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Compassionate (Paid Family) Leave – What It Covers & How to Use It

Most American workers qualify for up to 12 weeks of job-protected leave under the Family and Medical Leave Act (FMLA), a 1993 law that forms the basis for many employers’ parental and convalescent leave programs. With limited exceptions, FMLA-eligible employees can’t be fired for taking leave to care for ailing members of their immediate families, bond with a new child, or recuperate from an injury or illness.

The FMLA is a crucial entitlement for American workers. Unfortunately, it has a gaping flaw. With a notable and possibly temporary exception for COVID-related care or convalescence — one which excludes millions of people who work for employers with fewer than 50 or more than 500 employees — the FMLA doesn’t require employers to pay employees during eligible leave periods. In the United States, paid leave is strictly voluntary.

Most American workers at FMLA-eligible employers and worksites do qualify for some amount of paid leave, especially for childbirth and adoption. According to an analysis by the U.S. Department of Labor, about half of all workers at FMLA-eligible employers receive full pay for eligible leave, although mostly for short periods — less than 10 days is common. About 17% receive partial pay for some amount of eligible leave.

But the FMLA’s architects designed the law for relatively infrequent, relatively long-term life events, such as welcoming a new child or caring for a terminally ill parent. The law isn’t built to deal with more mundane, frequent, and shorter-term situations that can be just as troublesome for employers and employees alike, such as short-term dependent care necessitated by school closures or illnesses.

Nor is paid family leave of any sort widely available to U.S. workers. According to a 2018 report by the Congressional Research Service, just 16% of workers had access to employer-sponsored paid family leave plans — sometimes known as “compassionate leave” plans — treated as distinct from other types of paid time off, such as vacation time and nonspecific personal leave. (Other estimates, including one cited by the Brookings Institution, put the number around 50% of workers.)

By contrast, many Organisation for Economic Co-operation and Development (OECD) member countries — generally “developed” countries with advanced economies — give parents national entitlements to weeks or months of broadly defined paid “home care” leave. For example, France entitles mothers and fathers to 26 weeks of paid home care leave, albeit at a low average payment rate of about 14% of the parents’ regular earnings, according to the OECD Family Database. Germany’s paid home care leave allowance is even more generous, at least for mothers: 44 weeks at an average of 65% of regular earnings.

A handful of U.S. states, including California and New York, sponsor paid family leave insurance to subsidize the potentially high cost of such programs for employers. And many employers — including giants like General Mills and Facebook — have generous paid family leave allowances that include short-term leave for child care. Amid unprecedented social disruption and economic fallout from the COVID-19 pandemic, it’s a fair bet that more will follow, even as employers strengthen alternatives like flexible scheduling, employer-paid child care, and backup child care for when workers’ regular child care arrangements fall through.

Where does all this leave workers and their bosses? For starters, all workers should understand the basics of paid family leave and know whether they’re eligible for state-sponsored or voluntary paid family leave (PFL) programs. Employers weighing whether to implement PFL should know what’s involved and how to pay for it. And all Americans would benefit from an unbiased overview of the pros, cons, and feasibility of a federal PFL mandate in the vein of the Affordable Care Act’s individual health insurance coverage mandate.

Compassionate Leave (Paid Family Leave): What It Covers, Where It’s Available, & How to Implement It

Paid family leave allowances typically mirror those prescribed by the FMLA: taking time off to care for an ailing immediate family member, recover from a serious illness, or bond with a new child.

As the COVID-19 pandemic forced most U.S. schools and many day cares to close or restrict attendance, some employers reimagined their family leave policies, especially with respect to child care. A July 2020 feature in The Atlantic describes one Vermont nonprofit’s decision to offer 12 weeks of paid family leave to its entire staff, largely to mitigate the disruption caused by extended school closures. The organization’s CEO told The Atlantic that many employees use their leave to fill relatively short gaps in daily child care coverage or provide hands-on home schooling.

At a burn rate of two hours of leave per day, or an average of 10 hours per week, their allowances could theoretically stretch for nearly a full year. Crucially, expansive paid family leave gives workers leeway to attend to a wide variety of domestic circumstances that would otherwise interfere with their productivity — and their employers’ productivity — without turning to other types of leave, such as vacation leave or sick leave.

