How to offer paid leave without breaking the bank

If we’ve learned anything from the 2020 labor law trends, it’s that paid time off from work is an important resource for employees. This year, eligible employees in five states—including New York, California, Washington, Nevada, New Jersey, and Washington D.C.—will either have access to paid family and medical leave for the first time, or receive updated benefits.

According to the Department of Labor, only 16% of employees working in the private sector had access to paid family leave through their employers. The assumption is that this rate is low because many workers are employed by a small business that can’t afford to provide paid leave programs. 

When it comes to federal law, the Family and Medical Leave Act (FMLA) only requires businesses with 50 or more employees to provide unpaid time off for certain employees, meaning that if employees need to take time off to care for a family member or new child, they often must do so without compensation or job protection. 

If you want to implement a paid family and medical leave policy, don’t worry—it doesn’t have to be as costly as you might imagine. Here are a few steps to follow to get started on providing employees the benefit. 

Remember, this is not official legal advice. If you have questions or concerns about paid leave, it’s best to consult an employment lawyer. 

How do I set up a paid leave policy? 

Weigh the costs

The first step to building a successful paid leave policy is to weigh the costs. How much would it cost to replace the employee who wants to take some time off? Hint: it costs about 21% of an employee’s salary to find someone else to take his or her place, according to the Center for American Progress

Take that number and compare it to the cost of providing the time off, and you’ll find that offering even 12 weeks of paid leave is often less expensive than finding a new worker. You can even decrease your costs by forgoing the temporary replacement and spreading the duties of the employee on leave among your other workers for the time being. 

If you aren’t subject to any state laws that dictate how much leave you must offer (Check your state-by-state guide here to make sure), you can customize how much paid time you want to offer based on what you can afford. For example, you can offer three weeks of paid time off, followed by eight weeks of unpaid leave. 

Stay flexible 

Allow your employees to use the time when they need it most, even if it’s not all at once. The FMLA stipulates that workers can take 12 weeks of unpaid leave in a given year, but if an employee wants to take six weeks off after giving birth and save the other six weeks for when their spouse is not on leave, it may help minimize the damage to your bottom line. 

Utilize state subsidies 

If your business operates in one of the several states that offer financial support for paid family leave, take advantage of the help! California, for instance, covers about half of an employee’s salary for up to eight weeks of time off for new mothers, and six weeks for fathers. 

In New York, new moms who qualify for the program can receive limited disability pay for as long as 26 weeks if they are deemed unable to work by a doctor. Consider offering some type of payment on top of any available government assistance to give your employees the best benefit. 

Need help setting up a paid leave policy? Homebase customers who sign up for HRPro gain affordable access to certified advisors who can help you with paid leave plans—as well as any other HR topic—whenever you need them. Sign up today to get started! 

Remember, this is not official legal advice. If you have questions or concerns about paid leave, it’s best to consult an employment lawyer. 

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