, PFL offers economic benefits as noted recently by the Joint Economic Committee for the U.S. Congress, including improved business productivity and economic growth.

All in all, look for more expansion from states and consider your organization’s plan moving forward. &

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