The Price of a Family-Friendly Workplace
Paid family leave remains a contentious issue for employers nationwide. Although its federal future is unknown, employers are stepping up their game.
The common argument by employers against instituting a more robust paid family leave policy is its prohibitive cost. That certainly was the thinking at Bora Architects, along with fears that employees would misuse the policy.
That mindset quickly changed in 2015 for the Portland, Oregon, firm when a valued receptionist announced she was going to become a single mother. The pending birth and the possibility of losing a quality employee set off alarm bells for Amy Donohue, a principal with the firm, and Dawn Ridenour, the chief financial officer, launching them into a cost-benefit analysis. They had 65 employees at the time.
Ridenour pored over company data from the previous five years and identified all the instances in which an employee could have triggered a paid family leave policy. Donohue said she discovered the cost was reasonable. Specifically, the events she looked at fell under the Oregon Family Leave Act, which covers maternity and paternity leave, time off for adoption and foster care, and care for self, spouse, parent or child.
“It was something we could put in our budget every year,” Donohue said. “Some years we’re going to spend less, and others we might spend more. But on average it’s not a significant expense, especially compared to what it would cost to replace that person if they left. It isn’t just the Googles of the world that can afford it. Smaller companies can, too.”
The patchwork of paid family leave policies dotting the United States reveals a desire on the part of states, municipalities and businesses advocating for such programs. New York is the next state implementing paid family leave beginning Jan. 1, 2018, joining California, Rhode Island and New Jersey.
Politically, paid family and medical leave is supported by 71 percent of Republicans and 83 percent of Democrats, according to the May 2017 “Paid Family and Medical Leave” report by the AEI-Brookings Working Group on Parental Leave. The disagreement for a comprehensive federal policy lies not in the real need for the United States to adopt a solution, but in the messy details of how leave is funded, how long it lasts and who is eligible, the report states.
Although the Trump administration has not given any indication that federal paid family leave is on the horizon, first daughter Ivanka Trump has advocated for its implementation in some form, said Tracy Billows, partner at Chicago-based law practice Seyfarth Shaw.
“Whether that will ultimately come to fruition, we’ll have wait and see,” she said. “I don’t think that paid family leave on a federal level is completely off the table as we’ve sometimes seen in prior administrations.”
Meanwhile, a growing number of employers are adopting policies of their own.
Financial service company State Street Corp., which employs 33,000 people, is one of the many companies to enhance its paid family leave policy. Part of the reason the company chose to improve the policy in 2014 was to be a more attractive employer. “Our global total rewards team is constantly looking at the competitiveness of our paid leave policies,” said Mike Scannell, senior vice president and president of the State Street Foundation, the company’s charitable arm.
State Street also solicited feedback from employees through surveys and listening sessions, he said. The executive team wanted to create more channels for employees to share what’s on their minds. “A significant and consistent theme was the value of flexible work time, personal time off and the need for greater work life balance,” Scannell said.
Larger employers with deep financial resources, such as State Street, may be able to afford to offer these policies more easily, while small to midsized employers may be more sensitive to cost or temporary lack of manpower while an employee is out of the office. There are ways around these challenges, though, as Bora Architects and others show.
The structure of Bora’s policy is such that employees would not take advantage of it, according to Donohue. Employees who have been there a year get six weeks and can receive 20 percent of their salary. Employees who have been there two years get six weeks at 40 percent. And those who have been there for three years or more get the full benefit, six weeks at 60 percent of their salary. “We want to make sure people have been here a while to realize the full benefit,” Donohue said.
Even a person receiving the full benefit won’t be motivated to stay home from work longer than necessary, Donohue said, because 60 percent of one’s salary is still a challenge for a family to take on. These people would be living on a compromised salary for six weeks, and they’ll make the point to thoughtfully decide how much time to take.
While an employee is on leave, work still must run smoothly for up to six weeks. This transfer of power can go well if the company culture is supportive, according to Donohue. At Bora, where teams usually run from four to 12 people, those groups may be able to function one person short if a project is winding down. It’s also possible for them to borrow someone from a different team for a short length of time.
A supportive culture is also imperative at Change.org, said Allie Roseman, HR operations director for the petition website, which has 150 employees, 10 of whom took paid family leave in the past year. Stressing that if people are overworked, they hire a contractor. Roseman noted that taking on extra work can be a valuable learning experience.
“It’s often a very good learning opportunity for more senior employees to be able to take on some work and learn something new outside of their scope,” she said.
In 2015, Change.org began to offer 18 weeks of paid family leave for both mothers and fathers, Roseman said. The policy is flexible in that employees can take time off in one block or in smaller, staggered amounts of time, as long as the time is used within a year after the child’s birth.
Roseman took on extra work when the HR department’s most senior member, who is now the chief operating officer, went on leave to take care of his baby. She felt like she was ready to take on new duties, and some have since become her responsibility.
“I see that across the organization,” she said. “A more junior employee will take on a project that a more senior employee had when they were out on leave.” Then, she added, they have a new skill set that they’re happy with and they can contribute on a higher level.
Employers’ Attitudes and Actions
These organizations were able to make something work, but that’s not a common theme for much of the business community. The AEI-Brookings Working Group report addressed the challenges employers may face and potential solutions. The working group, comprised of a politically diverse group of individuals, discussed paid family leave and came up with a compromise policy. Although it did not satisfy everyone, it was an idea that everyone could get behind, said Isabel Sawhill, senior fellow in economic studies at the Brookings Institution.
A major idea behind the compromise was that it could not take form as an employer mandate or as something that would burden businesses with more taxes. “Even if you have a payroll tax to both employers and employees, most economists think it ends up being paid by employees because the employer could pass that along in the form of lower wages,” Sawhill said. The group decided an additional payroll tax on employees was the best option.
Despite the cost concerns of employers, the group ultimately believed it would be in employers’ best interests to offer paid leave. Research suggests that there is less turnover when a company allows paid time off. “Turnover is more disruptive and expensive than any temporary interruption,” Sawhill said.
Temporary absences or inconveniences in the workplace while an employee is on leave is something employers will have to get used to if they care about supporting parents. “It’s going to be inconvenient when an employee gets pregnant and has a baby, period, whether there’s paid time off or not,” Sawhill said.
The current paid family leave landscape, although riddled with its own contradictions, debates and tensions, is not nearly as controversial as other types of paid leave. Seyfarth’s Billows compared the current employer attitudes about paid family leave with that of paid sick leave, which confuses employers because of the variations in state laws. Acceptable reasons of use, family members covered and employee eligibility could differ widely between states, which creates an administrative nightmare for nationwide employers.
She doesn’t expect the same concern regarding paid family leave.
“Many companies are supportive of paid parental leave and they’re doing so for a number of reasons. For many clients, they’re already doing this because they know it’s an important benefit for recruiting and retaining top talent,” Billows said. “From my perspective, I don’t think there will be any backlash to paid parental leave or paid family leave.”
The voice of businesses is important in the discussion of paid family leave. Bora Architects’ Donohue met with Oregon Gov. Kate Brown to talk about paid leave policy. She, along with other business owners, discussed with the governor what the companies were doing, what had been successful, what the challenges were and what could potentially be implemented at a state level. Donohue also testified in front of the Oregon House of Representatives as a business owner who supports a statewide paid family leave policy.
“Businesses have taken this into their own hands because the governments have been slow to act,” she said. “It’s nice to see people understand this is an investment that pays off in the future.”
Andie Burjek is a Workforce associate editor. Comment below or email email@example.com.