Why paid maternity leave is a win-win for employers: Unveiling the hidden benefits

More than 120 countries around the world provide paid parental leave by law — but this does not include the U.S. While different state laws have begun introducing paid leave, many employees don’t have access to paid time off after birth. For these groups, 12 weeks of unpaid leave under the Family and Medical Leave Act is the only option – an unaffordable luxury for many people in the US.

According to advocacy group Paid Leave U.S., one in four American mothers return to work within two weeks of giving birth, despite the American College of Obstetricians and Gynaecologists recommending at least six. This means many new parents return to work before they are physically and mentally ready to.

Aside from time to bond with and care for a new child, the benefits of paid leave for employees are numerous, including lower chances of postpartum depression, increased breastfeeding rates, and reduced hospital admissions. In the long run, paid leave leads to improved employee morale, improved retention, and more women in the workplace.

These results are just the start of how paid family leave benefits employees and employers alike across the U.S. Here we share an in-depth look into the wider value of maternity leave for employees and their employers.

Understanding maternity leave

Maternity leave is defined as the time taken off work by a new mother following the birth of her child. This is often a mixture of paid and unpaid leave benefits provided by the employer, the balance of which depends on the individual company policies and state laws.

The Family and Medical Leave Act

The majority of an employee's parental leave falls under the Family and Medical Leave Act (FMLA) which applies across the U.S. Eligible employees receive 12 workweeks of unpaid job protected leave within a 12-month period to care for themselves or an immediate family member. This time off can include the birth of a child and childcare for a newborn within a year of giving birth.

Federal law states that this act applies to both male and female employees, as well as adoptive parents. If new parents work for the same company, the 12 weeks of unpaid leave is divided between them both.

There are important eligibility requirements when it comes to unpaid family and medical leave. Companies must have 50 or more employees to provide FMLA leave, and eligible employees must have worked for their employer for at least a year (or 1,250 hours). These regulations mean only 60% of the U.S. workforce are covered by FMLA leave.

Short-term disability benefits

Many employers also allow employees to use a mix of unpaid family and medical leave, sick leave, vacation time, and short-term disability benefits to increase their total parental leave.

Short-term disability insurance offers coverage for all or part of a worker's salary for a certain number of weeks due to certain medical needs that restrict the individual's ability to work. Pregnancy and giving birth are both considered a qualifying reason. This benefit is not required by law but offers a federal tax deduction if provided.

Paid parental leave vs unpaid parental leave

While all U.S. states are required to provide unpaid family and medical leave in line with the FMLA, there is no countrywide law on providing paid family leave. This can be difficult for all employees, but can particularly affect low-wage workers who can't afford to take an extended period of unpaid time off work.

To counteract this, many states are introducing their own specific paid parental leave policies to address this issue. States including Connecticut, Maine, and New York have implemented paid maternity leave, with others increasing the amount of unpaid leave benefits.

Maternity leave around the world

With no national paid leave offered and only the minimum unpaid leave required by law, the U.S. falls short when it comes to providing adequate maternity leave.

In comparison, 119 countries listed by the ILO provide the recommended 12 or more weeks of paid leave, with 62 offering 14 or more. This includes Iceland, Chile and Japan, with Estonia topping the list with 84 weeks of fully paid maternity leave.

This contrast is due to the role of culture and government in shaping these policies, with those providing more leave benefits typically being more family orientated and equal in terms of gender.

The direct benefits of maternity leave for employers

The benefits of paid parental leave are relatively clear for employees: more time to bond with their new child, to adapt to becoming new parents, and a reduced cost in childcare. But paid leave has other benefits of note too.

It can mean increased breastfeeding rates, improved infant health and reduced symptoms of postpartum depression. And for employers, paid parental leave benefits are apparent for both employees and business performance.

Companies that provide benefits as a whole are proven to see increased employee morale, loyalty, and productivity, while also enhancing their ability to attract top talent. One study showed that workers are five times more likely to stay at a company where they feel rewarded and valued. And paid family leave is high on the list of desirable benefits.

According to one global survey, 83% of millennials said they would be more likely to join a company that offers paid parental leave benefits, with a further 38% considering moving out of the U.S. to another country that provides improved parental leave policies.

Paid leave could be the differentiator between an employee taking or leaving a role. Research shows that 58% of employers confirm parental leave benefits have played a large part in improving their talent acquisition.

The indirect benefits of maternity leave for companies

For most women, working full time while having a family is not possible. Studies show that less than a quarter of women return to full time work after having a child – 79% of which end up leaving their role further down the line.

However, increasing access to paid family leave rather than temporary unpaid leave can significantly reduce this number. Not only does paid maternity leave benefit new mothers,  it also promotes better gender equality by empowering women to keep their roles rather than reducing their hours or leaving the workforce altogether.

