Besides the adoption of remote and hybrid work schedules, the approaches your peers are taking with paid leave benefits for their employees seem to be getting more flexible as well.
According to a recent leave programs survey conducted by Mercer, employees are looking for benefits that support their needs and obligations outside of work. As a result, companies are looking for new ways to update their paid leave programs to provide time off for reasons that may not previously have been accepted for granting time off.
For example, the 2022 Employee Benefits Report from the Society for Human Resource Management (SHRM) found one in five employers offer paid mental health days above and beyond regular sick leave.
A well-designed leave policy that optimizes employees’ overall well-being can be a competitive advantage in today’s highly competitive labor market. It shows current and prospective employees that you’re paying attention to suggestions likely to make them healthier, happier and more productive in their jobs.
Paid leave trends
The Mercer survey offered some ideas for beefing up your Employee Value Proposition, or all the benefits offered to employees every day they are employed.
Other than the standard vacation, sick time and personal leave (e.g., bereavement, religious holidays), the top types of paid time off being offered by employers are:
- Voting leave (59%). Laws regulating whether employers can grant days off for voting vary by state.
- Volunteer leave (43%). Granting paid leave for employees to make a difference with charitable service organizations can be included in your ESG portfolio.
- Caregiver/dependent leave (39%). According to AARP, California, Connecticut, Massachusetts, New Jersey, New York, Rhode Island, Washington state and Washington D.C. have paid family caregiver leave laws on the books. Colorado, Delaware, Maryland and Oregon have laws going into effect between 2023 and 2026.
- Foster care leave beyond what’s required by the Family and Medical Leave Act (FMLA) (24%), and
- Extreme weather leave (23%). Under the Fair Labor Standards Act (FLSA), employers aren’t required to pay nonexempt employees who are unable to work due to inclement weather.
Common types of time off the respondents said they were considering for their future paid leave policies include miscarriage leave (beyond what’s covered under FMLA), mental health days and surrogacy leave.
A proposed federal Support Through Loss Act, which would’ve provided at least three days of paid leave to workers experiencing miscarriage, stalled in Congress last year.
Survey data also revealed that 18% are thinking about an unlimited leave policy, where employees can take as many days off per year as needed.
But because paid leave programs have a financial, administrative and operational impact on your organization, it’s important to ensure that time-off policy changes won’t hurt the company in the process.
Budget, compliance considerations
When calculating the costs of adding a new type of paid leave, you’ll need to determine the exact leave pay rate for nonexempt employees. Will the leave be valued at the rate of pay in effect at the time the leave is earned, or the current rate of pay when the leave is used?
Don’t forget there may be additional costs, such as overtime pay for other employees working to cover for an absent employee.
If an employee leaves or is terminated, will the unused leave benefit time be paid out to him or her? If state law doesn’t require it, it’s a good idea to spell out in your written company policy what happens to that unused leave. In some states, employers have the discretion to determine the circumstances when employees will be paid for unused leave at separation.
And if you’re adding paid leave benefits to be more inclusive to different groups of people, it’s crucial that your new policy doesn’t end up being discriminatory and that it’s in compliance with federal and state laws.
Avoiding productivity issues
So that there are no operations hiccups, you’ll need to determine what limits or restrictions will be placed on paid leave time. For example, will you need to stipulate certain periods when employees aren’t permitted to take paid leave, or a deadline when the paid leave must be used by?
Also, with a new type of time off available to employees, managers may find themselves needing more time to prepare for absences. It’s a good idea to huddle up with HR to ask if there should be new procedures for requesting paid leave.
Trending down
Although the SHRM survey found that leave benefits were tied with retirement benefits as the No. 2 most important employee benefit (second only to health care), employers seem to be dialing back on expanded paid leave for new parents since resuming normal operations.
In 2020, 53% of respondents were offering maternity leave beyond what’s required by law. That’s since dropped to 35%. Paid paternity leave offered by 44% of companies two years ago is now offered by just 27%.
Paid adoption leave was reported by 28% of participants, compared to 36% back in 2020.
