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Resource Center / Employment Laws

Setting Up Your First Parental Leave Policy

Parental leave can be a first for many small business owners. This is a quick guide on how to set up an attractive policy with best practices in mind.

The letter "J" for Justworks.
Justworks
Jun 03, 20226 minutes

As we know, employment doesn’t exist in a vacuum, and employees have lives and obligations outside of work. While most employers have time off policies in place, situations may arise where a standard time off policy isn’t enough to cover the need for an extended leave.

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One of these situations — and one that is top of mind for most employers — is when an employee becomes a new parent through birth, adoption, or foster placement.

Statutory Protections

First, employers must consider statutory protections that might be available to employees at their organization. Statutory protections might come from the Family Medical Leave Act (FMLA), pregnancy disability laws, and state leave laws. Secondly, employers should decide whether the company will offer continued pay during the period of leave.

Federal Leave Protections

The federal law that covers parental leave is the Family and Medical Leave Act (FMLA). Under the FMLA, employers with 50 or more employees are required to provide up to 12 weeks of unpaid, job-protected leave for the birth or adoption of a new child.

The federal law that covers parental leave is the Family and Medical Leave Act (FMLA).

Employees may qualify for FMLA when they work for a covered employer, have worked at least 1250 hours in the previous 12 months, and when they experience a serious medical condition or need leave to bond with a new child.

State and Local Leave Protections

Various state and local laws exist and may expand on coverage under the FMLA. Additionally, while small employers may not be covered by the FMLA, most employers in states like New York, California, Connecticut, Massachusetts, and Washington (among others) are required to offer job protected leave to employees. In addition to the job-protected leave created by the state laws, employers should also be aware that most states also provide wage replacement benefits to employees utilizing the leave.

Wage Replacement Programs

In many cases, absences outside of a paid time off policy will not be paid by an employer. Due to the unpaid nature of protected leave, various programs exist to ensure that an employee can receive income while not earning wages. The avenue an employee takes to receive wage replacement will depend on the circumstances and whether or not the leave is for their own medical condition, or to bond with a new child.

  • Short-term Disability: Short-term Disability (STD) is a private insurance program generally offered to employees for an event in which they need to take unpaid leave for their own disability or medical condition. STD benefits usually pay around 60% up to a cap and can be used in coordination with a parental policy when an eligible birthing parent needs leave for pre- or post-partum disability.

  • Statutory/State Disability: Various states have created their own temporary disability insurance programs that work similarly to Short-term Disability. Employees eligible for these programs may be able to submit a claim to the state program for wage replacement when lost wages occur due to a temporary disability. Some of the states that have these programs include (but are not limited to) New York, California, New Jersey, and Massachusetts.

  • Paid Family Leave: Paid Family Leave programs may apply to an employee’s leave of absence when the leave is to bond with a new child. The wage replacement benefits and length of time offered by these programs vary by state, but will typically start following the birth of the child and cannot be utilized at the same time as STD or state disability.

Formulate Your Own Parental Leave Policy

To stand out, many employers will offer a partial or fully-paid parental leave benefit, which will continue an employee’s pay for a designated amount of time while they’re out on leave. Offering to pay for a certain amount of time can go a long way to alleviate some stress for employees. A standard benefit offered by employers is 100% paid leave for at least 12 weeks.

Like all benefits, the more generous you are, the more likely you are to get a higher quality candidate and retain employees.

Employers can choose to be strategic when considering how they want to coordinate benefits with wage replacement programs. Deciding whether the parental leave is all unpaid, paid-in-part, or fully paid is a decision employers have to make while looking at their finances. But like all benefits, the more generous you are, the more likely you are to get a higher quality candidate and retain employees.

Drafting the Policy

Once it’s determined what type of parental policy the company would like to offer, the next step would be drafting a policy outlining the new benefit. Standard policies will outline the expectations for the leave timeframes, notice requirements, pay, and how the policy will intersect with other benefits and protections available.

The Leave of Absence

Once employers have a policy in place, they must also prepare for leave administration. It’s best for companies to establish a process that runs alongside the company policy, but also keeps compliance standards in mind. A standard leave administration process will include:

  • A request and notice process

  • A formal process to establish leave with employees (via a template letter, FMLA paperwork, etc.)

  • Process for adjusting payroll in accordance with the policy

  • A framework for tracking time used as leave under the policy

Generally, employees will need to request leave in the timeframe dictated in your policy when the leave is foreseeable. This notice will allow for an employer to plan accordingly, before an employee goes out on leave. If the leave is not foreseeable, the employee must provide notice as soon as practicable. Most employees will take some form of leave to bond with their new child, while others may prefer not to. Although employers may want to be as helpful as possible during this time, they cannot force their employees to take leave. Regardless of what your employees decide, employers should always work with employees when they may potentially need parental leave.

Resourcing in the Absence of Employees

When an employee decides to go out on leave, employers will want to ensure that the company, and other employees, are ready for their departure. Employers and employees alike should engage in the discussion about the redistribution of work assignments and how longer-term projects might get completed.

It is a great idea to check-in periodically on your employee while they are out on parental leave.

If the work can’t easily be redistributed to other team members, employers can consider other solutions such as bringing in a temporary worker from an agency, engaging with a freelancer, or hiring a temporary employee for the duration of the leave.

Checking in While Out on Leave

It is a great idea to check-in periodically on your employee while they are out on parental leave. In fact, it’s best practice to have preset check-in dates scheduled with the employee before they go out on leave so you’re able to gauge how they’re doing while out on leave. These check-ins can also help the employee feel included while they’re out, and provide an opportunity to discuss their eventual return to work. Employers and employees should choose the method for these discussions before the employee starts their absence. Discussion via phone or email works best, but if done over the phone it’s important to follow up with any action items or expectations in a follow-up email, or certified letter.

How Work-from-home Policies Can Help

Employees returning from parental leave may find the adjustment period of returning to work rather difficult. It’s a good idea to discuss a return to work plan with your employee in advance, as well as what the transition back to work will look like. Employers may consider flexible work hours or flexible work from home agreements for employees who are phasing back to their regular work schedule in office.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.