Developing a Paid Leave Strategy That Supports Workers and Their Families

Developing a Paid Leave Strategy That Supports Workers and Their Families
Employee Wellbeing

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This insight is part 01 of 08 in this Collection.

Workforce

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This insight is part 11 of 12 in this Collection.

November 8, 2024 9 mins

Developing a Paid Leave Strategy That Supports Workers and Their Families

Developing a Paid Leave Strategy That Supports Workers and Their Families

With no federal paid leave law in the U.S., employers have limited guidance in designing equitable and comprehensive paid leave programs to support their workforce. Looking beyond compliance to focus on strategy and values will help create fair and well-designed policies.

Key Takeaways
  1. Balancing caregiving and work remains particularly challenging for employees with family care duties, which disproportionately affect women.
  2. There is a mismatch between employees with family caregiving responsibilities and employers that offer paid caregiver leave. State laws are evolving to fill this gap.
  3. Employers are expanding paid leave policies to include family care to align with commitments to wellbeing, as well as diversity, equity, inclusion and belonging.

Paid time off is incredibly important to employees’ overall wellbeing. When asked what benefits employees value most in a recent Aon survey, more than half named paid time off.1 In fact, one of the best things employers can do is provide their workforce with a comprehensive paid leave program that provides ample time for self-care, family care and recharge, so they can be fully present during the work day.

While specific needs vary from person to person, the overall value of paid time off remains consistent. To continue progress in this space, new state and municipal laws are being made to closely mirror employees’ requests and better support them in cases where work must be balanced with personal caregiving responsibilities. Employers are therefore tasked with deciding if they want their paid sick leave and family programs to simply meet minimum compliance requirements, or if they should establish a new minimum standard for paid sick time and family leave that truly addresses workforce needs. 

Creating an Equitable Paid Leave Strategy 

An optimal paid sick and family leave policy is one that balances several key considerations. It should comply with relevant laws, while reflecting the employer’s commitment to equitable treatment of their employees. A well-considered plan will also help an employer attract and retain talent. To achieve this, employers should base their principles on equity rather than geography. 

Here are three ways to create a compliant program that leverages paid leave laws and guarantees equitable access to family care leave:

1. Understand the demographic makeup of the workforce: Organizations with younger employees, who are often starting or growing their families, will have different needs compared to those with older employees likely caring for aging relatives. For companies with more mid-career employees who are part of the “sandwich generation,” their needs will likely be magnified by the demand to care for multiple generations. One study found there are about 2.5 million Americans who care for both an elderly relative and children at the same time.2   

“Those who are in the sandwich generation but do not have paid family leave, are more likely to be stressed at work because they can’t adequately care for their loved ones,” says Sander VanderWerf, senior vice president of Aon’s Time Away and Life Solutions practice. "Is that lack of emotional wellbeing hurting their performance? Are they leaving the workforce altogether? Companies need to consider these questions.” 

2. Determine how well existing leave policies address current needs: Involve employees in assessing how well your current paid leave policies fulfill their needs and identify gaps to address. Even if this process reveals that current company policy is ideally suited to employee needs, there is value in soliciting employee feedback to help continually evaluate and evolve paid leave and broader benefit offerings.

3. Examine alignment of current strategy to the company’s commitment to diversity, equity, inclusion and belonging (DEIB): Caregiving responsibilities disproportionately fall on female colleagues, as 60 percent of caregivers are women. Women of Color are also disproportionately prevalent as caregivers.3 Thus, a company’s paid leave strategy can impact the makeup of its workforce, especially if women are leaving the workforce to provide care. Look at the broader landscape and consider how current policies support women, People of Color, and the engagement of employees with personal and family health issues. 

One additional factor to consider is the cost of productivity to the business. The Family and Medical Leave Act of 1993 (FMLA) provides employees with unpaid leave and job protection. However, on average, only 15 percent of the workforce takes FMLA leave to provide care. This is in spite of the fact that two in five adults provide regular care to a family member.4

There are legitimate concerns that if an employer offers more paid time off to care for family members, employees will use the time more readily than they would use unpaid FMLA, and in turn, increase the cost of replacement workers. These concerns can be mitigated with phased implementation to help employers manage increased costs over time, and course correct as necessary. Other strategies include adopting a waiting period for new employees or offering partial pay during the leave period.

