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Paid Parental Leave Benefits Explained

Paid parental leave is where employers grant a paid extended leave of absence to employees, for the birth or adoption of a child. Often it is also referred to as maternity or paternity leave.

Parental leave is sometimes included as a part of a benefits package offered to employees through the employer. Benefits packages should often be reevaluated to ensure that what is being offered is tailored to your workforce’s needs and as an opportunity to discuss what may be missing.

Benefits packages often play a role in your company’s overall culture, so anything offered or not offered must be effective and useful to your employees to drive engagement and loyalty.

There is no federal rule that requires private employers to offer financially reimbursed parental leave to their employees. Paid parental leave can vary widely depending on the policy and employer. These varying factors include:

  • Effective date- how soon an employee can receive parental leave after being hired.
  • Benefit period- the length of time allotted for the employee to take leave. There is no standard set for this, some companies offer one week whereas some may offer several months at a time.
  • Benefit pay rate- the pay rate in which the employee is paid while on leave. Some benefits packages offer a portion of the employee’s pay rate while they are on this leave, i.e., two-thirds of their original pay. While others may offer full compensation for the duration of the leave.
  • Eligibility- in some cases, only employees that meet certain criteria are eligible for the benefit. For example, some companies will only offer it to full-time employees or to those that work a specified minimum number of hours per week.
  • Administration- this refers to how the benefit will be awarded to eligible employees. Some may come with a waiting period to receive pay while others may be paid on a regular schedule. Similarly, some companies that do offer this will opt to work with a third-party administrator to handle everything on the back end.

Even though parental leave is not required on a federal level, employers should check with their State’s and Local County’s legislation. For example, California maternity leave laws require companies with at least 5 employees to provide 12 weeks of unpaid family leave to new parents. And companies with at least 5 employees must provide up to four months of unpaid pregnancy-disability leave to employees unable to work due to pregnancy-related conditions or childbirth.

California employers are not required to provide paid maternity leave. But there are ways to receive money during this time. Including, using accrued paid time off, state disability insurance, temporary disability pay, and the Paid Family Leave Act. Employers are also required to keep workers on their health insurance during maternity leave.

More and more employers are offering paid paternal leave as part of their standard benefits package to attract new employees, hold better retention rates with current employees and boost the overall company culture and morale. Similarly, it may also help with overall employee satisfaction and wellness.

Learn more about how Payroll Systems can seamlessly integrate benefits into its payroll service to help you empower your workforce.

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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.