To Pay or Not to Pay Parental Leave?
There are no laws mandating unpaid leave to care for employee’s family members.
The Family Medical Leave Act allows employees of covered employers to take 12 weeks of unpaid leave in a 12-month period to care for a newborn or adopted child. An employee also can use the unpaid leave to take care of themselves or a family member who has a serious health condition.
Despite the protections FMLA provides, there's no U.S. statute mandating that leave time be paid to ALL employees and the financial toll that unpaid leave takes on families can be brutal. The United States Congress Joint Economic Committee reports that 25 percent of two-income families and 13 percent of single-parent families that file for bankruptcy do so after missing two or more weeks of work because they were sick or caring for an ill family member.
With that in mind, more and more companies now offer paid maternity, paternity or parental leave. Providing paid leave to take care of young or sick children ensures that employees will be able to return to their jobs.
According to the Society for Human Resource Management (SHRM), more than one in three U.S. employers offer paid maternity leave longer than the amount required by FMLA, up from one in six businesses earlier this decade. Still, as of 2017, only 15 percent of U.S. workers received paid family leave, according to the U.S. Bureau of Labor Statistics.
Also, employers who do offer parental leave don't always offer it to all their employees. World at Work, a global association for human resources management professionals and business leaders, surveyed 385 employers in 2017 and found that about 22 percent of companies offering paid leave only gave it to some workers. This is not unusual. Part-time workers typically are excluded, while middle- and upper-income workers are more likely to have access to paid leave.
Employer Benefits of Paid Leave
One reason employers offer paid leave is that it's an easy way to help retain employees without raising wages. Employees who feel appreciated are less likely to seek employment elsewhere. Plus, research shows that the cost of offering paid leave often is less expensive than paying recruiting and training costs for new employees. The Center for American Progress says that the typical median cost of turnover for most positions is 21 percent of an employee's annual salary.
Paid parental leave probably is most important to lower-wage workers — particularly those who are paid hourly — and who are less likely to be able to afford a day without pay. Working mothers, who usually are responsible for staying home with sick children and family members, benefit greatly from having paid sick leave. A 2010 Joint Economic Report (11th U.S. Congress) found that half of working mothers miss work if their child is sick compared to only 30 percent of working fathers.
Employee Benefits of Paid Leave
The biggest advantage of paid parental leave is financial security. The Federal Reserve's Survey of Consumer Finances showed that low income earners are least likely to have a savings account, and of those who make $25,000 annually, the average savings account is only $500. Employees who have to pay surprise medical bills and take unpaid time off obviously are those most susceptible to filing for bankruptcy.
In addition, employees who can afford to stay home when their child is first born help their children get a strong start in life.
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In this issue:
This Just In ... New Association Health Plan Rules Deemed "Absurd"
How to Fight the Opioid Epidemic
To Pay or Not to Pay Parental Leave?
Retirement Reform on Senate and House Agendas
Is Fitness Tracking for Better Health Worth the Risk of Losing Privacy?