Navigating New Paid Leave Laws

The topic of paid family leave has never been more relevant than it is today. Recently, Oregon became the eighth state to require paid family and medical leave for eligible employees; it joins California, Connecticut, Massachusetts, New Jersey, New York, Rhode Island and Washington in addition to the District of Columbia. As more working Americans make it clear they want paid family leave, states are responding. Currently, more than 20 states are evaluating similar legislation. This is putting pressure on employers to stay compliant, avoid fines and understand the importance of recognizing how new leave laws are impacting the administration of employee leave management.

However, there is also another interesting dynamic at play: Many U.S. companies are not waiting for legislation and have added or expanded paid family leave benefits to attract and retain employees. In fact, more than one-third of employers recognize they must offer paid family leave to attract employees.[1]

Let’s take, for example, American Express, which began offering parents 20 fully paid weeks, up from six weeks. Best Buy is another company that implemented paid caregiver leave, which allows employees to take up to four weeks to care for loved ones, along with the ability to access caregiver services on Care.com.[2] Most notable is that the 20 largest employers in the U.S. now offer paid parental leave to at least some of their workers.[3]

The Race to Stay Compliant

While many U.S. companies are choosing to adopt new paid leave benefits to stay competitive, the majority of companies – small and large – are overwhelmed and need help navigating the new leave laws in order to ensure compliance.

According to a recent study on absence management activity, 73 percent of employers who manage an absence management program with a workforce in at least three highly regulated states rated “interpreting federal/state laws” as the most challenging.[4] For many, the process not only poses an administrative burden too difficult to manage, but it can also have financial implications impacting their bottom line; for example, according to the Society for Human Resource Management, the average cost to defend an FMLA lawsuit is $78,000, and damages awarded to an employee may include lost back pay, front pay, attorney fees/costs, etc.

The reality is that increased state regulation means more employers need to focus on leave management compliance and how this impacts their employees. Below are some steps companies can take to prepare for when their state implements a new paid family leave law.

1. Determine Impact on Your Workforce

Understand what population of the workforce will be impacted by the new paid leave law and how the changes will interact with current employer leave policies, as well as employer benefit offerings. For example, if an employer has multiple offices across the country, a New-York-based employee will have different rights than an Illinois-based employee.

This disparity is prompting many employers to change their companywide policies to ensure parity among the workforce and create a positive employee experience. Many employers evaluate potential unintended gaps in their own benefit offerings following the passage of a new paid leave law and prepare accordingly. In cases where a state paid leave law may not cover an employee for having to take leave due to his/her own serious health condition, employers can fill the gaps.

We’ve seen instances where an employer decides to add and/or increase their disability coverage to ensure their own employees are protected. Finally, with a growing interest to attract and retain employees, more companies are adopting best practices to manage their absence management programs, such as reducing absenteeism through effective return-to-work programs.

2. Inform and Educate

Another study revealed only four in 10 employees feel their company’s benefits communications are “very effective.” With this in mind, it is critical for employers to develop a communications plan for employees to clearly inform them about updated policies and procedures related to the new law, such as accommodations and pregnancy/childbirth leaves or other working conditions.

Employers must also ensure staff, including human resource professionals, managers and supervisors are properly trained. Staff should have a solid understanding of the new paid leave laws, employees’ rights, how to address requests and how and when to engage with employees throughout the process (i.e., leading up to, during and returning from leave). The use of technology is also making it possible for employers and employees to access information through self-service web portals and mobile devices throughout the leave process.

3. Ensure Compliance

Consider consolidating leave management activities to ensure compliance and centralize intake to create efficiencies. As the complexity of managing benefits intensifies, employers are seeking to streamline leave administration and centralize it with a single internal department or vendor. One study shows the centralization of both short-term disability and FMLA have increased 75 percent since 2014.

Centralizing the management of these and other leaves enables efficiency gains, but more importantly, it ensures consistency and compliance while improving outcomes such as return-to-work rates and employee experience. The study confirms that companies that are integrating more of their health, disability and leave administration to achieve more positive leave management outcomes.

Employer Activity on the Rise and How to Manage Absence Effectively

Several factors are prompting employers to make leave management a higher priority, and we see no signs of this slowing down. The expansion of state and local leave laws, the potential liability associated with mismanaging employee leave and the opportunity to improve workforce health, productivity and the overall employee experience are motivating employers to adopt leave management processes that result in positive outcomes.

Compared to 2014, almost twice as many companies say their senior leadership is placing a high priority on leave management and reducing absenteeism. As a result, we anticipate that more and more companies will continue to make considerable progress implementing and enhancing leave management programs.

[1] “Understanding Current Trends in Employee Benefits: Benefit Penetration Rates, LIMRA, 2017

[2] The Trends That Could Shape Family Leave in 2019,” Lisa Burden, Sept. 28 2018. U.S. News, “To Save Time and Money, Companies Roll Out Caregiving Benefits,” March 4, 2019.

[3] “Lowe’s Joins Other Big Employers in Offering Paid Parental Leave,” New York Times, Feb. 1, 2018

[4] Unless otherwise noted, the source of all information is: 2019 Guardian Absence Management Activity Index & Study, “The Value of Leave Management Integration,”