How Employees Could Use Expanded Paid Family Leave

The possibilities are nearly endless for expansive paid family leave of the sort implemented by that Vermont nonprofit, even more so in a pandemic. Subject to company-specific guidelines or restrictions, potential uses for compassionate leave might include:

  • Shopping or picking up medication for elderly or otherwise vulnerable family members who don’t feel safe venturing out in public
  • Taking vulnerable family members to receive medical care or checkups
  • Supervising toddlers and preschoolers enrolled in day care part time (a reliable way to reduce child care costs)
  • Supervising younger school-age children enrolled in a mix of in-person and at-home classes, such as if they’re at school in the morning and at home in the afternoon
  • Providing hands-on instruction for older kids enrolled in a mix of in-person and at-home classes
  • Caring for sick children or other family members without eating into the worker’s own sick leave
  • Plugging last-minute child care gaps — for example, due to a short-term day care closure or a regular caregiver’s illness — without eating into the worker’s own sick leave

Workers need to keep their expectations in check, however. Most employers don’t offer expanded PFL for intraday child care or other transient needs. On the other hand, expanded PFL represents a key opportunity for employers to one-up competitors and attract high-potential job candidates.

Who Offers Paid Family Leave Right Now?

Although generous PFL policies are not the norm in the United States right now, many employers go above and beyond. Some, including a few of the country’s 500 largest private employers, provide paid family leave for longer than the FMLA’s 12-week entitlement to unpaid job-protected leave. This sampling of major employers draws from credible reporting by NBC News and a 2020 study by a partnership between Ad Age, Facebook, and Fatherly.

  • Netflix offers a full year of paid time off for new parents, without differentiating by gender or birth-giving status. Parents can return and leave again at will throughout the year-long period.
  • Deloitte offers an average of 22 weeks’ paid time off for new moms and 16 weeks for new dads, plus financial support for child care after new parents return to work. Deloitte also offers 16 weeks’ paid time off for broadly defined life events that may impact productivity and an average of 30 days’ additional paid time off.
  • Bank of America offers 16 weeks’ fully paid time off for new parents, regardless of gender, plus child care support upon return.
  • EBay offers 24 weeks’ paid maternity leave, 12 weeks’ paid paternity leave, and 12 weeks’ paid family care time. Both full-time and part-time workers are eligible.
  • S&P Global offers a minimum of 20 weeks’ paid leave for parents, regardless of gender, and two weeks’ paid care leave. All workers clocking at least 20 hours per week are eligible.

According to the Congressional Research Service, paid family leave is much more common among relatively well-compensated professionals. Some 28% of all “Management, professional, and related” workers had access to paid family leave through their employers, according to the CRS, compared with just 9% of service workers. Eligibility was 41% and 32% of workers in the “Information” and “Professional and Technical Services” industries, respectively, but just 5% and 8% in the “Administrative and Waste Services” and “Leisure and Hospitality” industries.

State PFL Insurance Programs

Several states sponsor paid family leave insurance programs for employers, per the Congressional Research Service. These programs use payroll tax contributions from employees or employers, or a combination of the two, to subsidize paid family leave expenses. They are essentially a “public option” for paid family leave, the financial burden of which is usually not shouldered entirely by the employer — a key contrast with workers’ compensation and unemployment insurance schemes. However, no state programs in existence as of May 2019 offered paid family leave for dependent care absent a qualifying illness.

  • California. California’s scheme provides up to six weeks’ family care leave at up to 70% (on average) of the employee’s full earnings. Covered circumstances include the arrival of a new child and a close family member’s serious illness. Most full- and part-time workers are eligible. Recipients are not entitled to job protection.
  • New Jersey. New Jersey’s program provides up to 12 consecutive weeks or 56 intermittent days of paid family care leave at up to 70% of the statewide average weekly wage. Covered circumstances include the arrival of a new child, a close family member’s serious medical condition, and needs related to domestic or sexual violence against the worker or a close family member. Recipients generally are not entitled to job protection.
  • Massachusetts. The Massachusetts program provides up to 26 weeks’ paid family leave at up to 64% of the state average weekly wage. Covered circumstances include the arrival of a new child, certain military exigencies requiring dependent care, and the worker’s own serious medical condition. Recipients are entitled to job protection in most cases.

Implementing PFL in Your Business: A Checklist

To the average small- or midsized business owner, implementing or enhancing paid family leave sounds like an exhausting and expensive prospect. Although it can be costly, implementation is unlikely to be much different than adopting any other employee benefit — and probably considerably less complex than lining up group health insurance coverage or 401(k) benefits.

Use this general checklist as a guide to establishing a compassionate leave benefit for your team.

