Recently, discussions surrounding paid parental leave have gained significant traction, even making it into election campaigns, reflecting a growing recognition of its importance. However, with increasing conversations, misinformation can sometimes cloud the understanding of paid parental leave in the workplace. To help clarify some misconceptions, join us as we debunk ten common myths surrounding paid parental leave, highlighting the facts and uncovering how employers can affordably offer this competitive program. We’ll start at the top.
Companies do need to offer paid parental leave. In today’s market with the rise of family-friendly benefits and the current dynamics of the workplace paid parental leave has increasingly become an employee dealbreaker. Many companies are already using paid parental leave as a way to attract and retain talent, out-competing larger organizations.
And as more states acknowledge the imperative nature of paid leave, employee expectations for paid parental leave will continue to increase. While 70% of employers want to add or expand paid parental leave, only 27% of employees in the private sector have access. Paid leave still remains at the top of the list for employees, and will continue to be at the center of many employee negotiations and employment conversations, but the biggest barrier for many companies is funding and managing it.
The unfortunate fact is that most employers do not have any good options. Currently, there are three options available for employers, so here’s what companies may be doing now:
Do Nothing: Most companies do nothing, which leaves many working parents unable to take time with their new children. This leads to many employees quitting their jobs, and women in family-building years are disproportionately affected by the lack of a paid parental leave policy.
Private Policies or Self-Fund: Another option for companies is to rely on private policies or try to self-fund, but this is expensive and not feasible for most companies. Not only are private policies not required, they are also not equitable. Like private policies, self-funding is also a challenge to equitably extend the same paid time off to all parent employees while managing costs year over year.
You may have built policies that unintentionally create discriminatory conditions for employees. Until the policy is audited, you may be exposed to unnecessary risk. Parento is EEOC compliant, we assume that risk.
Rely on State PFL: The final option is for companies to rely on state programs like Paid Family Leave (PFL) or disability insurance (DI). Typically DI has been used for maternity leave as a proxy, but these traditional options are not enough either. Not only are they not available in every state, but about half salary for 6-8 weeks off postpartum for a birthing parent is not enough time and non-birthing parents aren’t eligible for any time under a disability policy.
Existing state mandated disability or PFL programs may run concurrently with FMLA, but this paid benefit isn’t available in all states. State disability or private STD plans only cover the birthing parents, leaving many non-birthing parents not able to take parental leave. If employees don’t have access to state benefit programs or STD, then their other options are PTO, vacation, or self-funded plans. But this is expensive and unpredictable, leading to these problems:
Inequitable policies across states create gaps in coverage: Some working parents have no access to PFL, while their coworkers in other states do. And even in states that do provide PFL (e.g. California, New York, New Jersey, Oregon, Washington, Washington DC, Rhode Island, Colorado, and Maryland), there are so many hoops for new parents to jump through. As a result of the difficult experience, many claims are denied. The Connecticut PFL program denied 30% of all claims and Massachusetts denied 20% of claims last year. These parents have to tap into PTO, sick days, or take unpaid leave - creating inequitable work policies.
Policy exclusions for LGBTQ+ and non-birthing parents: Many employers opt to use “primary” and “secondary” language in their self-funded policies. This often provides more coverage to birthing parents (e.g. moms) and can exclude LGBTQ+ parents, dads, non-birthing parents, and those who adopt or foster.
As family dynamics change, employer policies need to cover all working parents equally and equitably.
Difficulty in budgeting and no support during the leave process: PFL programs, STD programs, and self-funded policies don’t provide support for HR or employees during the leave and claims process. Employers are tasked to have expertise and support their employees with a confusing and complicated filing process, while they also can’t anticipate upcoming leaves to budget for these expenses. This is a very popular option to outsource for employers as the paid parental leave landscape is still complicated and fragmented, and up to 30% of all claims are denied.
As mentioned in Myth #3, many companies have “primary” and “secondary” caregiver language in their policies, but they’re not equal or sufficient. If companies choose to only offer paid leave to moms, these policies disproportionately impact non-birthing parents. Not offering equitable paid leave to all parents no matter their gender or identification is discriminatory and may land them in hot water. That’s why Parento has built-in EEOC compliance into policies to help insulate companies from potential risk.
Here’s a decision tree to illustrate:
Any parent that is not pregnant falls into the “non-birthing parent” category, which means they have no paid time off to tap into aside from any vacation saved up. Offering equitable paid leave is a way for companies to effectively impact organizational DEIB goals while attracting and retaining top talent. For example, 70% of LGBTQ+ employees and 7x more likely to adopt or foster, but excluded if they’re not giving birth to the child. Even if they can take protected time off under federal or state policies like the Family and Medical Leave Act (FMLA), this time is unpaid.
Offering paid parental leave is also a great way to help companies destigmatize bonding leave. The reality is that when available, working fathers are taking an average of 60 days of bonding leave. Since 2018, paid paternity leave absences have increased 183% for men. This is backed up by California’s PFL program that shows from 2022-2023, fathers accounted for 44% of all bonding claims, up 31% from the decade before. (And this is not due to the pandemic: pre-pandemic rates were up 19% over the prior decade and 24% since the program started).
So despite what historical leave data may show, or what the trends have been in the past, dads take leave too.
