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Should You Offer Paid Family Leave Time?

Running a small business means that there are a LOT of things to keep track of. Profit margins, overhead expenses, hiring employees, and even making sure there’s toilet paper in the bathroom are often all tasks that end up falling on the boss. Add compliance to government regulations into that mix and it can be down right overwhelming.

Family leave, especially maternity leave, is a topic that’s being discussed more and more. If you try to research it, you will find family leave policies all across the board throughout American companies. As of September 2018, some of the best parental leave policies were found in the following businesses:

Spotify: 6 months paid parental leave over the course of 3 years. 18 weeks paid parental leave to any employee

Etsy: 26 week paid parental leave. The first 8 weeks must be used immediately after the birth or adoption of the child. The rest can be spaced out over 2 years.

Facebook: 4 months paid parental leave for parents of any gender

Bill & Melinda Gates Foundation: 52 weeks of paid time off during the child’s first year

[The above information was found from Glassdoor: 15 Companies With the Best Parental Leave Policies]

The specifics for each business in regard to whether the leave was only available for birth children differ, and each business also has different policies in regard to family and medical leave outside of parental leave.

While we can applaud these companies and their generous parental leave benefits, offering months of paid time may not be something your business can feasibly handle. That’s ok–you don’t have to. What exactly your family leave policy looks like is up to you and your team.

That said, there are certain things that you’re required to provide for employees in regard to parental leave. Let’s take a look at some of the regulations.

Family Leave Laws and Regulations

Family Leave Laws and Regulations

Family and Medical Leave Act (FMLA)

The Family and Medical Leave Act is a federal labor law that mandates that businesses with over 50 or more employees must provide 12 weeks of unpaid, job-protected leave to an employee for “…certain family and medical reasons.Public agencies and schools need to provide 12 weeks of unpaid, job-protected leave regardless of how many employees they have.

This means that if your business employs over 50 people, you are most likely required to provide a chunk of unpaid leave time to an employee. It is important to learn all information about FMLA in order to ensure that your business is in compliance. Learn about FMLA from the US Department of Labor here.

Pregnancy Discrimination Act

The Pregnancy Discrimination Act states, “…women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes…”

This act applies to any employer with 15 or more employees. You can read more about what this act looks like in practice here.

Americans with Disabilities Act

The Americans with Disabilities Act is also in place for businesses with greater than 15 employees. Though pregnancy itself is not considered a disability, certain pregnancy complications such as gestational diabetes and preeclampsia can be.

State Laws

The above laws are federal requirements in regard to pregnancy and parental leave policies. However, each state can have its own additional requirements. In additional to the FMLA requirements the following states require paid family leave time: California, Connecticut, Washington D.C., Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Washington.

Other states may require businesses with a number of employees fewer than 50 to provide leave time. Be sure to familiarize yourself with your own state’s requirements. Certain cities have specific regulations as well.

What You Need to Do and What You Should Do in Regard to Family Leave

What should you do in regard to family leave time?

What you need to do is outlined in the federal, state, and city requirements that apply to your business. [Please do not substitute this blog for legal or HR advice; be sure to consult with a professional.]

What you should do is up to you and your team. It will depend on a number of factors including the size of your business, the state of your business, the mission of you business, and the business’ core values. Offering paid parental leave is a very desirable benefit and can help to attract the best employees. Furthermore, a solid family leave policy is often good for company morale and can result in a greater number of employees returning to work after childbirth.

Family Leave Tax Credit

Learn about the Family Leave tax credit

More than just improving morale and attracting employees, there is another tangible benefit to offering paid leave time. As part of the Tax Cuts and Jobs Act of 2017, a two year tax credit was put into place for businesses that offer paid family leave. The credit is only for any family leave benefits paid to employees beginning January 1, 2018 through December 31, 2019. To find out if your business can receive this tax credit you can read more about it here.

Interested in learning more about tax credits available for your business? Contact us at Lumen Advisory and Finance!