- Maine passes paid family and medical leave law. The law will take effect in 2026 and offers up to 12 weeks of paid time off for family or medical reasons.
- Employers are steadily improving paid leave offerings. WorldatWork research found that 70% of organizations provided paid parental leave in 2022, which is up 13% from 2019, and 44% offered paid medical or caregiver leave, which is more than double the organizations that offered it in 2019.
- Various benefits to the organization. Employers are increasingly seeing the benefits of providing paid leave to their employees, as it is a key part of the employee value proposition and can boost attraction and retention efforts.
- Lay the groundwork before implementation. For organizations considering adding a paid leave program, conducting a comprehensive audit of existing processes will help identify areas for improvement and ensure a smooth transition to the new system.
The state of Maine recently passed paid family and medical leave legislation that will take effect in 2026, joining 12 other states that have similar programs.
One key driver behind the law is the fact that there is no federal law for paid leave, as more states are offering (or are considering offering) this much-desired benefit from an employee perspective. At the same time, employers that do offer paid leave see it as a key benefit to attract new employees in today’s highly competitive talent environment.
According to WorldatWork’s “2022 Total Rewards Inventory Programs and Practices Survey,” paid parental leave was offered by 70% of organizations in 2022, which is up 13% from 2019. Additionally, paid medical or caregiver leave was offered by 44% of organizations, which is more than double (20%) the organizations that offered it in 2019.
Despite these clear gains, that still leaves more than half of organizations that do not offer any kind of paid medical or caregiver leave and 30% that do not offer paid parental leave.
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In Maine, workers will receive up to 12 weeks of paid time off for family or medical reasons, such as the birth or adoption of a child, a serious illness, care for a sick relative or transition from military deployment.
Alex Henry, group benefits leader at WTW, said that from a rewards perspective, the upside of those programs is primarily twofold:
For one, Henry said, there is optics/perception — the availability of a company sponsored paid leave program conveys that the company values its employees, their families and the need to take leave to care for an employee’s self or family member.
“Employees’ perceived value is further defined by the percent of income replacement, the amount of time available for leave and the covered reasons/relationships,” he said. “Given the prevalence of non-traditional family structures in today’s age, it is more than just ‘how much for how long,’ but equally important is the ‘for whom and for what reason’ is paid leave an option.”
Next, there is the aforementioned ability to attract and retain key talent as another positive reason. In WTW’s “2023 Benefits Trends Survey,” employers cite “competition for talent” as the top issue influencing their benefit strategy.
Also, there has been significant improvement in the employer-sponsored family and caregiving support landscape over the years, to the degree that 88% of employers would rate their offering at or above market.
“Despite the competitiveness of the current offerings, 28% of these employers are looking to further enhance this offering over the next two years,” Henry said. He adds that these benefits are also valued by employees, especially Gen Z, who rank time off and leave benefits No. 4 in the realm of employer-sponsored benefits, according to WTW’s “2022 Global Benefits Attitude Survey.”
The Risks of Not Having a Paid Leave Program
Laurel Dimock, senior director, HR and compliance services at OneDigital, said employers can face several significant risks when lacking a robust paid family and medical leave program including:
- Inconsistent administration and non-compliance with applicable laws could expose them to legal claims of discrimination, potentially resulting in costly litigations and reputational damage.
- Inaccurate leave tracking might lead to higher costs and regulatory non-compliance, as inadequate record-keeping can be financially burdensome and even lead to penalties.
- Without an effective leave program, employers may experience increased absenteeism rates and encounter challenges in efficiently managing staffing needs, adversely affecting productivity and operational effectiveness. By implementing a well-structured and compliant paid leave program, employers can mitigate these risks while fostering a supportive work environment that attracts and retains top talent.
“Implementing a high-quality paid family and medical leave program requires a well-thought-out approach that integrates compliance, efficiency and employee support,” Dimock said.
She explained that employers should craft a policy that aligns with relevant laws and regulations, ensuring that the program meets legal requirements and protects both the company and its employees. Plus, she added, leveraging automation and visual tracking tools can streamline the leave management process, minimizing administrative burdens and promoting accuracy in tracking and reporting.
“Moreover, integrating the program with existing time and attendance systems enhances data accuracy and ensures seamless coordination between leave and work schedules,” Dimock said.
Laying Down the Groundwork
Before embarking on the implementation journey, conducting a comprehensive audit of existing processes will help identify areas for improvement and ensure a smooth transition to the new system, Dimock said. Establishing a robust data retention process is vital for safeguarding sensitive employee information and maintaining compliance with data protection regulations.
Administrators should then be equipped with comprehensive training to handle the leave requests efficiently and address employee concerns compassionately, Dimock said.
WTW’s Henry added that there is much to consider during implementation to ensure that the benefit is appropriately integrated within the ecosystem of 20-plus U.S. state-specific paid family leave benefits (some of which are pending implementation).
“For employers with a global footprint, it is also important to consider how/if this benefit will align with international paid leave laws, to ensure global parity where desired and to account for nuanced international requirements,” he said. “As the leave law landscape is constantly evolving, it is important to partner with an expert to ensure that the benefits are not only compliant, but as future-proof as possible.”
As for the potential of even more states adopting paid family and medical leave, OneDigital’s Dimock said the landscape of paid family and medical leave benefits presents several underlying factors contributing to its uneven adoption across states.
First, she explained that the readiness of employers to effectively manage and administer paid leave remains a key concern, as many employers, despite recognizing the advantages of offering this benefit, might lack the necessary infrastructure, resources and expertise to handle leave programs efficiently.
Dimock also said the absence of comprehensive national legislation on medical leave has created that patchwork of state-level regulations, further contributing to the disparity in the availability and quality of paid leave programs across the country.
“As a result, the lack of a standardized framework can pose challenges for companies operating in multiple states, potentially leading to confusion and compliance issues,” she said.
Bottom line, Dimock noted, the broader adoption of paid family and medical leave hinges on addressing these challenges.
“Encouraging employers to proactively invest in the necessary infrastructure, promoting work-life balance and advocating for comprehensive national legislation can collectively contribute to a more equitable and accessible landscape for paid leave benefits,” she said.
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