What is parental leave?

Parental leave is time when parents and caregivers take time off from work to care for a child or newborn. Parental leave policies vary by country and company, so understanding the regulations and available resources can help employees receive 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  does not offer nationwide paid parental or family leave  .

Increasingly, states  are offering paid parental leave  , funded by payroll taxes paid by the employee. Individual employers may also offer paid parental leave benefits, such as maternity and paternity leave.

Some states and employers offer paid parental leave as part of a comprehensive benefits package and pay employees their full salary during their parental leave. When paid parental leave is not available, employees can take advantage of up to 12 weeks of unpaid parental leave through FMLA.

Most unpaid parental leave  falls under the Family and Medical Leave Act  (FMLA), which provides employees with unpaid, job-protected leave within the first year of a child's birth or adoption. FMLA parental leave may also apply to employees who need to care for children with serious health conditions for a long period of time.

However, FMLA is not available to every employee. It is estimated that  44% of U.S. workers  are not eligible for FMLA benefits. In such cases, employees who need parental leave have to use their paid sick and vacation time to care for their children.

Benefits of granting 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 the opportunity to take the time needed to balance family responsibilities with their careers and to strengthen family relationships.

While these policies offer many benefits to employees, they also help employers. Here are some of the benefits your organization can reap with a strong parental leave policy.

Attract top talent to your organization

There's no 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 fierce competition for the top talent they need to help them meet business goals and move initiatives forward.

91% of employees  say it’s important to them to find a job that offers paid parental, family, or medical leave beyond their regular PTO. With  40% of employees  willing to leave their job in search of better benefits, offering paid parental leave could be just the thing that attracts talent to your company.

Of course, there is a cost to doing this. However, you can look at that cost as an investment in your company's future.

Build your employer brand and value proposition

Your employee value proposition (EVP) is the total amount of value you can offer employees in exchange for their time and talent. It strengthens your employer brand, which is essentially what external 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  25% of employers  offer paid parental leave.

Additionally, it establishes 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 young Millennials in the workplace  is having an employer who genuinely cares about them.

Decrease employee turnover

Employees leave their jobs for a variety of reasons. The number of employees separating from their employers in search of better benefits, work-life balance, and personal well-being is on the rise.

In fact, Millennials are seven points more likely to change organizations than older generations for these reasons.   Research also shows that employees who receive some form of paid family leave  are more likely to return to their jobs than to find a new job or leave the workforce altogether  .

These statistics show that providing 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 cost of losing a highly skilled employee and hiring another can be up to   50 % of their annual revenue .

Promote inclusivity and promote DEI initiatives

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

Data show that providing paid family leave   increases labor market participation by six percentage points among women who become mothers in the year they give birth. Additionally, these workers are more likely to remain in the labor force five years later.

Paid family leave can also help people from historically underrepresented groups  afford the leave  . This, in turn, helps employers retain a diverse workforce and access the performance benefits that typically accompany diversity — a significant win for companies looking to advance their DEI initiatives and  foster an inclusive workplace for all  .

Support employee well-being at the workplace

Statistics show that valuing employee well-being is key to attracting top talent, especially from the younger generation. However, it's also important to understand the  costs employers incur when employees are not healthy  :

• $20 million in lost opportunity for every 10,000 struggling workers
• 15-20% of total salary is lost in turnover costs due to burnout
• Burnout causes $322 billion in lost productivity
• 75% more medical costs accrued due to preventable conditions

These costs add up over time and can certainly take a toll on an employer's bottom line. Fortunately, they can be avoided with policies like paid parental leave.

Research shows that paid parental leave  can reduce financial burdens  , reduce stress, prevent rehospitalizations, and improve overall mental health. This not only means better productivity for employers but also less financial burden.

Provide employees with a better work-life balance

Research shows that Gen Z graduates entering the workforce prioritize work-life balance. In fact, 67% believe it  is “very important” to have the flexibility to take time away from work to deal with life events and personal responsibilities.  78% consider a sustainable work-life balance 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 child, they will feel secure knowing their finances are being taken care of and will be able to prioritize family and relationships beyond the workplace.

Improve employee productivity

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

Offering a parental leave policy gives parents the freedom to meet their needs at home. When these employees return to work knowing that their personal lives are being taken care of, they may experience less stress and focus more on projects and tasks. This is a win-win for the employee, their co-workers, and the organization.

Increase happiness in the workplace

It is important for employers to value employee morale and happiness. People who are happy at the workplace are more engaged and productive, which ultimately leads to better performance.

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

When parents are able to take the time to care for their children, everyone benefits. Parents are happier, and  children reap the benefits as they grow into adulthood.  Happiness at home can also spill over into the workplace, helping to boost morale and ensure that working parents feel good about what they do both inside and outside the office.

Strengthen business performance

While many employers wonder if offering paid parental leave will have a negative impact on their budgets, the data says the opposite. A growing number of statistics indicate that overall, paid leave policies can actually strengthen business performance.

After implementing paid leave policies, businesses  may experience 4.6% higher revenues  . They may also see 6.8% higher profit levels per full-time employee. Even better, the positive performance effects are just as significant for smaller employers.

This is particularly important because the prevailing perception is that paid maternity and parental leave would be too burdensome for these employers. Paid parental leave stabilizes the workforce, increases productivity, and allows businesses to experience significant cultural and financial benefits.

Be in tune with the current candidate's emotions

Today, employees are looking for more than just a job. They want to know that their work is meaningful and they want to work for companies that are doing good in the world. Parental leave is a way to show that you care about employees for more than just their productivity.

Showcasing these values ​​is especially important for attracting younger employees to your workforce. Statistics show that  65% of Gen Z undergraduates  will refrain from even applying for a job if the company's values ​​don't match theirs. In addition, 57% of them expect their employer to take a public stance on issues that affect employees.

With these statistics in mind, offering paid parental leave is about more than just getting the most out of your employees. It’s also a chance for you to show Gen Z and your employees 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 mothers or birth mothers  can take time off for  maternity leave . Parental leave is equally available to both mothers and fathers.

Maternity leave is usually available 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 the child's birth or adoption. Some employers offer both maternity or paternity leave and parental leave, meaning a mother can take parental leave after maternity leave.

How does parental leave payment work?

Most employers allow their employees to take leave with or without pay after the birth or adoption of a child. Before taking parental leave, the employee must notify their employer and complete all the necessary paperwork. This may include setting a return-to-work date or agreeing to remain with the company for a certain period of time after the leave is complete.

Parental leave is a leave of absence from the company, which means the employee is not required to communicate with their employer or complete work during that time. If parental leave is taken under FMLA or other programs, the employee is guaranteed their job when their leave ends.

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