A parental leave policy is your written rules for the time employees take off when they have or adopt a child—how much leave they get, whether it's paid, who qualifies, and what happens to their job and benefits while they're out. You may see it called paid maternity or paternity leave; parental leave is the broader term that applies to any new parent.
With an effective policy, you can accomplish two important things: Help your employee know what to expect long before the big day, and define your own commitment.
While you set the terms of your policy, you’ll see that the main work is coordinating them with the Family Medical Leave Act (FMLA), your PTO policy, and any state programs.
In this guide, we’ll help you understand how to manage and coordinate your parental leave policy.
Do I need a parental leave policy?
While no law requires you to have a parental leave policy, you probably still want one in writing. When you have one, you decide the terms once, and everyone gets the same answer. If you're weighing what to offer and what a competitive policy looks like, we cover the business case and inclusive policy design in how to set up an amazing parental leave policy.
Does federal law require paid parental leave?
No. There's no federal paid parental leave law in the US. The federal Family and Medical Leave Act (FMLA) provides job protection, but not pay.
If you have 50 or more employees, eligible employees can take up to 12 weeks of unpaid leave in a 12-month period to bond with a new child (by birth, adoption, or foster care placement). Bonding leave is time to care for and bond with a new child. FMLA also covers leave for an employee's own serious health condition, which is how a birth parent's recovery from childbirth is typically covered.
During FMLA leave, they get to stay on your health plan on the same terms, and when they come back, they get their old job or an equivalent one at the same pay.
To be eligible, an employee generally needs to have:
Been employed with you for 12 months
Worked 1,250 hours in the prior 12 months
Worked at a worksite with 50 or more employees within 75 miles
If you have under 50 employees, FMLA doesn't apply to you.
Do states require paid parental leave?
More than a dozen (California, New Jersey, Rhode Island, Washington, D.C., Washington, Massachusetts, New York, Connecticut, Oregon, Colorado, Delaware, Minnesota, Maine). have programs called paid family and medical leave (PFML). They generally require you to participate in a state-run insurance program that pays a percentage of the employee's average weekly wage for a set number of weeks.
Some are funded entirely by employee deductions and others also require an employer contribution too. Even if you don't have to pay for leave, you have to withhold and remit employee contributions along with your regular payroll taxes, and process leave requests.
A handful of other states, such as New Hampshire, offer voluntary paid family leave, where private insurers sell employers a paid family leave product.
Keep in mind that some states have their own job-protected leave laws that apply at a much lower employee count than the FMLA’s. To stay compliant, review the requirements of the states where your employees work.
What should a parental leave policy include?
Your parental leave policy should include answers to all the questions below:
What events qualify? Decide which family additions your policy covers: birth, adoption, foster placement, or a combination. FMLA covers all three, so if FMLA applies to you, unpaid job-protected leave is guaranteed. You’re just deciding what your paid leave covers. If you want to cover surrogacy, name it explicitly, since eligibility language written around "birth or adoption" may not clearly cover a parent through surrogacy.
Who's eligible, and after how long? Many employers require some tenure (such as 90 days or a year). Check that a tenure requirement doesn't conflict with a state program's eligibility rules. Decide whether part-time employees qualify. Independent contractors generally aren’t included.
How much leave do employees get? Choose how much leave you want to offer. If you use twelve weeks, it keeps the paid leave and job-protection window aligned.
Is the amount the same for everyone? If you provide “bonding leave,” it has to be available on equal terms regardless of gender (it’s a Title VII gender equality issue, and the EEOC has enforced it). You can provide extra time for a birth parent for medical recovery, as that’s legally separate from bonding.
Is leave paid, unpaid, or partly paid? If it's paid, say at what percentage of regular wages and for how much of the leave.
Is it continuous or intermittent? Decide if employees need to take their leave in one block, or whether they can split it up throughout a period of time. Intermittent leave is a nice perk, but it can be harder to manage staffing.
Do benefits continue during leave? Under FMLA, you have to keep employees on your health plan on the same terms. If FMLA doesn’t apply, you can decide, but check your health plan documents for any restrictions. Either way, you need a way to collect the employee's share of premiums when there's little or no paycheck to deduct from. Also, decide whether PTO keeps accruing during leave.
How much notice is needed? FMLA requires 30 days for foreseeable leave, and it's a reasonable default. Consider including an exception for early arrivals and emergencies.
What is the return-to-work schedule like? Confirm the employee returns to the same or an equivalent role. Note anything you will offer to ease the transition, like a ramp-up schedule or flexible hours for the first few weeks.
Where does the policy live? Put it in your employee handbook. Make sure managers know the terms so they can talk it through with employees. Revisit the policy when you hire in a new state in case there’s a new program to coordinate with.
Gusto's employee handbook builder walks you through building a handbook section by section.
How does parental leave work with FMLA and PTO?
Your parental leave policy has to work alongside other policies: FMLA, PTO, short-term disability, and in some states, a paid family leave program. Here are a couple things to know so you can explain the overlaps.
1. Make sure your leave and FMLA run at the same time
If an employee is FMLA-eligible and taking leave for a new child, that time is FMLA leave. You designate it, and your paid weeks run inside the same 12-week window. The employee can't decline the designation to save FMLA for later, and you can't agree to let them.
Even so, you should add that clarification to your policy so employees don’t read eight paid weeks plus twelve unpaid weeks as 20 weeks away from work. They'll assume their job is protected for all the leave when FMLA only covers 12.
