Paid Leave Benefits: Policy Changes and Private-Sector Trends

Paid Leave Benefits: Policy Changes and Private-Sector Trends

There’s a move afoot among legislators on the national, state, and local levels to require companies to provide a minimum amount of paid leave.  President Obama is a vocal advocate of the policy, and statehouses and city councils, like those in Maryland and the District of Columbia, are debating the costs and benefits of legally requiring businesses to adopt specific leave policies.  Meanwhile, some private-sector businesses are evaluating their workforce and cultures and deciding to offer unlimited time off to employees without government prodding.

Government  Regulation of Leave Policies

Since adoption of the Family and Medical Leave Act in 1993, businesses with 50 or more employees have had an obligation to provide unpaid leave to employees in certain circumstances (e.g., birth of a child, adoption, illness, caring for a sick family member).  But, many feel it’s not enough and point to the United States as the only advanced economy with no mandated paid-leave requirements. The proponents of required paid leave seem to have some wind in their sails.

In last year’s State of the Union address, President Obama advocated for the Healthy Families Act that would provide seven paid sick days to workers in companies with 15 or more employees. He also urged Congress to mandate six weeks of paid parental leave to American workers. Subsequently, the Healthy Families Act was introduced in both the U.S. House and Senate.

Some state and local governments aren’t waiting for a national policy to be enacted.  Four states, 20 cities and one county have paid sick-time laws on the books, according to A Better Balance legal center, and many more are reviewing their laws. There are a couple of examples close to home.  The District of Columbia is currently working hard to negotiate a Universal Paid Leave Act to give workers up to 16 weeks of paid leave.  In Maryland, legislators are pursuing a bill to require companies with more than nine employees to provide paid sick leave. However, increasing the cost of doing business by adding these requirements is making some uneasy.

What is the Private Sector Doing?

Most Americans sympathize with the plight of a worker who may lose pay or job security in order  to take care of themselves or family members in need.  But, according to the Bureau of Labor Statistics (BLS), most American workers do have paid leave options.  The 2015 BLS Employee Benefits Survey reveals that among private sector workers, 61% receive paid sick leave, 76% receive paid vacation time, and 77% receive paid holiday leave.  Paid family-leave benefits are fewer, offered to only12 percent of private-sector workers.  Across the board, these percentages are higher for full-time workers.  Higher-paid workers also generally have better benefits.

Some employers are reevaluating their leave benefits in light of the way their workforce operates and eschewing the traditional model of leave in favor of a more liberal policy that offers unlimited paid leave, sometimes referred to as “discretionary time off.”   These companies are seeking to foster trust and responsibility in their employees letting them take whatever time they need as long as they get their jobs done.  So far, only 1-2% of companies are going this route, but the idea has fairly broad appeal with both younger companies and more established businesses adopting these policies.

Unlimited Paid Leave Policies– Pros and Cons

Some employers may think offering unlimited paid leave to employees is crazy talk, but many who have implemented the policy are pleased with the results. Generally, the consensus is a company has to have the right culture to support it — one where there is already a high level of trust and accountability among employees, their colleagues, and their managers.

When it works well, unlimited paid leave has several benefits for both employer and employee:

  • Workers can customize leave to meet their lifestyle needs.
  • Employee morale and work-life balance improves.
  • Employers have a good recruiting and retention tool.
  • Companies don’t have the administrative burden of tracking leave.
  • Companies don’t have to pay out for unused leave.

Again, the policy isn’t for everyone and there are some pitfalls.

  • Without guidance of what’s appropriate, employees may take less time off for fear of being seen as slacking or abusing the policy.
  • If less leave is the result, the policy ultimately erodes benefits in the workplace.
  • Without clear work expectations of employees, it’s not clear if they are, in fact, getting their work done in a more flexible environment and businesses may suffer.

Whether the government mandates specific leave policies or employers make their own adjustments to fit their workforce demands and needs, it appears change is coming for how paid-leave benefits are offered and structured.

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