Young woman carrying baby looking throughout window
This summer, the Society for Human Resource Management (SHRM) published an annual employer survey showing fewer companies offering paid parental leave, dropping from 44% in 2020 to 27% in 2022.
It also stated only 35% of employers now offer paid maternity leave beyond what is required by law, down from 53% in 2020. Related, last week, some employers reported shrinking the number of paid weeks of maternity and paternity leave they will offer (streaming service Hulu reduced its fully paid parental leave from 20 weeks to eight weeks).
Paid parental leave has been unaffordable for most U.S. businesses, partly contributing to the lack of it. Smaller companies (those with under 100 employees) account for a large percentage of America’s employers and are unlikely to offer any paid maternity or paternity leave. Some states like California have provided help, but their policies typically only pay 50-60% of pay up to a weekly cap for 8-12 weeks.
Young professional working with human resources software on computer
Dirk Doebler is the CEO and founder of Parento, an insurance-based parental leave offering for companies. According to Deobler, Parento is the first paid parental leave insurance that addresses the lack of paid parental leave in the U.S. and makes it more affordable for companies to invest in gender-neutral paid parental leave.
“We talk to companies and their benefits brokers daily about parental leave. Paid parental leave is one of the hottest topics of conversations with HR and total rewards leaders, and it’s no longer confined to just tech or well-paid office workers. Pick an industry, and a company from that industry has reached out to us,” he added.
Most Americans get coverage through their employer’s group insurance. For example, paid parental leave can be insured, just as an employee’s health, dental, vision, short-term and long-term disability, and life policies are insured.
For example, when health insurance is provided for employees by their employer, that employer contracts with a health insurance company or companies, and employees can choose between those plans. Contracting with a health insurance company allows an employer to join an insurance risk pool and helps them avoid the expensive cost of self-funding employee policies.
Interestingly enough, according to Parento’s internal research, it typically costs employers 20-30% less to also contract and insure an employee’s paid parental leave than to self-fund it. “It only makes sense for companies to want to buy insurance for paid parental leave, which can be a higher risk and cost more money than dental or vision insurance for some companies,” adds Doebler.
Little baby boy is spending time in his mother's office
Extending (or simply even offering) paid parental leave has been linked to decreased maternal depression and anxiety, parental mortality, and increased marriage satisfaction and fertility. It also reduces attrition for the employer, with women who take paid leave far more likely to return to the workforce and work longer hours, on average, one to three years later.
Now, with the option to insure paid parental leave on the table, employers no longer have a reason to ignore this critical benefit.