2. Decide whether you require PTO during unpaid weeks
If your policy has an unpaid stretch, you can let employees use accrued PTO, including vacation or sick leave, to keep getting paid during those weeks. You can also require it. (During unpaid FMLA leave, requiring it is generally allowed. Once a state program or short-term disability is paying, the leave isn't unpaid anymore and you typically can't compel it.)
Where does my employee’s salary come from when they’re on parental leave?
When you're the only payer, you pay the employee’s paid weeks of leave through payroll, and after that, the employee uses accrued PTO or goes unpaid. It gets more complicated when a state program or short-term disability is also paying.
When an employee’s leave is paid by more than one source, they won’t get the money all in one paycheck. The money could come from three sources:
Your portion runs through payroll with normal withholding.
State benefits go to the employee from the state agency on the state's schedule.
Short-term disability comes from the insurer directly.
Consider this scenario: Employer offers 12 weeks with 6 paid at 60%. Employee works in a state with paid family leave.
Week | Who pays |
1–6 | You, 60% through payroll, plus a state benefit paid to the employee by the state agency |
7–12 | State benefit, as long as it lasts. State benefit durations vary |
You’ll have to make payroll decisions in the situations below:
If you won’t be the only payer, decide whether your pay stacks on top of state benefits. If your policy promises 60% and the state is already paying 70%, an employee can collect both and take home more than their usual paycheck. The alternative is to pick a target (such as 100%) and pay only the difference between the state benefit and that target. It’s the same outcome for the employee with a lower cost for you.
If you offer unpaid leave, decide how you'll collect premiums. During unpaid weeks, you don’t have a paycheck from which to deduct employee contributions. You can pay the employee's share to the carrier and recover it when they're back, or arrange for them to pay you directly during leave. Decide which, and tell the employee before leave starts.
When an employee goes on leave, Gusto keeps their benefits active and tracks the deductions you miss, then catches them up when the employee returns.
Short-term disability covers only part of your team
Short-term disability pays for the birth parent's medical recovery—typically six weeks for an uncomplicated delivery, eight for a C-section. It doesn't cover bonding time, and it doesn't cover an adoptive parent, a foster parent, or a non-birth parent.
Many short-term disability plans reduce the benefit by what you're already paying, so if your paid leave is generous, the disability benefit can end up small or zero. Check your plan documents before you set a percentage.
Sample parental leave policy
Here's a starting point for a parental leave policy that you can adapt to your business. Have an employment attorney review your version against the laws in every state where you have employees.
Parental leave policy template |
[Company] provides paid parental leave to employees welcoming a child by birth, adoption, or foster care placement. Eligibility. Regular full-time employees who have completed 12 months of continuous employment are eligible. Amount. Eligible employees receive 12 weeks of parental leave per qualifying event. The first 6 weeks are paid at 100% of base salary; the remaining 6 weeks are unpaid. Leave must be taken within 12 months of the child's arrival. Birth parent recovery. Employees who give birth may qualify for short-term disability benefits during medical recovery from childbirth. Any benefit comes from the insurer under that plan's terms, not from [Company], and the amount may be reduced by pay the employee receives from [Company] during the same period. Recovery time runs concurrently with the parental leave above. How this leave interacts with other leave. Parental leave runs concurrently with leave under the Family and Medical Leave Act and with any applicable state family leave program. Where a state program provides wage replacement, [Company] will supplement payments up to 100% of base salary for the paid portion of leave. Employees may use accrued PTO during the unpaid portion, but are not required to. Benefits. Health, dental, and vision coverage continue during leave, subject to the terms of [Company]'s plans and carrier requirements. Employees remain responsible for their share of premiums. For any pay period without enough pay to cover the deduction, [Company] will pay the employee's share to the carrier and recover it through payroll deductions after the employee returns. [HR contact] will confirm the amount and schedule before leave begins. Notice. Employees should notify [HR contact] at least 30 days before the expected start of leave when the timing is foreseeable, and as soon as practicable otherwise. Returning to work. Employees return to the same or an equivalent position at the same rate of pay. Requests for a phased return may be arranged with [HR contact] and the employee's manager. |
FAQs
Do I have to give a pregnant employee time off before their leave starts?
Possibly. The Pregnant Workers Fairness Act requires employers with 15 or more employees to provide reasonable accommodations for pregnancy-related limitations, and time off can qualify as an accommodation. That's separate from parental leave, which starts when the child arrives—an employee may need both.
What happens if an employee doesn't come back after parental leave?
You generally aren't obligated to hold the job beyond the leave you promised. If you paid the employee's health insurance premiums during unpaid FMLA leave, FMLA permits recovering your portion in certain circumstances. Spell out your expectations in the policy so nobody is guessing after the fact.
How do I handle parental leave if my employees work in different states?
Parental leave rules follow the state where the employee works, not where your business is based. With employees in multiple states, you may be subject to more than one set of rules. Many employers write a single policy generous enough to satisfy the strictest state they operate in.
Do part-time employees get parental leave?
That depends on your policy and your state. No federal law requires paid parental leave for anyone, and FMLA eligibility turns on hours worked—1,250 in the prior 12 months—rather than full-time status. Some state programs cover part-time employees.
Does parental leave have to be the same for mothers and fathers?
Bonding leave does. If you give birth mothers more bonding time than fathers, that's a Title VII problem. The standard is that parental leave has to be available to similarly situated men and women on the same terms, and the EEOC has brought enforcement actions over policies that weren't. Additional time for medical recovery from childbirth is legally distinct and can be limited to employees who gave birth.
