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Paying Employees on Maternity or Paternity Leave

April 5, 2016 | posted by Abacus Payroll
Small business maternity leave payroll and leave policy

As an employer, dealing with a pregnancy in the workplace can be a delicate situation. On the one hand, you want to be as supportive and congratulatory as possible. On the other hand, a part of you as a business owner wonders exactly how you’re going to fulfill so-and-so’s responsibilities for an undetermined amount of time.

Small businesses are especially susceptible to pregnancy-related absences, if for no other reason than that their numbers and policies are already a step down from those of large businesses. If you’re scratching your head at the prospect of having to cover an employee’s maternity or paternity leave but you’re unsure of how to proceed, the following points should help organize your process.

Think Compassionately

It should go without saying that your pregnant employee is going through an incredible change in their life. Any inconvenience your company faces with their loss, while not negligible, cannot take precedence. Even from a purely logistical standpoint, any asset retention-oriented model of behavior makes it clear that you should support your employee to the furthest extent of your ability.

You should start by briefing your employees on the federal- and state-based ramifications of maternity or paternity leave and work your way forward from there. Foster a healthy, friendly environment in which your employees feel comfortable coming forward with concerns, and the combination of these two behaviors should make integrating a new policy a breeze.

Know the Law

Of course, any sort of leave has legal aspects to it, and maternity leave is no exception. Though maternity and paternity leave remain loosely-regulated, there are a few non-negotiable laws to remember. The three main ones are as follows:

  • Family and Medical Leave Act – states that any company in excess of 50 employees must provide eligible men and women alike with 12 weeks of unpaid leave for the birth of a child, complete with active insurance coverage. This law also covers the time during the first year of an adoptee’s integration into a family.
  • Pregnancy Discrimination Act – works to ensure that pregnant women will not have hours reduced, either during or post-pregnancy. The Pregnancy Discrimination Act is an extension to the Civil Rights Act of 1964 under the U.S. Equal Employment Opportunity Commission and protects women from discrimination due to pregnancy, child birth, or a related medical condition. In addition to prohibiting discrimination against pregnant women in terms of employment, promotions, fringe benefits, layoff, or hiring, it also dissuades employers from preventing women from returning to work, so long as the company has at least 15 employees. As an employer, it is important to know the protections within the Pregnancy Discrimination Act when it comes to planning for maternity leave because the employee is protected even if the employer believes their actions are acting in the employee’s best interest.
  • Americans with Disabilities Act (ADA) – prohibits discrimination against employees on grounds of disability or temporary disability that results from the pregnancy. As one would accommodate employees with disabilities recognized by the ADA, a pregnant employee can request light duty, reasonable accomodations, or extended leave if their physical limitations are causing inability to work or perform their normal duties. Again, this law pertains to businesses with 15 or more employees.

As a general rule, most state-specific laws don’t require paid leave, with the exception of extenuating circumstances. For example, New Jersey state law mandates paid maternity or paternity leave only if employees have worked 20 calendar weeks or earned minimally 1000 times the state minimum wage in the 52 weeks prior to initiation of leave. In a case such as this, the employer may pay the employee up to two-thirds of a week’s pay for up to six weeks, provided the employee exhausts other available leave first.

Customize Your Parental Leave Policy

There is not a universal doctrine regarding maternity or paternity leave. While having to create your own policy entirely from scratch can present a logistical nightmare, it also allows you to tailor an inherently personal protocol to your company’s ethos. This can be a chance to give back to your employees, so don’t waste it.

First, your policies should always reflect both your company’s needs and those of the individual, so start by implementing an integrity system. