While some states have passed legislation ensuring paid family leave for employees at larger companies, many new parents have to make do with a combination of vacation time, sick days, and short-term disability.
Read on to find out what parents may be entitled to based on state regulations and company policy, and how you can maximize your benefits so you can get paid while on maternity leave.
What Is Paid Maternity Leave?
Paid maternity leave (or paternity leave) refers to the time off with pay that some companies grant employees welcoming a new baby or adopted child. Workers often receive only a percentage of their full-time pay, typically 60% to 80%, with limits based on the statewide average pay.
In the United States, businesses are not legally required to give employees paid maternity leave. According to the Bureau of Labor Statistics, only 23% of civilian workers had access to paid family leave in 2021. The U.S. is the only wealthy nation in the world that doesn’t mandate paid parental leave.
Fortunately, 11 states and the District of Columbia have passed legislation guaranteeing paid parental leave — though some laws don’t go into effect until 2023 or later. Federal workers nationwide are granted 12 weeks of paid family leave.
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How Long Is Maternity Leave?
Companies that voluntarily provide employees paid parental leave offer an average of 8 weeks. Because many parents find this inadequate — experts recommend 3 to 6 months — even employees with paid leave often extend their leave with vacation time and sick days.
Globally, the average paid maternity leave is 29 weeks.
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Benefits of Paid Family Leave
Research shows that paid family leave offers many benefits to parents and children. In one sense, the extra income helps families over the longer term, especially in lower-income households.
In another way, the time families spend together boosts the health of parents and children. Mothers are able to fully recover from childbirth, which can take six to eight weeks. And a child’s health is strengthened by the extra bonding time, regular breastfeeding, and reduced exposure to infectious disease.
Paid family leave may also cover other health emergencies, including:
• Adoption or foster child care
• Care of a spouse, child, or parent with a serious health condition
• A personal serious health condition
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What Is the Family and Medical Leave Act (FMLA)?
The Family Medical Leave Act (FMLA) is a federal law passed in 1993 that grants unpaid but job-protected family leave for eligible employees of larger companies. Individuals can also take time off to care for any family member with a serious health condition.
The law is designed to help families cope with emergencies that may occur without having to worry about losing their job. It also ensures that leave is available on a gender-neutral basis and supports equal employment opportunity for women and men.
FMLA Maternity Leave Eligibility Requirements
For an employee to qualify for FMLA benefits, both the employer and employee must meet certain requirements.
FMLA applies only to employers with 50 or more employees within 75 miles.
An employee must have worked for their company for at least 12 months and worked 1,250 hours within the past 12 months. Some part-time workers may not qualify.
State Laws for Maternity Leave
As noted above, 11 states and the District of Columbia have passed paid parental leave legislation, including California, Colorado, Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Washington, plus the District of Columbia. Benefits and eligibility vary from state to state.
Ways to Extend Maternity Leave
Traditionally, women without adequate maternity benefits have made do by cobbling together vacation and sick days, short-term disability, and unpaid leave. More recently, working from home — sometimes on a reduced schedule — has allowed parents to extend their time at home with pay.
You may want to search for a parental leave consultant in your state, such as MilkYourBenefits.com in California. For a fee, these advisors can provide up-to-date information on family leave law and the benefits you may qualify for.
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How to Prepare for Maternity Leave
It’s a good idea to prepare financially for maternity leave well in advance. Put away money and save for your baby. Here’s a rough timeline to help you plan for the big event.
1. Research State Laws and Company Policies
Before you announce that you are pregnant, find out what your company and state rules are for maternity leave. You can also look into how your medical insurance will work while you are out and how to add your baby to your plan. Check whether your premiums will go up.
You don’t have to inform your employer at this early stage. Your company should have an employee handbook that outlines family leave benefits, or it might be written into your contract.
If you experience pre- or post-natal health problems (such as high blood pressure, gestational diabetes, preterm labor, or C-section), you might qualify for short-term disability. However, know that disability benefits for pregnancy-related reasons are available only in some states. c
2. Develop a Maternity Leave Plan
Notify your employer of your pregnancy as you begin to show. Prepare for negotiating your leave by creating a plan for coverage while you are gone. For example, suggest a colleague you can train before you take leave. Explain how you plan to keep in touch with work while you are out.
Company maternity leave policy is not set in stone. You can negotiate with your employer to extend your paid time off, or perhaps propose a work-from-home or part-time arrangement.
Your boss may not agree with your plan, so consider it a jumping off point. One tactic is to present to your employer two or three options that you can live with. Your supervisor may well pick one of them. Finally, put it in writing and have it signed so that your employer cannot renege.
3. Start Planning Your Budget
Once you have a general idea of your income during maternity leave, prepare a new budget that includes all of your anticipated expenses. Check out tips on how to budget on a fluctuating income.
A budget planner app like SoFi’s Insights can make the budgeting easier because it tracks your expenses for you and gives a breakdown of your spending by category.
4. Write a Plan for Your Replacement
Before you write out instructions for those who will cover for you while you are gone, have a discussion with your teammates to make sure they are on board. Include in your instructions the dates that you will be gone, who will be responsible for what, and how you will communicate with your team (whether you will take part in meetings remotely, etc.).
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FMLA requires employers with 50 or more employees to offer up to 12 weeks of unpaid maternity leave. Research the benefits that you’re entitled to based on state regulations and company policy. Your maternity leave may end up being cobbled together from a combination of vacation time, sick days, short-term disability, work-from-home, and unpaid leave.
SoFi Insights is an app that helps you plan for life-changing events like starting a family. From your smartphone, you can track your expenses, explore the debt payoff planner, monitor your credit score, and talk to a financial planner for no cost.
What questions should I ask HR before going on maternity leave?
You can ask HR what benefits you are entitled to and how your health insurance will change after the birth or adoption. It’s also important to ensure the required forms are completed and any negotiated agreements for maternity leave are laid out in writing and signed by your employer.
How should you prepare financially for maternity leave?
In an ideal world, you would start saving for the baby before you are pregnant. Once you have negotiated your maternity leave and have an idea of your income, create a new budget that includes baby expenses.
Also check whether you qualify for any tax credits such as the Child Tax Credit, the Child and Dependent Care Credit, or the Adoption Credit and Adoption Assistance Programs. Taking out a College 529 savings plan for your child will reduce your taxable income.
What is short-term disability insurance and how does it impact maternity leave?
Short-term disability is an insurance program offered by some employers. Policies vary, but you might be entitled to 50% of your income or more for up to six weeks after giving birth if you have a C-section or experience complications. Check with your staff handbook and your HR department to find out if you might be eligible for short-term disability.
Photo credit: iStock/Maria Korneeva
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