Parental Leave

What Is Parental Leave?

Parental leave is the time parents and caregivers take off work to care for children or a new baby. Parental leave policies vary by country and company, so understanding the regulations and available resources can help employees access benefits and employers stay compliant.

Do Employees Get Paid for Parental Leave?

Parental leave can be paid or unpaid. The United States is one of the only developed countries that doesn’t offer nationwide paid parental or family leave.

Increasingly, states are offering paid parental leave, which is funded by employee-paid payroll taxes. Individual employers can also offer paid parental leave benefits, like maternity and paternity leave.

Some states and employers provide paid parental leave as a comprehensive benefits package and pay employees their full salaries throughout their parental leave. When paid parental leave isn’t available, employees can access up to 12 weeks of unpaid parental leave through FMLA.

Most unpaid parental leaves fall under the Family and Medical Leave Act (FMLA), which provides employees with unpaid, job-protected leave within the first year of a child being born or adopted. FMLA parental leave can also apply to employees who need to care for children with serious health conditions for an extended time.

However, FMLA isn’t available to every employee. An estimated 44% of U.S. employees don’t qualify for FMLA benefits. In those cases, employees needing parental leave have to use their paid sick and vacation time to care for their children.

The Benefits of Offering Parental Leave

Parental leave extends maternity and paternity leave or gives parents time off to care for their children. The goal of parental leave is to give employees of all genders a chance to balance family responsibilities with their careers and take the needed time to strengthen family relationships.

However, while these policies have many benefits for employees, they also help employers. Here are a few of the advantages your organization can experience with a robust parental leave policy in place.

Attract Top Talent to Your Organization

There’s little doubt that businesses in the United States are facing a tough labor market. With labor shortages expected to persist for the foreseeable future, many HR leaders find themselves in stiff competition for the top talent they need to help meet business goals and move initiatives forward.

91% of employees say that it’s important to them to have a job that offers paid parental, family, or medical leave that is separate from their normal PTO. With 40% of employees willing to leave their jobs in search of better benefits, offering paid parental leave can be just the thing that attracts that talent to your company.

Of course, doing so comes with costs. However, you can view that price as an investment in your company’s future.

Build Your Employer Brand and Value Proposition

Your employee value proposition (EVP) is the total sum of what you can offer employees in exchange for their time and talents. It bolsters your employer brand, which is essentially what outside candidates think of you as an employer. Your brand and EVP are two additional tools you can use to attract and retain talent in your organization.

How does offering paid parental leave improve your employer brand and EVP? First, it helps your company stand out in the job market, as only about 25% of employers offer paid parental leave.

Additionally, it positions your company as one that cares about the well-being of its employees. This is important because research shows that the primary concern of Gen Z and younger Millennials in the workplace is having an employer who truly cares about them.

Decrease Employee Turnover

Employees leave their jobs for many reasons. The number of employees who are parting ways with their employers in search of better benefits, work-life balance, and personal wellbeing is on the rise.

In fact, millennials have shown to be seven points more willing to change organizations for these reasons than older generations. Research also shows that employees who have access to paid family leave of some sort are more likely to return to their jobs than find a new one or leave the workforce altogether.

These statistics demonstrate that offering benefits like paid parental leave can help employers stabilize and retain their workforce. This is great news for employers, especially since some experts estimate that the costs of losing a highly skilled employee and having to hire another could be as much as 50% of their annual income.

Foster Inclusivity and Bolster DEI Initiatives

Paid parental leave can help employers attract and retain all employees, but it can have a special effect on diversity in the workplace.

Statistics show that offering paid family leave increases labor market participation among women who are mothers by six percentage points in the year that they gave birth. Additionally, these employees are likely to remain in the labor force five years later.

Paid family leave can also help those from historically underrepresented groups to afford leave. This, in turn, assists employers in retaining a diverse workforce and accessing the performance benefits that typically accompany diversitya critical win for companies looking to further their DEI initiatives and foster an inclusive workplace for all.

Support Employee Wellbeing in the Workplace

Statistics show that valuing employee wellbeing is key to attracting top talent, especially from younger generations. However, it’s also important to realize that employers incur costs when employees are not well:

• $20 million in lost opportunities for every 10,000 struggling employees
• 15–20% of total payroll lost to turnover costs due to burnout
• $322 billion in lost productivity due to burnout
• 75% more medical costs accrued due to preventable conditions

These costs add up over time and can certainly impact an employer’s bottom line. Fortunately, they can be avoided with policies like paid parental leave.

