Deloitte’s new policy drew attention because it not only gives up to 16 weeks of fully-paid family leave to employees who are new parents, but it also allows its employees to take paid family leave for broader family caregiving responsibilities, including eldercare and care for a sick spouse or child. Under the program, mothers who give birth are eligible for up to six months of paid time off when factoring in short-term disability for childbirth.
Under the federal Family and Medical Leave Act (FMLA), eligible employees are guaranteed 12 weeks of unpaid, job-protected leave during any 12-month period to bond with a newly born or adopted child, or for the employee’s own or a close family member’s serious health condition, among other reasons. A growing number of states have their own state family and medical leave and other leave-related laws, but currently only three states, California, New Jersey and Rhode Island require paid family leave. New York has passed a state paid family leave law that takes effect in January, 2018.
In states where paid family leave is not required by law, 18 percent of employers offer paid family leave benefits to their employees, according to the Society for Human Resource Management’s (SHRM’s) 2016 Employee Benefits Report. The survey also found that 21 percent of organizations offered family leave beyond the time required by federal FMLA, and 18 percent provided family leave beyond time or paid leave required by any state FMLA.
So why should employers consider offering paid family leave benefits even when they are not legally required to do so?
Getting the Competitive Edge
Calling its new program “the first of its kind for professional services,” Deloitte says that it developed the expansive paid family leave program based on employee feedback and the desire to attract and retain talented employees in a competitive hiring market.
According to a company survey, Deloitte found that 88 percent of its employees would value a broader paid leave policy to include family care beyond parental leave. In addition, according to Deloitte’s Chief Talent Officer, Mike Preston, the company’s talent strategy is “centered around our ability to create a leadership culture that is focused on the development and well-being of our professionals. Leading-edge programs for our people, reinforced by daily interactions and conversations at the team level, instill a culture of support and well-being.”
Paid parental leave has seen a boom in recent years, generally attributed to the benefits war to diversify and attract women to the workplace. See for example, the major companies that have expanded their leave programs in 2016.
In the financial services industry, Deloitte’s move to equalize access to paid family leave for both new parents and caregivers puts the firm in the lead in providing paid family leave benefits, at least for now. The company’s new policy appears to be more comprehensive and generous than leave benefits currently offered by its competitors such as PwC, KPMG, IBM, and Accenture. Competitors’ policies for paid leave for birth mothers ranges from 12 to 18 weeks, while paid leave for other primary caregivers ranges between 3 and 12 weeks. However, in the race to stay competitive and attract top talent, the title of benefits-leader is likely to change.
The Cost of Being a Leader
Paid family leave does have its costs, but they may not be as high as originally thought and the benefits may be greater. According to a report from the White House Council of Economic Advisors, in a survey of 200 HR managers, two-thirds cited family-supportive policies as the single most important factor in attracting and retaining employees. The study noted that paid leave has been shown to increase the probability that women continue in their job after having a child, rather than quitting permanently, saving employers the expense of recruiting and training additional employees.
State laws that require paid family leave finance the leave through employee payroll deductions. In New Jersey, for example, employees contribute 0.09 percent of the taxable wage base, which is the first $32,000 in covered wages earned. According to the New Jersey Department of Labor and Workforce Development, the maximum yearly deduction per employee was $29 in 2015. In California, another state that offers paid family leave financed by employee payroll deduction, employees pay an average of only $30 a year into the state’s paid family leave fund, according to statistics from the California Employment Development Department.
The impact on employers’ finances and other economic indicators appears to have been positive as well. In a survey conducted by the Center for Economic and Policy Research, the vast majority of employers responding said that the California paid family leave law has had a positive or no negative effect on profitability and performance (91 percent), productivity (89 percent), turnover (93 percent) and employee morale (99 percent).
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