This Is Why Employers Are Rethinking Their Paid Leave Programs

By: | July 11, 2019

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.

As employers look for ways to retain and recruit top talent, employees are looking for more than the typical benefits (health, dental and vision insurance) offered by many employers.

They want a good wage and flexible time off that allows them to balance work and family.

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Connecticut, which recently passed the most generous paid family leave law in the country, has now been added to the list of states that mandate paid time off for new parents and caregivers. It has joined New York and New Jersey in offering the benefit, effectively making the New York metropolitan area — the most populous in the country —an attractive paid family leave zone for new parents.

Private employers also continue to adopt and expand paid medical and parental leave programs.

Sweetgreen, the Washington, D.C.-based salad chain that is rapidly expanding in New York, California and other states, recently announced five months of paid parental leave. This move is noteworthy because this kind of leave is unusual in the highly-competitive quick-service restaurant industry, which has historically been characterized by high turnover and minimal benefits.

Hewlett Packard Enterprise, Advance Financial and Bloomberg are just a few of the other companies that have expanded paid parental leave programs in recent months.

And then there are Maine and Nevada.

Maine’s governor recently signed “An Act Authorizing Earned Employee Leave,” a title reflecting its mandate that covered employers provide paid leave to be used not just for illness but for any reason. Starting in 2021, any employer that employs more than 10 employees for more than 120 days in any calendar year must provide paid leave. Employees are entitled to earn at least one hour of paid leave for every 40 hours worked, up to a total of 40 hours per year.

Soon after Maine acted, Nevada’s governor signed a similar paid leave law. Starting on Jan. 1, 2020, employers with 50 or more employees mush provide each employee with “at least 0.01923 hours of paid leave for each hour of work performed” in a “benefit year,” which the bill defines simply as “a 365-day period.”

There are numerous provisions and exemptions. But the key point is that, like Maine, employees can use leave for “any reason.” This is a a big change in the paid leave landscape, and one which advocates will no doubt be pushing in other states.

Clearly, ideas about the importance of paid leave, common in other advanced industrialized economies, have taken root in parts of the U.S., with more looking to follow suit. So what’s driving this shift?

Why There’s an Increase in Demand for Paid Leave 

Like any change of this kind, mandated leave didn’t just appear on the scene. Activists have been pushing for it for decades. The FMLA, passed in 1993, was the first achievement and set the stage for what has followed.

The second factor behind paid leave is changes in attitudes and expectations — especially among younger employees. Employees will still work hard, but more than ever, they want to balance their work commitments with their personal and family obligations.

Smart employers know that employee engagement goes far beyond “showing up for work” and “getting things done.” Creativity, flexibility and dedication to a mission are factors that help drive competitiveness in today’s economy.  Management structures and processes that encourage those qualities can be very satisfying for employees.

But when there is a high level of engagement, in which employees “give their all” and identify with the success of an organization, there can also be stress. Employers must proactively help employees balance their multiple commitments to keep healthy, goal-driven stress from turning into something more serious.

Paid family leave is a central piece of this balancing act.

Finally, it’s undeniable that the acceleration in mandated and voluntary leave is a result of the current economic climate. The labor market is extremely tight. Attracting and retaining qualified employees has become a major employer goal. But with persistently low inflation, most companies still do not have a lot of pricing power. Thoughtful leave programs that meet employees’ pressing needs and desires can be a cost-effective way to remain competitive.

Reviewing Existing Employee Benefits

Leave mandates have intensified the need to be thoughtful. If your competitors must provide paid leave by law, how do you differentiate your program? Or, on the other hand, what if you operate in a sector that makes it difficult to offer a robust program? How do you compete with employers that do?

That’s where leave program nuances can make a difference. Leave for both parents, a more expansive definition of family, and more income replacement are all program specifics that can make leave programs tailored and more attractive to particular workforces.

Employee engagement can also be improved through other benefits. Paid gym and other memberships communicate that employers care about employee wellness and the ability to enjoy their free time.

Financial wellness and emergency savings programs can help address a major source of workplace and personal stress. Elder and child care needs are another demand impacting the workforce, and it is a wise employer who seeks ways to provide resources that addresses these needs.

Mental health programs can play a large role both in assisting employees with the stresses of everyday life and communicating that an employer cares about worker well-being on and off the job.

Even pet care leave is now in the mix.

Catching the Social/Economic Train

What it comes down to is nuances and being attuned to your particular workforce.

Good management is the place to start. This includes training in the basic elements of the FMLA, the ADA, and other federal and state laws that protect employee leave and other employment rights.

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The human element is increasingly augmented by data analytics tools to pinpoint both positive and negative trends and help shape benefits programs to address them. The result is tailored programs that increase the likelihood of hiring the right talent and minimizing the risk of losing top talent to competitors.

The U.S. has long glorified both work and family life, but these concepts have often been narrowly defined and exist in silos.

Public and private policy has done little to make actual work life and changing family life mutually reinforcing. Paid employee leave is part of a broad-based movement to address that. Paid leave is more than just an employee benefit; it’s where law and business practices catch up with decades of social and economic change.

And since those changes have been so broad and deep, it’s a safe bet that the new laws are only stops along the journey.

Paid leave has a long way to go in this country, but we’re on the way. &

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The R&I Editorial Team can be reached at [email protected]