THE BLOG
10/20/2014 12:01 pm ET Updated Dec 06, 2017

American Business Should Take the Lead on Paid Parental Leave

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The state of parental leave in the U.S. sucks. As the chart below shows (courtesy of thinkprogress.org), the U.S. is one of only three countries (the other two are Oman and Papua New Guinea) to not mandate some level of paid parental leave at the federal level.

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It's time for us to close that gap, and businesses specifically should realize the power they have to provide fair and equal leave for their employees. As we at change.org announce 18 weeks of fully-paid leave for all parents, the challenge to other U.S. companies is this: business leaders should step up and offer paid parental leave -- for all parents -- at least at the FMLA minimum of 12 weeks.

The 1993 Family and Medical Leave Act passed by President Clinton provides 12 weeks of job protection so parents can take time off for the birth of a child -- but no guaranteed pay in that timeframe leaves expectant parents in a weird limbo. On top of this low baseline, a few states (CA, RI, NJ) have passed legislation to offer some paid parental leave, but even in those states, there is still a looming shortfall: there is no guarantee new parents will be "kept whole" while on leave. In some cases, employees are only paid 50% of their annual salary, forcing parents to consider how much leave they can really take, and if one parent should take more than the other.

Far from more U.S. companies making up this shortfall, since 2008 employers have become significantly less likely to provide full pay during maternity leave. Furthermore, only 14% of spouses/partners receive any portion of paid time off following the birth of their child (down from 16% in 2008).

In many instances, this trade-off between taking time off or getting paid will perpetuate the trend that women take more leave and therefore the problems they face in the workplace after having children.

The challenge for CEO's and HR leaders is deciding whether to wait for the government to mandate full pay for parental leave, or to lead on leave themselves. Should your employees be penalized with reduced pay for taking protected parental leave? From both a practical and emotional level, I believe the answer is no. It's time for U.S. companies to set policies that do right by their employees and reflect the evolving notion of family.

Why We Decided to #ChangeLeave

When I started at change.org in June, there were two compelling trends swirling around the tech industry: 1) a number of stories were emerging around company self-disclosure of diversity metrics and how women, in particular, are treated in the industry; and 2) U.S. tech companies were making a push to provide more generous parental leave benefits amidst stagnant progress at the political level.

After internal discussions on each issues, we decided that we could make a real difference with a new parental leave policy that ensures full pay for all parents during the 12 weeks of federally protected leave and then for 6 additional weeks.

We firmly believed that an inclusive and equal policy for paid parental leave would enable a more successful company. One that tangibly supported families. But first, we had to assess the likely financial and organizational impact of making that decision:

Cost (Real vs. Theoretical vs. Opportunity)

Every company asking the question about whether to "foot the bill" for protected leave will first ask themselves how much it will cost them. We started with some basic assumptions:

Real Costs

If, as a company, you subscribe to the basic sentiment of FMLA and simply say that someone's leave is "unpaid" and they need to use accrued vacation/PTO in order fund their leave, then the company recoups that budgeted opex (the individual's salary) and burns off liability cost (the accrued vacation/PTO) at the same time. In this scenario, the individual is being penalized.

We looked at this closely and ran some hypothetical assessments on how many positions we would really need to temporarily backfill. The number was low.

For a company composed of a mixture of operational, professional, and senior team members, only a fraction of your staff would be temporarily backfilled while on leave. One estimate is between 25% on the low-end to 50% on the high-end. Senior team members and professional staff, where expertise and significant decision making responsibility are centralized, would rarely be backfilled while on a parental leave. And these roles are typically going to be the higher cost roles. Operational roles would likely be backfilled while on leave but the cost assumptions for these backfills are much lower.

To put all this into perspective: the current annual birthrate for childbearing adults in the U.S. is about 6% (and dropping each year). Thats a mere 6% of your total staff population that would potentially be seeking parental leave each year.

Theoretical Costs

But what about the theoretical costs? For revenue generating roles, does the company lose out because the Account Executive is not generating revenue during that time you're paying them to be on leave? Or does the product feature assigned to the Engineer suffer because they are not here? The reality of this theoretical question is that the work does not simply vanish. Accounts do not simply go untended and R&D work rarely outright stops because a professional role is vacated. Instead, the likelihood is that the work is temporarily redistributed.

Opportunity Costs

The last question to ask is about the cost of not keeping your staff whole while on parental leave. In other words, if employees are forced to come back early because they cannot afford to take too much unpaid leave, is the employee fully engaged at work or are they distracted and resentful? In short, our realization was that we did not want a team member to have to make this tradeoff. Just to emphasize the obvious here: the first few months after the arrival of a child is both an important and stressful time for parents, and a period where they should be permitted to focus on their newborn. Indeed, there is a growing body of research that shows not being able to take the leave has detrimental effects -- both for the parent and the child.

So, if you assume that the theoretical and opportunity costs offset each other, it boils down to backfilling a fraction of positions (certainly under 6%) for a few months each year. And in some states -- including California -- the individual can even recoup part of their salary so making them whole would cost even less. In other words, you would only be covering the part of their salary that they can't recoup from the government.

Policy Blueprint

We're a small company with just ~200 employees globally, but we believe it's better to be on the higher side of paid parental leave.

A simple blueprint for FMLA-covered companies (roughly businesses with more than 50 employees) is to provide 12-weeks of fully-paid parental leave as your "global floor," on an equal basis for all parents, recognizing that some staff outside the U.S. will already be entitled to more than that. Have a mantra that your parents should not be "penalized" - with reduced pay, burned PTO, full benefit premiums etc. -- for taking the protected leave afforded to them.

Take Action

There's no telling when we'll see mandated paid leave at the state or federal level, so if you don't already have a policy that ensures full pay for protected parental leave, your choice is to wait or to be on the leading edge. Your opportunity is to take tangible action to value the role of parents at your company. We strongly believe the ROI is in your favor.

If you have any questions, feel free to reach out to me at changeleave@change.org.

Join us in offering paid and equal parental leave. It's time to #ChangeLeave.