Paid Family Leave: Recruitment & Retention Strategy

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In our last blog we shared the best workplace perks and benefits being offered by employers that make them stand out from the rest. In this third and final blog about what employees want from your benefits program, we’re focusing on one particular benefit that is attracting a large proportion of employees.  Paid Family Leave (PFL) is one of the biggest trends in employee benefits today. In a competitive job market, PFL is a key contributor to attracting and maintaining high-quality employees. We’ll discuss the reason behind the culture shift towards paid family leave and the benefits it can have for your company. 

Paid Family Leave (PFL) vs. the Family and Medical Leave Act (FMLA)

As a note, there is a difference between Paid Family Leave (PFL) and The Family and Medical Leave Act (FMLA). FMLA was implemented to help employees balance work and life responsibilities by giving them time away, up to 12 weeks, from work to manage certain family and medical events such as the birth or adoption of a child and medical needs of a close family member. The act also protects the employees job for the duration of their leave and requires that their group health benefits be maintained. 

Paid Family Leave is the partially or fully compensated time away from work for certain and significant family caregiving needs including the birth or adoption of a child or serious illness of a close family member. While FMLA does provide eligible employees a set amount of leave time for specific family caregiving needs, there is no law that requires private-sector employers to provide compensation for this time away from work.  At this time, employees may access PFL if it is offered by an employer. 

Unpaid Leave May Mean – Leaving For Good

Although protected under FMLA,  caregiving often lasts longer than the allotted unpaid 12 weeks and employees are finding themselves having to leave their jobs to tend to family matters. Family Leave is personal and can impact crucial moments in life, yet many workers are forced to choose between their jobs and their families. “Paid leave makes it possible for new mothers to recover and care for new babies; for fathers to take an active role at the outset of a child’s life; for sons and daughters to hold the hand of a dying parent; and for everyone to reduce financial hardship and avoid untenable choices between getting critical care for serious illnesses or soldiering through work without respite. At some point, virtually everyone – women and men – will need to take care of a new child, a seriously ill parent or partner, or their own serious health issue, yet access to paid leave is all too rare” (National Partnership for Women and Families, 2018).  In a study conducted through the Harvard Business School project Managing the Future of Work in a report called “The Caring Company“, employees reported having to provide care in different stages of their careers, with the top reasons for leaving an organization being:

  • to take care of a newborn or adopted child (57%), 
  • to care for a sick child (49%) 
  • to manage a child’s daily needs (43%)
  • to take care of an elder with daily living needs (~33%)
  • to care for an ill or disabled spouse, partner, or family member (~25%)

Employees leaving jobs and performing lower than typical due to caregiving results in a hidden cost of care for employers. In that same study conducted through Harvard Business School’s project on the Managing the Future of Work, it was found that the impact that care responsibilities are having on organizations is underestimated by employers, with less than a quarter (23%) of employers believing that caregiving influenced employees performance. However, employees who responded to the survey reported that caregiving impacted them in the following ways:

  • A third (32%) of employees voluntarily left a job during their career due to caregiving responsibilities. 
  • Over a  quarter (27%) of employees aged 18−25 and half (50%) of employees aged 26−35 years reported that they had already left a job due to caregiving responsibilities.
  • 80% say their responsibilities at home keep them from doing their best at work.
  • Over a quarter (28%)  said their caregiving obligations had hurt their careers.

From an employee perspective, taking any time away from work without income can lead to [increased] financial stress, especially with the addition of medical bills, new-born or adoption related bills and general caregiving-related bills to pay. This burden is felt even more by low-wage workers for whom taking leave without pay is not realistic. This results in mothers returning to work within 1-2 weeks of giving birth, fathers unable to play an active role in their newborns life or an individual not being able to spend time with a sick parent, sibling or spouse. When employees take unpaid leave, it impacts more than just the employee. Families, businesses and the economy suffers due to reduced labor force participation and lower wages, reduced retirement savings, poorer health, higher likelihood of public assistance use, and higher turnover costs for employers to recruit and train replacements. 

Paid Leave’s Impact on Recruitment & Retention

Individuals are seeking out jobs that offer Paid Family Leave so as to minimize the effects of taking time off from work to care for family matters, yet according to a national survey of employers conducted by the Bureau of Labor Statistics, only 16% of private-industry employees had access to PFL through their employers. Thus, as a way to stand out amongst others and retain talent and remain competitive overall, companies are beginning to offer Paid Family Leave as part of their benefits packages. Companies are not only offering Paid Leave, they are offering it for increased amounts of time, some up to 6 months with full or partial pay. 

Offering paid leave impacts business (and economies) in the following ways:

  • Employees are more likely to stay in the workforce when they take Paid Family Leave so businesses save money on employee replacement costs, which is around 21% of that employee’s annual salary because PFL reduces turnover. 
  • It improves business productivity by improving employee morale and satisfaction, making it easier for businesses to retain skilled workers. 
  • It can help to close the gender pay gap by keeping female workers linked to the workforce, thereby also increasing workplace diversity.
  • The combination of increased productivity and labor force participation bolsters economic growth which can impact company profits 
  • Because at some point in everyone’s life, they will need to take leave, individuals are more likely to accept a position with a company/organization that offers this benefit.

All in all, offering employees Paid Family Leave also lets employees know that you, their employer, care. Life happens outside of work; babies need to be born, loved ones need to be cared for, and bills need to be paid. No one should have to choose between their career, which essentially is their livelihood, and their loved ones. At this time, while the trend is moving towards Paid Family Leave benefits, only a minority of employers are offering them. Including Paid Family Leave into a benefits package shows the human side of a company and can set you apart from other employers, therefore improving your recruitment strategy and increasing employee retention.

Generous paid family leave is just one way you can attract top talent and appeal to a diverse set of candidates. See how other benefit offerings can strengthen your business from our Behind the Benefits whitepaper.

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