Implementing widespread legislation for national paid leave is not as straightforward or as close to reality as hoped. Complexities like the political landscape, economic conditions, and societal tensions continue to pose significant challenges to pushing this initiative over the finish line. Anticipated limitations for national paid leave can be better understood by examining existing Paid Family Leave (PFL) programs:
1. Program and infrastructure costs and long timelines: PFL is funded through mandatory payroll deduction, how will a national program be funded? Most of the existing state PFL programs are funded by employee contributions, so how long will it take to roll out?
2. Inequalities and disparities in coverage: There’s no indication that a national policy would offer the same protections and coverage to birthing and non birthing parents.
3. Denials and delays: Complicated PFL applications with no emphasis on user experience lead to delays and denied claims, which is the current experience for most states.
4. Program underutilization: PFL programs are underutilized due to barriers to entry, leaving companies on the hook for underreported leaves or footing the bill to improve employee experience.
5. Barriers to entry leading to disparities in access and usage: Current PFL programs are already underutilized by Black and Latinx parents due to language, complicated applications and platforms, and lack of awareness in workplaces.
As much as national paid leave has made headlines, we aren’t close enough to rely on this and companies need a solution now. Even if the new proposed budget for national paid leave goes anywhere (unlike previous efforts), it would still take about 10 years to fund.
Many companies try to manage the costs of offering paid parental leave on their own, either managing the top-up pay or just continuing salary. However, that can be costly and difficult to manage, and those salary expenses are gone. So while this route is expensive and many companies can’t afford to offer a program, Parento makes it easy and affordable to offer paid parental leave.
For less than the cost of dental, we are leveraging insurance to minimize employer risk and drive impressive results while providing financial security for working parents who go on leave. Under the policy, companies get reimbursed directly for any parental leave salary expenses so they’re able to manage costs, afford to offer paid parental leave, and even manage the absence with temporary backfilling.
The insurance premium is also tax-deductible for employers with an upfront tax deduction, making the program cost-neutral for many companies.
The Parento program offers great value for the premium, with 3 products in 1. Besides the insurance component, companies are able to offer a highly utilized EAP program with parent support and unlimited 1:1 coaching with Parent Experience, and have access to administrative support and expertise for both employee and employer through Leave Concierge.
We can quote companies with as little as 10 employees, so Parento seamlessly fits with existing packages no matter the size of the business. In fact, offering paid parental leave enables smaller companies to outcompete much larger firms for talent and benefit from increased loyalty, a reduction in preventable turnover, brand and image boost, and culture-building that leads to increased productivity. 40% of employers say workers leave their job to find a role that offers better employee benefits with 62% of businesses surveyed changed benefit offerings in 2023. This turnover often impacts SMBs because they can’t always absorb the excess work as easily as an enterprise level organization.
The Best Place for Working Parents© National Trends Report found that paid time off, maternity leave, and paternity leave all ranked as the top policies implemented for all business sizes. This tells us that all companies, no matter the size, are prioritizing these family-friendly programs.
Traditionally, policies like paid parental leave were seen as a luxury only for the high-tech industries competing for the high-value talent, but they’re table stakes for all industries now, including uncommon industries. According to The Best Place for Working Parents© National Trends Report from 2023, parental leave is a top Standout Benefit in some surprising industries like Agriculture/Forestry/Wildlife, and becoming a Standard Benefit in more and more industries such as Construction, Manufacturing, Government, Professional Services, and Environmental.
Paid parental leave has been increasing in popularity and demand, moving its way up next to healthcare and childcare as key programs. Here’s a look at the industries of Parento clients:
But as you can see, almost a quarter of our clients are state agencies, non-profits, and manufacturing. They’re not all in the technology industry or large enterprises, giving a lot of opportunity to companies looking to stand out.
The Parento program makes it easy for companies to offer paid parental leave. Parento helps companies improve their employee experience and loyalty, while offloading the complicated leave management process. Plus with a user-friendly portal for both employers and employees, companies can reduce hours of workload for the HR team - regardless of size or industry.
With Parento, when the employee takes leave, the employee remains on payroll and the company is reimbursed for that salary expense based on the policy.
Because the employee remains on payroll, there is no interruption in pay for employees and no need for an additional W-2 at the end of the year. This also provides no risk of benefit clawback for employers, making offering paid parental leave simple and affordable.
With Parento, companies do not need to wait for open-enrollment to add paid parental leave. Unlike traditional insurance plans, Parento can be added at any time of the year, not just during open-enrollment. We can quote, bind and implement the new policy within 2 weeks. The program seamlessly integrates with existing policies and offerings, which helps companies space out program roll-outs to improve success and adoption.
And on the implementation side, there’s no employee enrollment so the lift for HR teams can be as little as 2-3 hours. Once the Parento program is live, employees have access to Parent Experience and Leave Concierge, taking ongoing work off of HR and helping employees understand the options available to them under their new policy.
While there’s a clear gap in paid parental leave coverage, we recognize that paid parental leave is still a fairly newer offering for companies. By breaking down these ten misconceptions, we hope to shed light on the true significance and impact of paid parental leave policies, empowering individuals and organizations to make informed decisions and advocate for equitable practices in the realm of family support and workplace policies.
Ready to learn more about bringing Parento to your workplace? Schedule a call with our team!
