Some employers are providing paid family leave (PFL) as a popular addition to employee benefit packages, and are finding that it can help improve employee engagement and productivity.

While large employers in technology, finance, consulting, and legal are leading the charge, other industries and smaller employers are beginning to offer PFL as well. Historically, paid parental leave (PPL) was the benefit launching point that evolved into PFL with broader benefits. The news media frequently discuss the two interchangeably, which can be confusing.

PFL is a complex benefit with multiple factors affecting cost and perceived value to employees:

• What family leave purposes are covered? Options include: bonding at birth or adoption; caring for parents; caring for spouses; caring for children; personal healthcare; domestic abuse or stalking response; and military family leave.
• What is the level of mandated wage replacement? State PFL and local laws vary as to percentage of wage replaced, and the maximum cap on total weekly benefits. States offering PFL include California, New Jersey, Rhode Island, New York (beginning Jan. 1, 2018), and District of Columbia (beginning July 1, 2020). Employers have more freedom to design custom PFL packages for their employees if unaffected by these jurisdictions or similar municipal laws.
• What is the duration of the benefit? In Rhode Island it’s four weeks, in California and New Jersey it’s six weeks, and New York begins at eight weeks and will reach 12 weeks by 2021. In these four states, the program builds on state temporary disability insurance programs. The District of Columbia will require from two to eight weeks depending on leave purpose. U.S. corporate benefits run as high as 20 weeks of PPL at Twitter, 26 weeks at Etsy, and 12 months at Netflix.

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A new Boston Consulting Group report makes the case that organizations that offer paid family leave see higher retention rates, better results from employee recruitment, and improved morale—especially since relatively few employers offer the benefit at this time.

What does the furniture retailer IKEA have in common with the U.S. Department of Defense?

If you answered “similar taste in decor,” you’re wrong, unless IKEA recently started offering its Kivik couches with a camo print. But if you guessed that they both offer their employees paid family leave, you’re on the right track.

A new Boston Consulting Group report [PDF] on the subject of paid leave calls out the two employers for offering the benefit, which tends to be uncommon in some industries. The BCG report, written from the perspective that paid family leave is unlikely to become federal law anytime soon, instead makes the case that the added cost pays for itself in other ways.

“Though the benefits can be hard to measure, companies report that the payoff from offering paid family leave exceeds the costs,” the report states. “And companies report that they are able to manage the cost of their programs through thoughtful design.”

Click here to view the key points from the report