1. Determine How to Pay for the Program

Traditional forms of paid time off, such as vacation leave and sick leave, are most often paid for by employers, even when they have the practical effect of decreasing workers’ take-home pay through lower starting wages or slower wage increases. If you choose to take this route with compassionate leave, you’ll have a hefty new obligation on your books. Self-insurance — making regular contributions into an interest-bearing funding bucket such as a high-yield savings account earmarked only for compassionate leave payments — might be the way to go here.

Alternatively, you can share the burden with employees by funding a portion of the benefit yourself and deducting the rest from wages. The Strong Families Act, which became law in late 2017, does provide employers with tax credits against a portion up to three months of wages paid to certain workers taking parental leave under FMLA, reducing employer costs for a specific type of paid family leave. However, the Strong Families Act doesn’t subsidize any other form of paid family leave.

2. Establish Coverage Parameters

Determine what forms of family leave you’re willing to cover. Do you want to stick to “standard” forms of compassionate leave for new parents and caregivers to the seriously ill? Or do you want to follow the trail blazed by that Vermont nonprofit and offer an expansive menu of coverage for child care emergencies and the like? Should bereavement leave — leave to attend funerals for family members and close friends, plus extra time to grieve the loss — factor into your considerations?

3. Decide How Much Paid Leave to Allow

Next, decide how much of each type of leave you’ll allow. Many employers offer more parental leave than caregiver leave, while others lump all family leave into a single class that employees can use as they see fit. To the extent that you’re able — perhaps through candid conversations with competitors or former employees of competitors — ascertain how much and what type of leave your peer companies allow and use those findings to guide your decision.

4. Settle on Compensation for Employees on Leave

The gold standard for paid family leave is 100% paid, of course, but not all employers can afford to cover 12, 24, or 52 weeks of an absent worker’s full salary. You’ll need to strike a balance between what’s financially feasible and what your competitors allow, bearing in mind that being perceived as less employee-friendly could increase employee turnover or cost you quality hires in the long run.

5. Develop Formal Policies for Requesting and Granting Leave

There’s no reason not to model leave-taking policies after those already in place for vacation time and sick leave. You can probably modify whatever process you use for those to encompass paid family leave. The more interesting question is where to draw the line on formal requests

For example, especially if you already use a flexible schedule that allows employees to work outside regular business hours, how much informal leave do you allow before requiring employees to draw from accrued leave time? One hour? Two? Four?

6. Incorporate Employee Feedback Into Program Updates

Early on, keep close tabs on your program and ask employees for honest feedback. If you find no employees taking their full allowance, you can probably get away with trimming it. Conversely, if employees clamor for more generous dependent care leave or other forms of support, look for financially realistic pathways to offering them.

Should the United States Have Universal Paid Family Leave?

The Congressional Research Service’s analysis shows that many workers do not have access to paid family leave of any sort. Moreover, paid family leave benefits are not equitably distributed throughout the labor force. White-collar professionals are several times more likely to enjoy paid family leave benefits than lower-wage service workers, many of whom have few employment benefits to speak of.

Although state-sponsored PFL insurance programs provide some help for employees fortunate enough to be eligible by dint of geography and employment status, the United States is among the only OECD countries without a national entitlement to paid family leave. Which begs the question: Should federal legislators pass such an entitlement into law?

The range of possible answers extends well beyond a binary “yes” or “no.” First, distinguishing between “universal” and “widely available” is important. Although the Affordable Care Act significantly reduced the total number of Americans without health insurance, millions remained uninsured after its passage. Likewise, given that no state-sponsored paid family leave program provides universal coverage, it’s unlikely that a federal program — which would undoubtedly take shape through a painstaking process of legislative sausage-making — would either.

Proposed PFL Legislation in the United States

Credible recent proposals for federal legislation to address the United States’ lack of a national paid family leave mandate range from incremental solutions like the Strong Families Act to more sweeping measures like the FAMILY Act, which would establish a de facto national insurance scheme for paid family leave.

  • FAMILY Act. The FAMILY Act would empower the Social Security Administration to establish “a family and medical leave insurance (FMLI) benefit payment for a specified benefit period and [prescribe] a formula for determining the individual’s monthly benefit amount” with consideration to other government benefits for which the individual may be eligible, such as temporary disability insurance or state-sponsored family leave. The program would be funded through a tax on employers, employees, and the self-employed.
  • New Parents Act. The New Parents Act would amend the Social Security Act to allow new parents to receive up to three months of Social Security benefits after the arrival of a new child. The funds would be offset by deferring retirement for a corresponding — although not necessarily equal — period of time.
  • Working Parents Flexibility Act. The Working Parents Flexibility Act would allow for the creation of tax-exempt, employee-funded parental leave savings accounts to subsidize the cost of leave to care for eligible children, up to a lifetime contribution cap of $24,000 and an adjusted gross income ceiling of $250,000.