Just as important as costs, though, are the savings. The cost of permanently replacing workers who must leave the workforce in order to provide care for a relative likely outweighs the cost of providing leave. Similarly, the value of attracting and retaining talent based in part on the ability to provide paid leave is significant. 

Working with an advisor that aligns priorities between the business and the workforce can help employers craft a policy that balances commitment to equity, the needs of the workforce and the demands of compliance.

Focusing Only on Compliance can Breed Complexity

A paid leave strategy that reflects the company’s values and commitment to equity must still comply with the law. However, in the U.S., there are no federal laws that mandate paid leave, making it one of the few countries without a nationwide policy. Instead, there is a patchwork of laws providing some type of paid leave support for family members, covering just under 50 percent of workers.

Quote icon

New laws and ordinances are being enacted across the country. Four new paid family leave programs will be launching in the next two years, and three ballot measures on paid sick leave passed in the 2024 election. This requires constant vigilance.

Abbey Hendricks
Vice President, Legal Consulting Group, Health Solutions, North America

This patchwork of laws and the shifting political landscape that make paid leave policy difficult to predict have resulted in employers taking one of two paths to compliance as it relates to their own paid leave policies. Employers can comply on an individual law basis, which results in workers in similar jobs having different leave policies based on their geography. Or they can define paid leave according to the organization’s commitment to DEIB and compliance — resulting in a more consistent approach to meeting employees’ family care needs.

Employers who choose just to comply with each law individually must consider the unintended consequences this approach may cause, including: 

  • Variations of practices for employees who move between states: An employee who relocates to another state, whether for a job transfer or personal reasons, might not realize this could reduce their paid leave. Even employees who live in states that are adjacent to their workplace may have different policies. For example, a company based in Philadelphia may have employees who live in New Jersey, which has a different state law.
  • Negative employee sentiment: Employees living in jurisdictions with less paid leave may have a less favorable view of a company’s benefit offering. In an era where more employees openly discuss their pay and benefits with colleagues, this can lead to increased brand and reputational risk.
  • Administrative and communication complexities: A lack of consistency in plan coverage across geographies can lead to administration and communication challenges.
  • Lack of program clarity: There could be an impact to programs where paid leave overlaps. For example, employers might have different policies around sick leave, vacation, paid parental leave, and short-term disability. Policies need to be in place to direct employees which type of leave applies in a given situation.
  • Greater compliance challenges: Managing compliance can be tougher when an employer only adheres to minimum standards, as the company might not be fully aware of changes in leave policies several states away. 

Making the Right Decision on Paid Leave Strategy

Amid the complexity of local laws, U.S. employers have an opportunity to refine their paid sick and family leave policies. Doing so will not only help reinforce the organization’s values, but also attract and retain talent. Start by considering strategies to support employees with family care responsibilities and provide equitable benefits. At the same time, make sure to leverage new paid leave laws that contribute to a productive workforce. Companies that successfully navigate this dynamic will likely gain a competitive advantage, especially when it comes to retaining talent — specifically women, who may otherwise leave the workforce. 

Building a leave strategy and creating policies that reflect an organization’s values allow employers to improve compliance and communication, while also providing real benefits to their employees. Ultimately, it’s the people who feel valued that will add the most value to the firm — in both productivity and performance.  

Employee Benefits Consulting and Broking

Employee Benefits Consulting and Broking

Aon can help employers craft meaningful benefits strategies, including paid leave. Learn more about our Employee Benefits Consulting and Broking practice.

Learn More

1 Aon 2024 Employee Sentiment Study | Aon
2 A National Profile of Sandwich Generation Caregivers Providing Care to Both Older Adults and Children | Geriatrics Healthcare Professionals
3 Caregiver Statistics: Demographics | Family Caregiver Alliance
4 Caregiver Statistics: Demographics | Family Caregiver Alliance

Aon’s Thought Leaders
  • Abbey Hendricks
    Vice President, Legal Consulting Group, Health Solutions, North America
  • Sander VanderWerf
    Senior Vice President, Time Away and Life Solutions Group, Health Solutions, North America

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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