Paid family leave is one of the most sought-after benefits among employees today, and one of the least frequently offered by employers. This “disconnect between what American workers want and what they get” is exacerbated by the fact that currently there is no federal mandate in the United States requiring paid family leave.
Currently the Family and Medical Leave Act, more commonly known as FMLA, offers workers 12 weeks of family leave to care for newborn or newly adopted children, a sick family member, or one’s own health. But not all employees are able to take advantage of this policy, and all 12 weeks of leave are unpaid. While better than nothing, FMLA alone is no longer a sustainable option for employees. This is where paid family leave comes into play.
Employers are often hesitant to incorporate paid family leave plans into their benefits packages for financial reasons. Because payroll taxes cover the cost of most paid family leave plans, all employees may have to pay slightly more in taxes each pay period should an employer implement such a policy. However, these costs are minimal and would take the burden of funding off of the employers themselves. In California, for example, where a comprehensive paid family leave program has been in place since 2002, “91% of employers saw no noticeable effect or a positive effect on profitability and performance.”¹
Another benefit to offering paid family leave is the improvement in employee retention rates. Today’s labor market is extremely tight. It’s getting more and more difficult for employers to retain skilled workers. So if companies want to hold on to the employees they do have, they might want to take a look at their benefits packages. A benefits package that includes paid family leave is an attractive one that is sure to retain current employees as well as draw in new ones.
As previously mentioned, the employers in California who offered paid family leave claim that doing so has led to either an increase or no noticeable change in profitability and performance. There was a similar effect on their employee satisfaction rates. In fact, almost 100% of employers reported “no noticeable effect or a positive effect on employee morale.“¹ Satisfied employees are more motivated at work, which leads to increased productivity and profitability. It’s a win-win for both the employee and employer.
In addition to the state of California, several other states and organizations have successfully implemented paid family leave plans:
- Connecticut lawmakers recently passed a piece of legislation that will “give private-sector Connecticut workers an employee-funded disability insurance policy”.
- Smucker’s is giving its employees 12 weeks of paid family leave in an effort to “retain and attract talent while promoting employee wellbeing.”
- Northern Illinois University now provides employees with five continuous weeks of paid leave, which is the most generous paid leave plan among the state’s public universities.
Paid family leave is popular. Employees want it as an option, and offering it is mutually beneficial to both the employer and employee. Increased profitability rates, improved worker retention rates, and increased worker satisfaction are only a few of these benefits. Plus, including paid family leave in compensation packages allows employers to retain skilled workers. Overall, paid family leave is a policy employers should seek to implement, both for their wellbeing, as well as the wellbeing of their employees.
By Kaitlyn Whiteside
1 https://fistfuloftalent.com/2019/08/paid-family-leave-is-a-no-brainer.html
2 http://cepr.net/documents/publications/paid-family-leave-1-2011.pdf
3 https://fortune.com/2019/08/15/retaining-employees-paid-family-leave/
4 https://www.middletownpress.com/middletown/article/CT-lawmakers-who-passed-family-leave-law-win-14539856.php
5 https://hrexecutive.com/smuckers-sweetens-leave-benefits-for-employees/