Arguments for Widely Available Paid Family Leave

For the most part, arguments in favor of a federal entitlement to paid family leave do not require great leaps of logic. Virtually every American worker has a dependent, parent, or other family member or friend who’d be expected to turn to them in times of need — whether that’s an afternoon out of school or the last weeks of life.

The U.S. Is an Outlier Among Developed Nations

Most OECD member nations have national entitlements to paid family leave, although the details — including all-important eligibility requirements and pay scales — vary widely. Importantly, nationwide PFL isn’t the exclusive province of the Norways and Switzerlands of the world: small, rich, more-or-less ethnically homogeneous countries with strong social safety nets. Big, diverse countries like France and Germany have figured out how to provide months of paid leave to new parents and family caregivers too, according to the OECD’s PFL overview.

Setting aside the question of whether a costly new federal entitlement to paid family leave is politically or fiscally feasible, it’s clear that the technical hurdles to establishing and implementing such a scheme are surmountable.

It’s a Likely Boon for Employee Productivity

Regardless of its scope, caregiving is difficult work. Employees pulling double duty as family caregivers can’t be expected to bring their “A” games to work with any consistency — certainly not when they’re up night after night attending to a crying newborn or neurologically impaired parent. Even parents tasked with supervising or schooling otherwise healthy kids a few hours per week must divide their attention between work and care, and getting back in the swing of things isn’t always easy.

Seen in this light, widely available paid PFL gives parents one less thing to worry about off the job — making them that much more productive when they’re back on.

It Could Level the Competitive Playing Field for Smaller or Lower-Margin Employers

For many smaller or lower-margin employers, self-insuring an expansive paid PFL program into existence — one that extends beyond the narrow confines of paid parental leave prescribed by the Strong Families Act — simply isn’t in the cards. This puts any employer that can’t fund its own voluntary PFL program at a competitive disadvantage to those that can, including bigger, better-funded peers that could be in a position to poach the employer’s best team members.

A widely available entitlement that’s no longer the employer’s direct responsibility could blunt or eliminate this disadvantage, quelling employee retention concerns.

Arguments Against Widely Available Paid Family Leave

The arguments against a federal entitlement to paid family leave tend toward the pragmatic: reasonable concerns over such a program’s cost, impact on smaller employers, and interference with more flexible alternatives.

It Has to Be Paid for Somehow

There’s no such thing as a free lunch. The appreciable societal benefits of a national entitlement to paid family leave notwithstanding, the significant costs of such a program would be borne by some combination of employers, employees, and the federal government’s credit line. In the wake of trillions in federal stimulus necessitated by the COVID-19 pandemic, concerns over the size of the national debt and its second-order effects — such as inflation and higher federal borrowing costs — are sure to dominate federal politics and could well put a national PFL entitlement out of reach in the near term.

Cheaper, More Flexible Alternatives May Exist

A national entitlement to paid family leave isn’t the only solution to the problems faced by Americans pulling double duty as wage-earners and family caregivers. Many large employers already offer alternatives or supplements to generous PFL. For example, KPMG allows employees to work flexible schedules within reason — allowing employees to work when their kids are asleep or otherwise supervised — and provides backup child care when parents’ regular arrangements fall through, per NBC News. Liberty Mutual allows flexible scheduling too, according to Ad Age. Bank of America subsidizes employees’ child care expenses, also according to Ad Age.

To be sure, providing formal backup child care is a logistical challenge — and perhaps an impossibility — for small and midsize employers, as it involves either running a day care or managing an exclusive contract with a third-party provider. But professional services firms of any size can adopt flexible scheduling, at least for nonessential workers not required to be on call at certain times.

Final Word

For those of us who “live to work” — voluntarily or otherwise — the idea of paid time off to care for children or parents feels out of the ordinary. And it’s certainly true that real obstacles, both logistical and financial, stand in the way of a federal PFL mandate or even widespread adoption of voluntary PFL.

But the experience of much of the rest of the developed world, including big countries like Germany and France, suggests that a national compassionate leave policy — and, perhaps, a healthier work-life balance overall — is within our reach.

Does your employer have a compassionate leave policy? Do you wish they would?

Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

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