Paid parental leave is a complex puzzle for employers, with challenges arising from the fragmented coverage across states, lack of uniformity, and coordination of various benefit programs. Employers often find themselves unprepared for the financial and logistical complexities associated with managing parental leave. Inspired by insights from this webinar, “Today’s messy paid parental leave landscape,” we explore the complicated paid parental leave landscape and how Parento steps in to meet the needs of employers and working parents.
From determining eligibility to calculating payroll and navigating compliance issues, the burden on HR professionals keeps growing. For a successful parental leave, two key components must be considered: Leave Management and Wage Replacement. It’s common to think of these as one leave experience, but while employees may be able to take time off with job protections under state law, it may not be partially or fully paid.
Leave management involves the logistics of planning and coordinating time away from work, posing compliance challenges for employers. Are leave entitlements being tracked, or does the leave fall under company policy? Do they continue health insurance while on leave? How are job responsibilities handled while the employee is away from work? What about transitioning back to work from leave?
Wage replacement is how the employee is getting paid while on parental leave. For those employees who have state programs or short term disability benefits to tap into for a short duration of time, there’s a lot of confusion around what pay is available, and when and how to apply - for both employers and employees.
When it comes to paid parental leave, today’s options are limited and disjointed and do not solve for real world scenarios. Remote and dispersed workforces, the coordination of benefits, and coverage for non-birthing or LGBTQ+ employees pose additional hurdles.
The first option for wage replacement is state benefit programs, which are state mandated wage replacement benefits while an employee is not working. State programs include both State Disability Insurance and Paid Family Leave (PFL) programs. As of 2024, this what the fragmented coverage looks like:
Programs are only available in California, Colorado, Connecticut, Massachusetts, New Jersey, New York, Oregon, Rhode Island, Washington, and the District of Columbia. Without a federal PFL program, states have different leave and paid leave options and requirements, creating confusion and limitations for employees and employers. While there have been some exciting updates recently, like Oregon and Colorado adding new programs, PFL alone does not meet the needs of employees.
These states show a quick snapshot of some differences such as filing before and after birth or placement, varying benefit rates and durations, and different filing processes. This fragmented paid parental leave landscape results in employees having disastrous leave experiences or choosing to forego time off completely.
For a birthing parent in states without mandated programs, there may be Short Term Disability available. This is an employer provided wage replacement benefit while an employee is considered to be “disabled” by pregnancy. Pregnancy typically accounts for 60% of all short term disability claims, but is not available for all parents. Relying on STD programs alone is discriminatory and disproportionately excludes the 70% of LGBTQ+ employees who want to be parents and are 7x more likely to adopt.
And for those who give birth, short term disability benefits are still limited to 6-8 weeks postpartum, which is nowhere near enough time. This is why 30% of women quit their jobs after having a child without paid parental leave and 25% of first-time dads in STEM fields quit within a year of having a child.
If employees do not have access to state benefit programs or short term disability, then their other options are PTO, vacation, or self-funded policies, like salary continuation. But this is expensive and unpredictable. The detailed payroll calculations required for wage replacement, like this example, are also difficult to manage.
Even though 70% of employers wanted to add or expand Paid Parental Leave in 2023, the process of getting paid on leave becomes a challenging endeavor. Each parental leave is unique, depending on the individual, their location, and the company policy, raising the expectations of employees for a positive workplace experience. This is where Parento steps in to support the needs of both employers and employees.
Parento is not just an insurance provider; it's a comprehensive paid parental leave solution for today's workforce. The holistic approach ensures affordable paid parental leave coverage, compliance, and employee support, allowing HR professionals to focus on other critical tasks while offering a highly competitive program to manage the complex puzzle of paid parental leave. Chat with sales to learn more and get started.