Research shows that paid parental leave can lessen financial burdens, decrease stress, prevent rehospitalization, and improve overall mental health. This not only means improved productivity for employers but decreased financial burden as well.

Offer More Work-Life Balance to Employees

Research indicates that Gen Z graduates entering the workforce prioritize work-life balance. In fact, 67% believe it’s “very important” to have the flexibility to step away from work to deal with life events and personal responsibilities. 78% see having a sustainable work-life balance as essential to their definition of career success.

A generous paid parental leave policy can help you provide this work-life balance. When your employees take leave to care for a baby, they’ll have the security that comes with knowing their finances are taken care of and be able to prioritize family and relationships beyond the workplace.

Improve Employee Productivity

When parents are stressed about what is going on at home, it can negatively impact their focus at work, resulting in lower personal productivity. Unfortunately, this lack of productivity can extend to the team, too, as missed deadlines and extended projects affect overall performance and customer satisfaction.

Offering a parental leave policy gives parents the freedom to tend to their needs at home. When these employees return to work knowing their personal lives are taken care of, they can experience less stress and stay more focused on projects and tasks. It’s a win-win for the employee, their colleagues, and the organization.

Improve Workplace Happiness

It’s important for employers to value employee morale and happiness. Those who are happy in the workplace are likely to be more engaged and productive, which ultimately leads to better performance.

Unfortunately, studies show that parents in the U.S. are generally less happy than their childless counterparts. The good news is that studies also show that parental leave can help change this.

When parents are able to take time off to care for their children, everyone benefits. Parents become happier, and children benefit well into adulthood. Happiness at home can also spill over into the workplace, helping to raise morale and ensuring working parents feel good about what they do inside and outside of the office.

Strengthen Business Performance

While many employers wonder whether offering paid parental leave will negatively impact their budget, the data says otherwise. A growing number of statistics indicate that paid leave policies as a whole can actually strengthen business performance.

After implementing paid leave policies, businesses can experience 4.6% greater revenue. They can also see 6.8% greater profit levels per full-time employee. What’s even better is that the positive performance impacts are just as significant for smaller employers.

This is especially important because the prevailing sentiment is that paid maternity and parental leave would be too much of a burden for these employers to take on. Having paid parental leave stabilizes the workforce, increases productivity, and allows businesses to experience significant cultural and financial returns.

Align With Current Candidate Sentiments

In this day and age, employees are looking for more than just a job. They want to know that their work is meaningful and desire to work for companies that are doing good in the world. Parental leave is a way to showcase that you care about employees beyond what they can produce.

Showing these values is especially important for attracting younger employees to your workforce. Statistics show that 65% of Gen Z undergrads would refrain from even applying to a job if the company’s values don’t align with theirs. Additionally, 57% of them expect their employers to take a public stance on issues that impact employees.

With these figures in mind, offering paid parental leave is about more than just getting more out of your employees. It’s also your chance to show Gen Z and your workforce as a whole that you’re willing to adjust your corporate practices to show that you care.

Parental Leave vs. Maternity Leave: What’s the Difference?

Only female adoptive or birth mothers can take time off for maternity leave. Parental leave is available equally to mothers and fathers.

Maternity leave typically occurs in the weeks and months following the birth or adoption of a child, but most parental leave is available to employees within the first year of a child’s birth or adoption. Some employers offer both maternity or paternity leave and parental leave, meaning a mother could take maternity leave followed by parental leave.

How Does Parental Leave Pay Work?

Most employers allow their employees to take paid or unpaid time off after a child is born or adopted. Before taking parental leave, the employee must notify their employer and complete any required paperwork. This could include deciding on a date to return to work or agreeing to remain with the company for a certain period after the leave is complete.

Parental leave is a leave of absence from the company, meaning the employee isn’t required to communicate with their employer or complete work during that time. If taking parental leave under FMLA or other programs, the employee is guaranteed to have their job when their leave is done.

Employees who receive paid parental leave typically receive their full weekly pay for their time off, excluding overtime or bonuses.