Can credit unions keep shirking paid parental leave benefits?

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Back in 1983, Pat Wesenberg was a teller at Central City Credit Union when she gave birth to her first child. She didn’t reap the benefits of paid parental leave – not because she didn’t want to, but because they didn’t exist.

“[B]ack then there was no paid maternity benefit and you were really expected to come back in six weeks,” said Wesenberg, who is now the CEO and president of Simplicity Credit Union in Marshfield, Wis., which was formerly Central City. “[Simplicity was] a lot smaller of an organization back then, but we had no lactation room. So if you were a breastfeeding mom back then, you had to pump in the restroom.”

Thirty-six years later, the $264 million-asset credit union still does not offer paid parental leave. It’s something that could eventually put Simplicity at a disadvantage in recruiting employees, Wesenberg acknowledges.

“I think [paid parental leave] is something that we really should consider,” Wesenberg said.

Though Simplicity isn’t alone in not offering paid parental leave, it is difficult to gauge how many institutions provide this benefit. There is no industry-wide data available.

For all that individual credit unions can claim about moves they have taken to be an employer of choice, paid parental leave is still not a given at credit unions. Moreover, as major corporations increasingly announce plans to beef up these offerings, credit unions may need to rethink their benefits packages.

Sixty-four percent of the 50 institutions on this year’s Best Credit Unions to Work For ranking said they provide fully or partially paid parental leave after the birth or adoption of a child. But further research revealed that a number of these institutions allow employees to take other forms of paid time off, such as sick leave or vacation days, in lieu of a separate paid parental leave program.

Instead, roughly 17 of the 50 credit unions – about 34% – on the Best Credit Unions list offer a paid leave program. Paid parental leave is defined as an employer offering staff fully paid time off that is separate from vacation or sick time.

For a rough comparison, a quarter of state and local government workers had access to paid family leave in 2018, according to the Bureau of Labor Statistics. Sixteen percent of private industry workers and 17% of civilian employees had access to this benefit, according to BLS data.

Wesenberg and the other executives interviewed for this story all represent institutions that appear on this year’s Best Credit Unions to Work For list.

Offering paid parental leave can be a great way to attract and retain talent, especially in a booming economy, experts said. But many credit unions don’t offer this benefit because of the cost and the added strain on resources from employees being gone for an extended period of time.

Employers who have boosted paid leave

Instead, some credit unions turn to other family-friendly perks to make employees happy.

“[Paid parental leave] is a piece of a benefits package that we need to have in place to help our employees to maintain a healthy work-life basis,” said Monte Berg, president and CEO of Veridian Credit Union in Waterloo, Iowa. “We’re all competing for good employees.”

Difficulties in offering paid parental leave

Access to parental paid time off in the U.S. pales in comparison to the rest of the world since leave is provided through an employee’s job rather than by the government. In fact, the U.S. is the only developed country that does not require an employer to offer paid parental leave to new parents, according to the Organization for Economic Cooperation and Development. A number of countries, such as Bulgaria, Hungary, Japan, Lithuania, Latvia, Norway and Slovakia, all offer a year's worth of paid leave, the data shows.

Instead, employers in the United States must follow the Family and Medical Leave Act of 1993, which requires employers to provide employees with up to 12 weeks of unpaid leave for qualified medical and family reasons.

But the law only applies to employers with at least 50 full-time and part-time workers based within a 75-mile radius of an office location. That means that even if a company's employees based at a headquarters office qualify for FMLA, workers commuting to a smaller, remote location may not be eligible.

Because of these requirements, a large percentage of the credit union industry may not be required to even offer unpaid time through FMLA. For instance, about a quarter of credit unions have less than $10 million in assets, meaning they are small and may not meet the 50-employee rule. And small credit unions – which make up the lion’s share of the industry – are among the least likely to be able to afford any sort of paid leave offering even if they wanted to provide one.

Some employees will also have access to short-term disability benefits, whether that’s provided through the state or through a separate program from an employer. Simplicity Credit Union, for example, offers a short-term disability plan for employees who qualify, including for new mothers. Employees receive two-thirds of their pay while on leave for up to six weeks.

For those that are required to adhere to FMLA, some still don’t offer paid time off because of the perceived costs. The expense tied to a paid parental leave program would vary by institution and can be difficult to fully calculate.

For one, the employer would need to look at the employee’s salary. If a worker makes $30 an hour and takes leave for three months on a full salary, that cost is easy to calculate, said Daisy Dowling, founder and CEO of Workparent, a consulting and research firm. Institutions simply multiply the hourly rate of a fill-in over the span of 12 weeks.

But there are other factors to consider that are more subjective and harder to calculate, such as the disruption involved when someone takes leave.

Using analysis from existing family leave data, an AEI-Brookings working group looked into the financial impact of paid leave proposals broken down by state. In 2017 the group drafted a program similar to existing FMLA policy. This proposed leave plan would cost about $12.7 billion nationwide.

Still, paid leave programs might actually save some employers money. For example, the California Paid Family Leave plan offers workers up to six weeks of partial pay. A study of that program showed that California companies could save $89 million per year because of reduced employee turnover.

Other studies have noted that paid leave programs result in increased worker productivity, which naturally brings a boost in profitability.

General staffing is another important consideration. Some credit unions don’t have the capacity to prolong leave for employees because they need workers on the job.

“We are limited on [flexibility] with the type of position,” said Tony Hale, president and CEO of Texell Credit Union. “Obviously if you’re in a member-facing role, we count on you to adhere to our schedule for our retail environment but for our back-office staff, especially those who are exempt from overtime, there’s [so] much flexibility as we can afford.”