Paid leave can help close the gender pay gap, and it can also lead to more female-led decision making, creating a more diverse and inclusive workplace.

The role of maternity leave in corporate social responsibility

Corporate social responsibility plays a key role in an organization's success. By giving back to society, looking after customers, and caring for their people, companies see improved brand loyalty and a better overall bottom line.

A company's parental leave policy hugely contributes to how it is viewed in the public eye. Extended paid leave shows a company to be supportive of its employees and their family members, to be embracing of a family-friendly culture, and to have a positive reputation which will in turn contribute to a boost in recruitment.

Overcoming the challenges of implementing paid leave

Providing paid maternity leave can be challenging for those involved. There are many steps to overcome, including agreeing and planning for leave, as well as managing the repercussions of an employee being out of work for an extended amount of time.

However, there are ways in which a company can effectively support their employees to become new parents without a huge cost to the business.

The cost of paid leave

Paid time off work is expensive. Paying a salary for an employee that isn't at work – plus the upfront cost of their replacement – can seem futile, but the financial implications of not doing so can actually be worse.

Hiring and training a permanent replacement is usually a greater cost, as advocated for by KPMG whose 18 week paid parental leave policy drives increased retention and decreased costs overall. Recruiting temporary cover also helps to manage the employee’s workload without transferring it to other team members, particularly skilled talent who can integrate into the team quickly to reduce training time and costs. It can also be beneficial to have a short crossover between the employee and their temporary replacement to address any queries and concerns before they go on leave.

If recruiting temporary hires isn't possible (due to costs or a lack of specialist skills), employers can consider outsourcing to independent contractors, or cross-training employees to be able to perform multiple job roles. This produces more collaborative employees, increases opportunities for development, and enhances flexibility in the workplace when someone is on leave or off sick.

A similar technique used is job rotation, where employers rotate their employees' responsibilities and positions. This prepares employees for paid parental leave as well as other scenarios, such as someone leaving the business, and can be a promising strategy for increasing employee engagement and productivity.

Eligibility requirements

As with all types of paid leave, the eligibility requirements should be clearly defined to avoid confusion and conflict. This includes the criteria, prerequisites, and what your employee is legally entitled to in terms of compensation and time away from work.

Examples include: how long an employee has been employed before they take leave, the percentage of their salary received during leave, and any requirements such as keep-in-touch days.

Returning to work after paid family leave

Re-entering the workforce after having a child can be difficult. It can be alienating to be away from their responsibilities and colleagues for an extended amount of time, which in turn can affect an employees' self-confidence.

While employees are on leave, it's important to check in with them and keep them up-to-date with important business news, establish when they'd like to return, and discuss any reasonable accommodations that can be put in place to support their role as new parents, such as flexible working hours or a phased return.

This will ensure a smooth transition back into the workplace and help them to feel valued. Once the time comes, make sure employees are up to date with any business changes and the status of current projects to avoid any unnecessary lapses in productivity.

Strategies for effective maternity leave management

Implementing the below strategies will help employers to provide an effective parental leave policy that benefits both employees and the business.

Pre-leave support

Maternity leave usually starts a week or two before a mother is expected to give birth, with paternity leave starting as soon as their partner goes into labor. But this date can change at short notice. If an employee gives birth early, employers can be left in a tricky situation if they don't have handover notes and temporary support in place.

It's therefore important to plan what parental leave looks like for your employee and the business well in advance. Consider offering pre-leave programs that allow employees to begin reducing their workload earlier, and employers to prepare for their departure rather than being stuck with an increased workload at short notice.

Flexible working arrangements

Flexible working is one of the most common employee benefits, with 70% of U.S. businesses providing flexi-working plans to help compete for top talent and improve employee retention. In addition to well-known hybrid and remote roles, this includes compressed work weeks (less, longer shifts), fluctuating hours, evening or weekend work, shift sharing and reduced hours.

This offering accommodates working parents, but also caregivers, those with multiple jobs, and the vast majority of workers who now expect a level of flexibility after the COVID-19 pandemic.

Align with your employee on their expectations for returning to work before they depart for parental leave, including the flexible working arrangements they would most benefit from.

The future of maternity leave

Parental leave – and therefore maternity leave – is changing. Ongoing campaigns for paid leave continuously raise awareness for the need for paid family and medical leave for every employee in the U.S. 

Further laws for paid maternity and paternity leave have (or will soon) come into effect in 13 states plus the District of Columbia, including California, Colorado, Rhode Island, and New Jersey.

With little advances in paid leave being put in place by legislation, employers have more to consider when it comes to extended family leave and support.

