Forcing small businesses to offer paid leave could result in lower wages for their employees.
Small businesses value fathers and mothers just as much as larger companies. But mandated parental paid leave can be a little more tricky for small-shop owners, who have to consider what policies would help employees—without doing permanent damage to their businesses.
NFIB’s Senior Executive Council Beth Milito weighed in on paternity leave policies on CBS Sunday Morning, pointing out that the cost of mandated paid leave will fall on someone—be it the employer, employee or consumer.
Where Parental Paid Leave Stands Now
Those in favor of mandated parental leave benefits argue that the U.S. lags behind most developed countries worldwide. Seventy-one countries offer paid leave for new fathers—not including the U.S.—and the U.S. is only one of two countries that doesn’t offer paid leave for mothers, CBS reported.
In 1993, Pres. Bill Clinton signed the Family and Medical Leave Act (FMLA), which grants up to 12 weeks of leave, unpaid, and is only offered to full-time workers at firms with 50 or more employees. This also only applies to those who have worked more than 1,200 hours in a 12-month period.
Forty percent of workers, and most small businesses, aren’t included in FMLA. So, how should small businesses handle parental leave policies?
Most employers already offer paid sick leave and vacation days, Milito told CBS. It will cost someone, somewhere, if companies are required to offer more paid leave on top of that, she added.
“They can’t just pass it onto consumers,” Milito said. “What is it going to mean? It’s probably going to mean lower wages for the employees, so you’re going to hurt the very people you’re trying to help. It’s robbing Peter to pay Paul.”
Small Biz Perspective
Parental leave can have a bigger impact on smaller companies because it’s more demanding on a staff to cover for each other, wrote Karen Firestone, president and CEO of the small business Aureus Asset Management, in an article in the Harvard Business Review.
“Big corporations contain redundancies, which allow colleagues to cover for each other over a period of months,” said Firestone. “Without that luxury, small companies must hire long-term temp replacements for administrative, research, investment, trading or other positions. Other costs include management time and effort and the risks of errors or a poor cultural fit.”
Small business owners have to decide whether they should draft an official policy or offer each employee a customized plan, Firestone added.
“Spelling out all benefits in writing could be a useful recruiting tool, but could require delivery of equally generous plans to people of varying value to us,” she said. “For that reason, we have chosen to explain that we offer a mix of set and customized work/family benefits. We see this as fair to our employees and to ourselves as a small enterprise.”
