Broad paid parental leave policies started as a trend in the high-tech sector and have expanded significantly throughout the United States as part of an overall movement toward family-friendly benefits. Companies in all industries — professional services (Deloitte, Ernst & Young), food & beverage (Coca-Cola), finance (Fidelity), hospitality (Hilton) — have recently announced enhancements to their parental leave programs, and some studies show policies have increased about 200% between 2009 and 2014.

With a number of reasons why companies are expanding leave — including to attract and retain top talent, align policies with company values and create a more equitable work environment — many more employers are expected to follow suit. However, what makes for a sound practice can be complicated to implement. Before employers undertake any desired parental leave enhancement, they must address four key questions to ensure success.

1. How to name the leave. Is it maternity leave? Paternity leave? Parental leave?

The U.S. Equal Employment Opportunity Commission’s Enforcement Guidance on Pregnancy Discrimination and Related Issues (Title VII), which prohibits discrimination based on gender, has opened the door for lawsuits alleging that certain paid parental leave programs that do not offer equal time off policies for both parents are discriminatory.

Per Title VII, “employers should carefully distinguish between leave related to any physical limitations imposed by pregnancy or childbirth (described … as pregnancy-related medical leave) and leave for purposes of bonding with a child and/or providing care for a child (described … as parental leave).”

In other words, companies must name leave carefully and specifically to avoid legal disputes.

2. How to pay for and administer the leave. Is it a stand-alone leave policy, short term disability (STD) or a combination?

There’s a growing understanding among employees, and now employers, that birth mothers do not consider a routine pregnancy and childbirth as a “disability.” In response, some employers are taking a closer look at their disability plans, specifically their treatment of claims for pregnancy and childbirth, and opting to:

Take pre- and post-partum maternity claims out of their STD plans, although they still pay a “disability type” benefit to the employee outside of their traditional STD plan.

Increase the payment amounts for STD maternity claims (often paying 100% income replacement for six or eight weeks – or even longer) even though the STD pays a lesser benefit percentage for non-maternity claims.

Create a combination of the above. Take the maternity benefit out of the disability plan and make it entirely separate, or create a separate class for birth mothers within the STD plan to provide a richer benefit to new mothers.

3. How to implement leave across different workforces and different locations. What is the company policy? How does it comply and/or align with state and municipal mandates?

Currently, four states mandate paid parental leave (California, New Jersey, New York (2018) and Rhode Island), as do many other cities and municipalities. It is anticipated that this legislative trend will continue, as President Donald Trump has pledged to implement some form of national paid family leave.

Thus, employers should comply with the laws in the cities and states in which they operate; offering employees in those states the leave as mandated by the municipality in which they work. Employers should also consider the parity of their benefits if they operate in locations that mandate paid leave as well as locations that do not.

4. How to create an inclusive policy. Can leave be open to all employees, not just new parents?

Employers have made dramatic steps over the past few years in recognizing the bonding needs of new parents with their children and helping to bridge the gap of parental leave policies in the United States with most other countries around the world.

This movement toward more family-friendly workplace policies has raised the inevitable question of paid leave to care for other family members, not just children. Many believe that a broader paid leave for specific family care is a practice whose time is coming, and companies may look at designing a more encompassing approach.

Benefits leaders should consult with internal partners, including legal resources, to consider whether a parental leave program or a broader family leave program is the most appropriate approach for the organization, both culturally and financially.

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Patricia Purdy

Patricia Purdy

Patricia Purdy is Pacific Resources’ practice lead for specialty benefits, including life, disability, dental, absence and productivity.