Paternity leave and shared parental leave

Maternity and paternity leave are just as important. Yet there is a disparity between the length of time mothers and fathers are offered when welcoming home a child. Currently, unpaid paternity leave is covered under the FMLA, however, paid paternity leave is hard to come by with laws varying by state.

This also affects LGBTQIA+ couples who typically don't receive the same amount of leave as birth parents and in some cases must be married to be eligible for parental leave. One study found that same-sex male parents received an average of 22 fewer weeks of paid leave than heterosexual couples across 29 countries. It's therefore just as important to consider paid paternity leave as a whole when looking at improving gender diversity and inclusivity in the workplace.

Doing so doesn't only promote equal parental rights—there's benefits for the business too. According to McKinsey, more than one in four women in the U.S. are considering downshifting their career or leaving the workforce altogether, often due to burnout as a working mother. But if their partners are enabled to take on caregiving responsibilities through paternity leave, this could be directly reduced, resulting in more women in leadership positions.

The research also showed that despite a lack of uptake in paternity leave, the benefits are imperative to an employee's family relationships, finances, and own mental health. It's also seen to boost overall happiness and engagement at work.

Family-friendly policies and support

Parental leave policies that go beyond the basics of unpaid time off or limited paid leave have unparalleled benefits and demonstrate a company's care and compassion.

For maternity and paternity leave to be effective, there's a need to be an overarching family-friendly work culture that encourages taking parental leave. It should normalize parents taking time away from their roles and help to clarify any concerns about an employee's career setbacks.

This can be achieved by adding other benefits to a paid family leave program that help parents to get the additional care and assistance they need throughout parenthood, such as better access to health providers.

Access to speciality maternal health care

Parents and parents-to-be tend to need more support than they receive from their current health coverage. Pregnant people often have short prenatal appointments in which to check their own health and their babies, leaving many with questions left unanswered. It's also reported that nearly six million women have no or limited access to maternity care in the U.S.

That's why maternity benefits is so important in today's world. With access to speciality care providers such as OB-GYNs, midwives, and lactation consultants, people can get support for both their mental and physical health at a time that suits them, from the comfort of their home.

This not only supports employees through becoming parents, but can also improve their overall health. For example, Maven's Maternity and Newborn Care program has seen up to 28% lower NICU admission rates for members.

With Maven, members also get access to care navigation to help them understand which health care providers are best for them. Our Care Advocates stay with each employee throughout their journey, taking them through an individual care plan and helping them to navigate Maven's maternity benefits.

Mental health support

Many people suffer from anxiety, stress, or depression during or after childbirth. And approximately one in seven women can develop postpartum depression after having a baby, which is often worsened for those whose employers don't offer paid parental leave.

As well as connecting employees with mental health professionals, organizations can provide access to support groups, education, and internal peer networks to help them get the care they need.

Predictions for maternity leave policies

Maternity leave is a much-talked-about issue. And as companies continue to listen to their employees and new laws come into effect, we see it improving for the better in future years.

Technology will become more integral

Leveraging technology in the workplace is integral to faster, more efficient ways of working. And the same applies to employee benefits. Technology in this space promotes better accessibility and inclusivity, saves time and administration, addresses eligibility and compliance issues, and sees improved uptake from employees due to ease of use.

With more organizations (45% in 2023) planning on increasing their spend in HR tech, it's expected that benefits technology will continue to grow across the board, particularly when facilitating family leave.

When providing paid maternity and paternity leave, companies are leaning towards wraparound care that provides other generous benefits and enhanced support, such as Maven's suite of women's and family health solutions. With access to resources and care 24/7, 365 days a year, our digital health benefits help employees to manage parenthood and successfully transition back into the office.

Paid maternity and paternity leave is a priority

Studies show that paid maternity and paternity leave are a top priority for employees. Maven's upcoming State of Women's and Family Health report surveyed nearly 5,000 people, with paid parental leave being a key deciding factor for those considering a new role. This was even more prominent for Gen Z and millennials, with 46% reporting that family health benefits are influential in their decision to stay at their job or take a new one.

With paid time becoming less of a nice to have, and more of a requirement to keep top talent, we expect the number of companies who offer paid parental leave to increase over the next year and beyond.

Going beyond paid maternity leave with Maven

Going beyond the minimum unpaid and paid medical leave is a key step in providing better maternity care in the workplace. Companies who offer paid parental leave are shown to have better employee well being, engagement, retention, and talent acquisition. But providing holistic support that helps family members from newborn to beyond supports their mental and physical health throughout every step of parenthood.

Maven is the leading family and women's health benefits provider, connecting employees with the care they need to thrive at home and in the workplace. With our 24/7 solution, working parents can access clinical experts, community support and online resources to improve their overall wellbeing as a parent.

Find out more about how Maven can better your maternity benefits offering by requesting a demo today.