United States: Paid Family Leave Policies May Not All Be Equal: Starbucks Investors Questioning Differing Application Of Paid Family Leave Policy

Last Updated: November 13 2017
Article by Keith S. Anderson

If your company has a family leave policy that goes beyond the legal requirements of the Family and Medical Leave Act (FMLA), does that policy need to apply to all employee levels equally? No. But as Starbucks is currently experiencing, your company may face some questions about why corporate executives have a more favorable paid family leave policy than lower-level employees. Such a policy would be legally defensible, but careful thought should go into crafting and implementing a paid family leave policy to meet the company's goals.

At an annual shareholder meeting earlier this year, a Starbucks barista demanded more paid family leave for employees who are new mothers, such as herself, igniting the scrutiny. The current policies have been protested by baristas and store managers. Corporate employees receive 16 weeks of paid leave if they give birth and 12 weeks if they are new fathers or adoptive parents, whereas retails workers who give birth are eligible for six weeks of paid leave, but fathers whose partners give birth receive no paid leave.

The baristas' complaints led to one of Starbucks' corporate investors, Zevin Asset Management, to announce that it would pressure Starbucks to inform shareholders of whether its paid family leave policy would be considered discrimination because the company offered more favorable family leave policies to corporate employees. Zevin has issued similar warnings to over a dozen other major corporations. Thus, many companies are addressing the question of the disparity in paid family leave policies.

Developing an effective family leave policy should certainly conform to the statutory requirements, but after that a company must assess its priorities and resources that go beyond what is legally mandated.

As far as what is legally required, in general, the FMLA requires employers with 50 or more employees to provide up to 12 weeks of unpaid leave in a 12-month period, with the continuation of the group health insurance coverage and with restoration to the same or equivalent position upon return, for the birth of a child, care for a new born child within the year of birth, or to care for a spouse, child or parent with a serious health condition. FMLA protection applies equally to both men and women.

Additionally, Title VII and the Pregnancy Discrimination Act must be remembered and abided by when crafting a family leave policy. Title VII prohibits discrimination on the basis of sex, among other protected characteristics, such as religion, race or national origin. The Pregnancy Discrimination Act added the prohibition against pregnancy, birth or other related medical conditions. Finally, several states have paid parental leave mandates (e.g., California, New Jersey, and Rhode Island). Some have advocated for legislation mandating paid family leave. But at this point, employers can generally set their own standards and eligibility for parental leave benefits.

Once those legal requirements are met, a company is free to determine what type of family leave benefit – paid or unpaid – it wants to offer its workforce. As long as the differentiations in the family leave offerings are based on legitimate, non-discriminatory business reasons, they should be defensible. But be careful in crafting a policy that includes a subtle differentiation that will draw scrutiny – such as giving a greater benefit to "primary" caregivers in a family.

A family leave policy – established for bonding purposes versus pregnancy disability – should apply equally to both males and females, per guidance from the EEOC. For actual pregnancy disability leave – for the period the employee is medically incapacitated due to pregnancy and recovery – there can and should be a difference between women and men. Leave that is beyond that which is medically required is considered bonding leave and should be equally applied to both men and women.

Ultimately, a family leave policy is a recruiting and retention tool for employers, and the design of the policy should keep those goals in mind. The benefit offered may differ among the different types of employees and the needs of the company. Companies are obviously allowed to pay people differently based on their job classifications and other factors, so offering different family leave policies is just another means of compensation.

Some considerations to think about when establishing any paid family leave policy:

  • What are the needs of your company?
  • What can your company afford?
  • What is the workforce and talent availability?
  • Will the policy increase morale and improve the culture?
  • Are you running FMLA leave concurrently with paid parental leave? It is legal, and you should do it.
  • Are you requiring the exhausting of other paid leave prior to parental leave? It is legal to require employees to use up all vacation, sick, and PTO leave before beginning the paid parental leave period.
  • Could any possible alternative policies such as purchasing an insurance plan to pay for medical-related maternity leave or offering flexible part-time schedules or telecommuting be offered?
  • Do you want to offer the full extent of the benefits with the employment offering or allow benefits to be accrued over time?

Once FMLA compliance is established, each company should carefully assess its needs, situation, and priorities in putting together a successful family leave program. The benefit will likely look different between employees in different classifications, just as different members of any company are paid at different levels or may enjoy other non-uniform benefits. Once a policy is thoughtfully developed and finalized, it should be publicized to allow your company to maximize the recruiting and retention intent.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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