May 13 is Mother's Day in the U.S., Australia and Canada. As such, it feels apropos to recognize the latest initiatives in the U.S. and around the world aimed at increasing opportunities at work for working mothers (and caregivers more generally). Government-mandated maternity, paternity and parental leave and benefits, as well as robust childcare and eldercare infrastructure are among the most effective public policy investments for promoting gender parity in the workforce. As employers strive to retain working parents and increase female representation in corporate leadership roles, this article highlights how parental leave rights and related benefits are changing to reduce the burden of work-family conflicts on women and encourage men (and even grandparents!) to avail themselves of paternity leave and/or parental leave.
While the intended effects of new legislation in this area are of course positive, it can be challenging for U.S. and multinational employers to navigate the patchwork of statutory requirements that offer varying entitlements based on differing circumstances. Even beyond managing simple compliance, many multinational employers also feel the pressure to stay competitive in the war for talent and to create human resources policies that can be managed centrally in a streamlined fashion, while also locally compliant in jurisdictions outside of the U.S.
Here, we focus on recent entitlements and related benefits made available to employees who manage caregiving responsibilities outside of work and share the updates multinationals need to know.
Key Jurisdictions at Home That Are Strengthening Existing Paid Family Leave Laws
New York, California, Washington and Washington, D.C., are the latest jurisdictions to enact or strengthen existing paid family leave laws, and many other jurisdictions proposed paid family leave legislation this year.
In New York, the new Paid Family Leave Law took effect on Jan. 1, 2018. Under this law, all employers must provide eligible employees with up to 12 weeks of paid leave a year for an employee to bond with a new child, care for a seriously ill family member, or address certain issues arising from a family member's military service. Such leave cannot be used for the employee's own illness or medical condition. To qualify for such leave, employees must be employed for 26 consecutive weeks (or 175 days, for employees who work less than 20 hours per week). The law will be implemented in phases which began Jan. 1; employees are now entitled to just eight of the 12 weeks of paid leave at 50 percent pay (subject to certain caps). However, by January 2020, the amount of leave and salary will increase to 12 weeks leave at 67 percent pay (subject to certain caps). Funding will be provided by a weekly payroll tax for employees. Employees are entitled to job protection and health insurance coverage while on leave, though they may be required to pay their health care contributions.
Employees in California have been covered by the Paid Family Leave Act since 2004. However, since Jan. 1, 2018, employees will receive between 60 to 70 percent of their salary while on eligible paid leave, depending on their income level. The total amount of leave remains at six weeks per year.
In San Francisco, new parents who are employed by covered employers (i.e., 35 or more employees as of July 1, 2017, or 20 or more employees as of Jan. 1, 2018) are entitled to six weeks of fully paid leave. Covered employers must pay the difference between what is required under the California Paid Family Leave Law and the employee's full pay. Note that the employee thresholds under the ordinance refer to total employees, as opposed to employees working exclusively in San Francisco city limits.
In the state of Washington, the newly enacted paid family and medical leave program will be funded by premiums paid by both employees and many employers, and will be administered by the Employment Security Department. Starting in 2020, the insurance program will allow workers to take up to 12 weeks, as needed, when they welcome a new child into their family, are struck by a serious illness or injury, or need to take care of an ill or ailing relative. Employers must start payroll deductions, premium remittance and reporting obligations on Jan. 1, 2019. Employees can apply for paid family leave benefits beginning on Jan. 1, 2020.
Finally, on April 7, 2017, the D.C. Universal Paid Leave Amendment Act of 2016 took effect in Washington, D.C. Under the act, private employers must provide employees with up to eight weeks paid leave, to be used as follows:
- Up to eight weeks paid leave to care for a new child
- Up to six weeks to care for a sick family member
- Up to two weeks for the employee's personal illness
The program is funded by a new employer payroll tax, set to take effect July 1, 2019. Employees will be eligible to begin using paid leave on July 1, 2020.
The above examples are just the tip of the iceberg. Lawmakers in more than 20 other U.S. states, including Colorado, Illinois, Massachusetts and Vermont, proposed paid family leave legislation in 2017, so we're confident the paid family leave trend likely will continue.
Growing Benefits Outside the U.S.
Many countries outside the U.S. already have statutory paid parental leave frameworks that are more generous than the U.S. Certain jurisdictions are taking parental leave entitlements to the next level, making changes designed to increase incentives for more women to work or to remain in the workforce, as well as to address an aging workforce. In particular, paid parental leave has expanded in scope with the introduction of paternity leave laws in some traditionally patriarchal societies, as well as legislation to extend parental leave laws to working grandparents. The intent is to encourage men to take parental leave and thus alleviate some of the challenges working mothers face. What follows is a snapshot of global updates in key jurisdictions.