He noted that scheduling problems are worse at smaller credit unions rather than larger institutions due to more limited resources and fewer workers.

There are also hidden costs in having to train other employees to fill the void left by those on leave or pay overtime for those who have to work longer hours, said Gregory Hearing, a shareholder in the labor and employment practice group at the law firm GrayRobinson.

It can be very difficult to fill those seats and provide excellent customer service, and that can affect the bottom line in a way that’s hard to measure, Hearing added.

Because of these various factors, institutions can have “a very rich parental leave program and have it cost near $0, or offer a minimal leave and end up with a bigger number,” Dowling said. Because of that, institutions should base decisions on offering paid parental leave on factors beyond financial.

Though Texell doesn’t offer a paid parental leave plan yet, Hale said that they assess their benefits every six months. The Temple, Texas-based CU has not yet been compelled to add this benefit, but if demand for paid parental leave noticeably increases then that could change.

Instead, employees of the $389 million-asset Texell can accrue up to 400 hours of paid time off for vacation and sick leave within a year and use that after a child is born.

“I don’t know what the magic size is where it becomes easier to offer parental leave over and above a typical leave program, but I know that we’re not there yet,” Hale said.

Deterrent to hiring?

Offering parental leave benefits has become more prevalent across all industries, Dowling said. For instance, 16% of private industry workers had access to paid family leave in 2018, up 4 percentage points from 2014, according to BLS data.

Additionally, unemployment remained near record lows at 3.7% in August, according to BLS data. That has made it more difficult for some companies to hire workers.

And though some credit unions do offer paid parental leave programs, many remain noncompetitive compared with others in the financial services industry. For instance, Bank of America offers 16 weeks of paid parental leave while Credit Suisse provides 20.

Overall, the average length of full-pay parental leave is 4.1 weeks in the U.S., according to a 2016 WorldatWork survey.

Because of that, providing a robust parental leave package can be one way to hire talent in a competitive environment. Institutions that don’t offer leave may miss out on high-value employees who are able to get those benefits elsewhere, Hearing said.

“It’s seen as a bit of a marketing war,” Dowling said. “If you can say that you have a longer paid leave, you look like a more attractive employer.”

Paid parental leave isn’t on the radar yet of Arkansas Federal Credit Union in Jacksonville, Ark., said Heather Savage, senior vice president of human resources. Currently employees are allowed to share their paid time off with their coworkers who may need additional days out of the office.

So far, the $1.2 billion-asset credit union hasn’t had any candidates decline to move forward with a job due to lack of paid parental leave, but the institution is competing for talent so offering this benefit could heighten its appeal.

“I definitely think that if we make the move to add [paid parental leave], it will definitely help our recruitment strategy but I don’t think that’s something that’s keeping us from acquiring talent today,” Savage said.

Being family friendly in other ways

Instead of providing paid parental leave, some credit unions have turned to other benefits to attract employees.

“I would encourage people to not make the mistake of simply equating the number of paid weeks with overall parental support,” Dowling said.

Some credit unions have noticed parents easing back in when they return to work. For example, a new parent returning from leave may work only three days a week to lessen the shock of the transition.

“I think many people start back part-time as they introduce their child to daycare or whatever the transition is for them,” said Berg, who leads the $4.3 billion-asset Veridian Credit Union, which has offered one week of paid parental leave for roughly the past five years.

Berg noted that he understands that the employee benefits environment is swiftly changing, so the credit union reassesses its benefit offerings every two years through an annual employee engagement survey. The credit union asks its employees what benefits they would like to see added.

The credit union emphasizes flexibility for its employees’ schedules too, allowing people to telecommute when needed.

“It’s the culture we have at Veridian. We want to be able to retain our employees and we want them to be able to be with their family when they need to be with their family,” Berg said. “So there’s no specific black-and-white policy. We try to meet the needs of everybody.”

Employee retention can be a problem, however. With the increasing costs of child care, some new parents are finding it more cost effective to place their careers on hold and stay at home to care for a child.

As reported, some credit unions have also instituted policies allowing new parents to bring their babies with them to the office for a limited period of time, though that practice is not widespread across the industry.

At Atomic Credit Union in Piketon, Ohio, five employees in a department with a dozen workers recently had children. Of those five new parents, three will not return to work, according to President and CEO Tom Griffiths.

To help improve employee retention for new parents, the $336 million-asset credit union is looking into offering something similar to a health savings account for daycare expenses. Employees will be able to contribute tax-free money into this account to pay for childcare.

Atomic is also considering other ways to help. Options on the table include an on-site or off-site daycare, or perhaps a stipend.

“[A] lot of employees simply do not return because the cost of daycare outweighs the cost of work,” Griffiths said.

Even though Simplicity Credit Union doesn’t offer paid parental leave, management has added other family friendly touches. For example, the credit union’s facilities underwent major renovations three years ago. After receiving suggestions from a focus group of employees, the credit union revamped its lactation room.

Staff requested new fixtures that would allow the door to be locked from the inside, a refrigerator and comfortable chairs. Prior to the recommendation, the credit union’s lactation room had bare walls.

“I think it is one extra perk to tilt the scale for employees to go this organization,” Simplicity’s Wesenberg said. “It’s not a deal breaker, [but] I know that many organizations — both credit unions and other organizations — have a lot of problems in that area, so I think if we aren’t proactive, we will run into problems in the future.”

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