Paid Maternity Leave: Inside the Debate and What It Means for Your Business

Business.com / HR Solutions / Last Modified: February 22, 2017

As more companies announce changes to paid maternity leave, don’t miss a chance to review your business’s policy.

It’s not often that the United States of America, Suriname and Papua New Guinea are mentioned on the same short list.

These are the only three countries left in the world that do not have laws mandating paid maternity leave for working mothers.

While the federal Family Medical Leave Act (FMLA) does offer employees 12 weeks of unpaid leave, not every employer is bound by the FMLA and it requires women to take a cut in pay for having a baby.

Several factors are forcing businesses to conduct an internal review of their policies and move them beyond the minimums set by the FMLA.

Most recently, the iconic soup company Campbell’s made news by instituting its first ever paid parental leave policy.

CEO Denise Morrison rolled out a gender-neutral plan of 10 weeks of paid leave for the primary caregiver and two weeks of paid leave for a secondary caregiver after a birth or an adoption. She’s also instructed Campbell’s HR officials to be flexible and work to meet the employees’ individual needs. 

Campbell’s is just the latest company to take on the maternity leave debate: Netflix, Facebook, and Etsy are a few of the other well-known businesses who have rolled out paid family leave policies in recent months.  

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Here is a closer look at the debate and what it means for your business.

Impacts Majority of the Work Force

Paid maternity leave is not a niche issue that only impacts a small number of workers. According to data from the U.S. Department of Labor, 57 percent of women participate in the labor force and 70 percent of women with children under age 18 are working.

Further, those numbers are on the rise. In 1976, about 35 percent of women with children younger than three years old were working outside the home, a number that is now over 60 percent. Simply put, maternity leave is not a fringe benefit. It is an important part of any comprehensive employee wellness package.

Benefits to the Employee

A common misconception is that maternity leave is simply a time for mom and baby to cuddle, but the point isn’t just family bonding. Mom will have follow-up doctors’ appointments for herself and for baby, including frequent weight and height checks.

Mom also needs time to physically heal from childbirth and to allow her body to adjust to new hormone levels, sleep schedules and emotions. Time off is needed to help manage these major physical and psychological changes.

A woman’s childbearing years also correspond with the years in which she is most likely to advance and develop professionally. Giving employees maternity leave allows them to continue to grow and excel both in the workplace and at home, instead of choosing one over the other. Studies show that happy employees are more productive and efficient at work, so there is a mutual benefit to keeping women who are considering growing their family happy.

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Benefits to the Employer

Perhaps the biggest benefit to employers comes via retention. The cost and time spent replacing a high-performing employee can undercut any business’s budget. As more companies offer paid family leave, and as teleworking and freelance options make a flexible work environment more commonplace, companies with strict policies of no paid leave are going to lose their talent.

Google can serve as a case study for this. Tech companies are much maligned for their lack of employee diversity, so the tech giant welcomes ways to keep more women on board. Google increased their paid maternity leave to 18 weeks in 2007 and the rate at which new mothers quit dropped 50 percent.

There is also the public perception benefit: Every company to roll out paid leave policies has been lauded as inclusive, modern and family-friendly. Reputations receive a positive boost from announcing more generous paid maternity leave benefits.

Related Article:Awesome Employee Benefits: Attract and Retain Talent With No or Little Cost to Your Business

Costs to Your Business

Of course, the work of the new mom or dad needs to be covered during their absence. But remember, this is not an unplanned absence. Businesses will have months to prepare for the maternity leave, allowing them to put contingency plans in place, prepare clients and shift project deadlines.

Costs are often cited as a reason to forgo paid maternity leave. However, a survey conducted after the state of California mandated paid leave found that an overwhelming majority, 91 percent, reported that the policy boosted profits or had a neutral impact on the bottom line.

Paid family leave is an important part of any benefits package and one that employees in their childbearing years will look at closely. Companies that wish to retain high-performing women are reevaluating and changing their plans to meet this crucial demographic.

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