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Is Paid Parental Leave Good for Small Business?

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There's growing debate (and growing support) in the U.S. around paid parental leave. It's become a major campaign issue, and many states and municipalities are considering its pros, cons, and costs. For large private companies--think Google, Netflix, Adobe--expansive leave policies are a salary bargaining chip and a recruiting and retention tool.

There's growing evidence that parental leave policies are good for business. Google increased employee retention after it implemented a generous maternity leave policy, which improved the bottom line. Turnover is extremely costly for all sized businesses. But what does the growing debate mean for small business?

The Family Medical Leave Act (FMLA) provides full-time U.S. workers with 12 weeks of unpaid leave for your work related injuries and serious health condition, to provide care for an ill family member, or for birth or adoption of a child. Under FMLA, only employers with more than 50 employees within 75 miles of the company are required to provide FMLA leave. The U.S. Department of Labor (DOL) reports that only 12 percent of U.S. workers in the private sector have access to paid family leave through their employer. Add that to the fact that the U.S. is behind the curve here, as the only industrialized nation in the world that doesn't mandate paid leave.

According to a 2015 AP poll, two thirds of Americans think paid time off for new parents is necessary, and that opinion is a bi-partisan one, shared by Democrats, Republicans and independents.

There are genuine benefits to paid leave, for both parents, children, society and business. The DOL says paid leave can increase the labor force by making it easier for women to stay in the workforce and that such leave can reduce reliance on public assistance benefits. It also decreases infant mortality and has positive effects on families.

For business, paid leave programs increase worker retention and decrease turnover. It's a complicated issue, and the truth is there are many small business owners who want to be able to provide paid parental leave, but their pockets just aren't deep enough to do so.

The good news? The growing debate is generating creative ways around the challenge.

Public Solutions

California, New Jersey, and Rhode Island have paid family leave laws in effect.

California's workers pay into a disability insurance fund that then pays a percentage of their wages during leave; the plan has been in place for more than a decade. The California Small Business Majority reports that the program does not have a significant negative effect on business; all costs are paid by the employee. While most using the program for paid parental leave are women, claims by men are up 411 percent, fueled, experts think, by millennial beliefs and practice of shared parenting and household demands. Research shows that paid parental leave also benefits the family and women in the workplace.

Like California, Rhode Island and New Jersey workers pay into a state insurance fund. Other states are in ongoing efforts to add parental and family leave laws. A Better Balance is a work and family legal center that studies the issue, and has created a comparison chart detailing existing laws and current legislative efforts.

Private Solutions

Many Silicon Valley companies are driving change, and offer parental leave, not "maternity" leave. Facebook's Mark Zuckerberg made national headlines when he took two months off after his child was born, and Netflix did the same when it announced "unlimited" parental leave during the first year after the birth or adoption of a child.

At smaller companies folks are still figuring out what works for them. You can plan for maternity leave and give the company an opportunity to create a process that will make the organization stronger and more profitable. Small businesses learned that paying for maternity leave was more cost-effective than losing the employees and trying to replace them.

How did they do it? They came up with a budget, created job resources, got a head-start on projects, cross-trained other staff, and eventually, when they were back at full-staff, gave some time off to those who shouldered the work during the maternity leave.

Other start-ups on tight budgets work around a specific policy by being open-minded, and offering freedom and flexibility based on the employee and the company's needs.

Small businesses can survive while solving the challenges of paid parental leave, and as happens when the ball gets rolling, thrive. And that's good for business.

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