Team Management

Need a Parental Leave Policy? Here’s How to Set Up an Amazing One

Kira Deutch Former Managing Editor, Gusto 
Parental leave policy

Parental leave is a chunk of time employees can take off if they or their spouse have just given birth, if they’ve adopted a child, or in some cases, become a foster parent.

The goal is to ensure that such a sunny life event doesn’t get overshadowed by the looming question mark of “what about work?”

Here’s the thing: The bare minimum for leave doesn’t guarantee that employees get to keep their wages or salary while they’re taking time off. So they could be earning zilch while out with their families.

Imagine going 12 weeks without a single paycheck—while you’re contending with all the intense joy and upheaval that a baby brings. That’s why many employers retool their leave packages to allow people to continue earning a salary while they’re out.

From IKEA to Netflix to small businesses right around the corner, there are tons of companies that offer paid parental leave, even if they’re not required to.

Why do they bother?

Because a parental leave policy signals to employees that their employer cares about their lives, are invested in their happiness, and are right by their side throughout their biggest milestones. Plus, offering paid parental leave helps ensure employees’ families get started on the right foot.

A quick synopsis of parental leave laws

Today, the US is one of the only developed countries that has no paid parental leave law in place. However, we do have something called the Family and Medical Leave Act, or FMLA, which tells employers what they can and can’t do about unpaid leave.

Specifically, the FMLA requires companies with 50 or more employees (who are located within 75 miles of an office or worksite) that they need to offer new parents up to 12 weeks of unpaid leave over the course of a 12-month period. This rule applies to all full-time workers, regardless of their gender, so long as they’ve worked 1,250 hours for their employer prior to taking leave.

On top of the federal FMLA rule are various state rules that pack in even more weight. For example, Massachusetts, California, Rhode Island, and New Jersey all mandate companies to provide paid leave, which makes the “unpaid” part of the federal rule not applicable.

Unsure which law applies to you? See what your state says here.

But what if my company is small and doesn’t have an endless budget?

That’s okay—you don’t necessarily need one. Optimizely created a great financial model template that you can use to project the actual cost of offering paid leave to your team.

Think about how much it would cost to replace any of your employees.

Spoiler alert: It’s a lot.

Then, use that number to help you come up with a leave budget per person. For a general idea, the Center for American Progress found that the average cost of replacing someone was 21 percent of their salary.

“When we eventually did the math, it turned out this program cost nothing. The cost of having a mom out of the office for an extra couple of months was more than offset by the value of retaining her expertise…”

– Laszlo Bock, Google’s former head of people, in Work Rules!

Chances are slim that everyone on your team will go out and get pregnant at the same time, which means you won’t have to shell out for parental leave for each and every employee all at once.

Still can’t afford to provide a paid stretch of time? Then consider having a portion of the time paid and some of it unpaid, so people can still reap some of the benefits of a meaningful leave policy.

How to build a thoughtful parental leave policy

Ready to roll? We’ve put together some tips to help you develop the best possible policy for your team—and your business.

1. Leave room for flexibility

Some companies allow parents to take leave when they need it most, whether that’s before or after the child is born.

Under the FMLA guidelines, people can take 12 weeks during a 12-month timeframe, which employees can then spread out before or after the actual birth.

You can also allow people to chunk it out so they can take their leave at periodic intervals throughout the year after they give birth.

Give your team room to get creative. They can start with three- to four-day workweeks in the beginning, or take leave when their partner isn’t taking theirs, to spread out the amount of time they don’t have to pay for childcare. This flexibility allows for a more thoughtful move back to the office.

2. Consider a “leave share” program

Back in 2015, Amazon launched an innovative addition to its policy: they allowed parents to share leave with their spouses.

Under the program, an employee can share up to six weeks of their paid leave with a partner—so long as the partner doesn’t receive the benefit from their own employer.

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3. Make the transition easy

A transition program can help people have an easier time getting back into the swing of things.

It can also help increase the odds that a parent will return to work.

Atlanta law firm Alston & Bird created a program that connects new moms with mentors once they return from leave. Most of the mentors have already gone through the experience of having a child, so they’re ready to offer loads of support as new moms ramp back up.

Another option is to allow new parents the ability to work from home or work part-time right when they get back.

Amazon has a dedicated “ramp back” program, where employees can return part-time in the beginning and then ease their way back to full time. Spotify offers flexible work options through its “Welcome Back!” program for all full-time employees, including the ability to work from home, work part-time, or work at various hours.

Easing your way back can make the transition a lot less overwhelming.

“This policy best defines who we are as a company, born out of a Swedish culture that places an emphasis on a healthy work/family balance, gender equality, and the ability for every parent to spend quality time with the people that matter most in their lives.”

— Katarina Berg, Chief Human Resources Officer at Spotify

4. Stay gender neutral

You know what rocks? The fact that every family is different. So make sure your policy reflects that truth.

Instead of singling out a certain gender or family dynamic, make sure the language and rules you lay out are applicable to everyone.

Here’s a sample policy from Women Employed to give you a taste of what gender-neutral language can look like.

5. Use it as a time to celebrate

Many companies sweeten the whole pregnancy deal with extras. Utah-based software company, Domo, gives mothers $2,000 to buy maternity clothes so they can feel more comfortable in the months leading up to the big day.

They also give both mothers and fathers $1,000 in cash to help with all the new expenses.

6. Practice what you preach

Every employee should take advantage of their company’s parental leave policy, no matter their role. Doing so sends a message to the rest of the team that it’s not only okay to take it, it’s encouraged.

Parental leave is a right that every employer should protect—and every eligible employee should use.

Once you’re finished wrapping up your policy, get it approved by an HR expert, and then slip it into your employee handbook. After that, make sure everyone—parents and non-parents alike—get their hands on the latest version.

A thoughtful parental leave policy is one of the most important ways to keep your team feeling happy.

Get cracking on a policy that’s compliant, true to who you are, and makes sense for your team. And then, watch as everyone feels way more relaxed (and stoked!) as their little ones make their worldly debuts.

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Updated: January 5, 2021

Kira Deutch
Kira Deutch Kira Deutch is a former Gusto editor. She has a background in publishing and content marketing for startups.


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