Nonprofits, We Need to Talk About Parental Leave Policies

Our 2021 Mid-South Nonprofit Compensation Report revealed that only 35% of nonprofits have a paid parental leave policy. However, parental leave has emerged as a front-runner among benefits for recruiting and retaining talent, and a generous parental leave policy can be seen as direct evidence of an empathetic and inclusive company culture. According to the Society of Human Resources (SHRM) “2022 Employee Benefits Survey,” around 1/3 of employers in all industries are offering some type of paid parental leave. Some of these employers are offering leave per state law, but many are offering leave that is more generous than required.

Understanding the Costs and Benefits

When implementing a parental leave plan, it’s important to consider the cost of the benefit, both from an actual dollar amount and from the potential for disruption of work due to extended absences. Some experts argue that the cost of paid parental leave is insignificant for employers that have a large population of salaried employees because those salaries are already accounted for in payroll. Many employers manage the cost of parental leave by designating a specific number of weeks as paid leave, and then allowing employees to take additional leave unpaid, with an overall leave not to exceed 12 weeks in most cases. However, there is also the matter of the cost of reduced labor as people are absent, and/or the additional cost of hiring temporary replacement workers or overtime pay for staff who are picking up extra responsibilities while employees are out on parental leave. This cost can be mitigated by requiring up to 30 days of advance notice to utilize parental leave (whenever practicable) to give employers time to distribute duties and formulate a plan to continue work efficiency while the employee is out on leave.

In addition to building out a policy that includes elements of paid or unpaid parental leave, whenever possible, adding a period of increased flexibility for new parents can also be seen as a significant benefit. Depending on your operational needs, this may look like flexible hours, a hybrid work environment, a modified schedule, or accommodating more requests for time off as needed.

Policy Pitfalls

It is vital to clearly distinguish between pregnancy-related disability leave for birth mothers, and general parental leave available to all new parents, ensuring that there is an equal amount of parental leave/bonding time offered to all parents. If your parental leave or “bonding time” policy provides more time off to one gender over the other following the birth or adoption of a child, it runs the risk of being viewed as discriminatory by the Equal Employment Opportunity Commission (EEOC). In many cases, the parent who birthed the child has a specific amount of recovery time (typically 6-8 weeks), but this leave should be considered separate from parental leave benefits.

Familiarize Yourself with FMLA and State Leave Laws

Depending on the location and size of your organization, additional laws may apply and have an impact on your policy. At the Federal Level, private employers with 50 or more employees are mandated to provide unpaid Family Medical Leave of up to 12 weeks. Both parents are able to utilize this leave for the birth of a child or for the placement of a child for adoption. Many states are also joining the parental leave trend by mandating paid or unpaid parental or family-related leave for all employees regardless of gender. It is necessary for all employers with employees in other states to review state-specific leave laws when drafting their parental leave policies, because remote employees are most often covered by the law of the states in which they actually perform the work, rather than in the state their organization resides.

There is great value in enabling all new parents (whether male or female, or parents by birth or adoption) to be able to take advantage of and benefit from an organization’s parental leave policy. By ensuring a thoughtful approach to the policy, you are able to do what is best for your team while protecting your organization from a compliance standpoint.

This column was written by Amanda McCollum and originally appeared on the Momentum Nonprofit Partners blog.