Most employers have positive attitudes towards paid leave, agreeing that it is important to take care of their employees and that offering paid leave is "the right thing to do." (Photo: Shutterstock)
Several states have mandated paid family or medical leave (PFML) while many others are considering it, or have legislation in process. The COVID-19 pandemic has further placed PFML in the spotlight — employee concerns about their family's health, as well as their own, are at the forefront. Childcare is increasingly challenging with daycare closures and the implementation of remote and hybrid learning.
The Families First Coronavirus Response Act addresses some of these concerns, but is only effective through the end of 2020. Negative impacts of the pandemic on businesses include lost revenue and increasingly unpredictable medical costs. States are facing lost revenue and budget shortfalls. In the current environment, employers may take the lead in the PFML space by establishing their own paid leave programs.
To gain a better appreciation for employers' concerns and needs related to PFML, LIMRA surveyed 604 human resources decision-makers at U.S. companies. Participating companies have at least 25 employees, are in the private sector, and offer at least some non-medical benefits that are either 100% employee paid or cost is shared between employees and employers.
Most employers have positive attitudes towards paid leave, agreeing that it is important to take care of their employees (96%) and that offering paid leave is "the right thing to do" (87%). However, significant concerns exist — these include cost, potential abuse, staffing impact, increased administrative burden, and compliance. Fifty-two percent of employers believe that paid leave requirements place an unnecessary burden on employers. However, if an employer were to choose not to offer paid leave, they would place themselves at a disadvantage in recruiting and retaining employees. Brokers and carriers may be able to help alleviate employers' concerns about paid leave.
Outsourcing leave management administration can ease the burden on employers. Currently, 78% of employers manage leave administration internally. However, 39% of these would be interested in outsourcing leave management if paid family leave were to be mandated. Choosing a private PFML plan (preferred by 6 out of 10 employers) could also help. However, those employers operating in multiple states (with potentially varying leave requirements), should consider whether a combination of state and private plans could best meet their needs. Critically, when there is a state mandate, the state determines whether employers have a private plan option. Therefore, employers must make their preferences known to their state representatives.
Employers have significant concerns about PFML, but it is important to understand that their perceptions may not always be accurate. In some instances, employers overestimate the changes they will make in response to a mandate. For example, 40% of employers with no current mandate expect to increase the employee contribution to other benefits, but only 20% of employers with in-force laws actually do so.
On the other hand, employers in states without PFML laws are less likely to note overlap between short-term disability and other leave types, and they are much less likely to plan/make changes (relative to employers in in-force states), even when they do note overlap. This consideration appears to remain under the employer's radar when PFML is not mandated. One explanation for these inconsistencies is that employers may not adequately understand PFML because they have not received clear information or, worse, they have been misinformed (this is more likely for those in states without a mandate).
Employers should do their research on PFML, consult credible sources (like brokers and carriers) early on, and cross-validate their findings. Doing so will help them "do the right thing" for themselves and their employees and avoid potentially costly missteps should they choose to implement PFML.
Mary Lesch, Ph.D., joined LIMRA in 2018. She is experienced in both quantitative and qualitative research methods and has a background in risk perception, behavior change, and technology acceptance. She has published in academic and professional journals and served on the editorial board of the Journal of Experimental Psychology: Applied. She received her master's degree and Ph.D. in cognitive psychology from the University of Massachusetts- Amherst.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.