Increasing Parental/Paternity Leave and Related Benefits: In Singapore, as of Jan. 1, 2017, in line with the government’s objective to promote a family-friendly workplace and boost Singapore's birth rate, employees who have been employed for at least three months are now entitled to two weeks government-paid paternity leave, or GPPL, and may be entitled to an additional four weeks of shared parental leave if their spouse qualifies for maternity leave under the Child Development Co-Savings Act. GPPL is paid by the employer but is fully reimbursable by the government up to $2,500 per week. Additionally, for children born on or after July 1, 2017, employees are entitled to take up to four weeks of shared parental leave, capped at $2,500 per week.
Similarly, a new law in Spain increased paternity leave from 13 calendar days to four weeks. Leave is provided at 100 percent of covered pay, provided by social security. Leave can be taken either full- or part-time, at a minimum rate of 50 percent of regular working time. It is yet to be seen whether employees will take advantage of these new leave laws.
Likewise, since September 2016, paternity leave is a recognized legal right in Ireland. Employees considered to be a "relevant parent" of a child are entitled to two weeks consecutive leave from their employment to care for their child. (A "relevant parent" includes the child's father, the spouse/civil partner/cohabitant of the child's mother or sole male adopter and parents of a donor-conceived child. Same sex couples jointly adopting a child must choose one parent to be the "relevant parent.")
In South Africa, on Nov. 28, 2017, Parliament passed a bill providing unpaid paternity leave (at least 10 days), adoption leave and surrogacy leave for all employees who do not qualify for maternity leave. The bill also provides for an increase in maternity leave benefits and now provides for payment of parental benefits and surrogate parental benefits from the Unemployment Insurance Fund. The bill is considered significant in terms of recognizing the rights of the LGBT community as it is gender-neutral.
Increasing Maternity Leave and Related Benefits: Every six months, Colombian employers now need to facilitate, promote and offer one day employees can share with their families. Employers can offer this day off any day of the week, even on the employee’s mandatory rest day. If the employer does not offer this day off within the six-month period, employees can request a paid day off during the work week to spend time with their family and attend to family duties. Also in Colombia, maternity leave has increased to 18 weeks. With these changes, the government aims to encourage the proper attention and appropriate early childhood care.
In India, as of earlier this year, establishments with 50 or more employees must provide childcare facilities within a certain distance from the workplace. Female employees may visit their children at the facilities up to four times per day, inclusive of rest time. In addition, up to 26 weeks (previously 12 weeks) of maternity leave taken by female employees can now be included as "continuous service" for purposes of calculating gratuity payments for Indian employees.
Leave for Working Grandparents: Certain European jurisdictions (e.g., the U.K.) are moving toward introducing legislation contemplating the ability for parents to share unused parental leave with grandparents or for working grandparents to take paid leave to look after a sick grandchild thus permitting working mothers and fathers to remain in the workforce.
Caregiver Leave: In China, the Guangzhou city government issued its Population and Family Planning Service and Management Regulations, effective Feb. 1, 2018. Among other changes, the regulations create a new type of leave called caregiver leave for any employee who is an only child and has parents older than 60 years old. Caregiver leave is not mandatory, but if granted, entitles the employee to up to 15 cumulative leave days each year to care for a parent receiving in-patient treatment.
What's Next? How U.S. and Multinational Employers Should Address New Family Leave Law Requirements
As a starting point, employers should understand their obligations under local law. The following considerations are key:
- Is the parental leave paid or unpaid and what are the eligibility criteria?
- If the parental leave is paid, what portion of the leave, if any, is covered by the employer versus the local authorities/social security institutions?
- If the local authorities/social security institutions cover some but not all of an employee's salary during the leave, can the local employer "top up" salaries to make the employee "whole" during the leave period? Does the employee benefit from job protection during his/her leave? If so, how long must the position be held for the employee on leave? Can the employer benefit from a government stipend to hire a temp during the leave?
- Should the period of leave be taken into account for purposes of calculating variable compensation and merit increases?
Once an employer understands the parental leave law and requirements in jurisdictions where it has employees, the employer should ensure its policies, employee handbooks, employment agreements and other employment-related documentation are in line with the new developments. Employers with "one size fits all" parental leave policies, both in the U.S. and abroad should carefully review such policies. While not impossible to implement, uniform leave policies can be difficult to manage, and can sometimes work to an employee's detriment. For example, an employer who provides paid family leave for an employee who is entitled to statutory payments from the government may inadvertently limit an employee's ability to collect such statutory entitlements as the social security authorities could then refuse to provide allowances to an employee receiving partial or full pay from the employer.
Next, human resources and management teams should be trained and updated on these new requirements and updates to any policies. At the end of the day, these teams will be the "first responders" to these new developments and need to be cautious while communicating with employees about leave entitlements.
Finally, companies should be mindful in their overall hiring practices not to discriminate against groups of individuals who may be most likely to benefit from new paid parental leave entitlements. The HR team should be reminded of the "dos and don’ts" of the interview process (for example, a simple question about a candidate’s family could be viewed as discriminatory).
Published in Law 360 here on 10 April 2018.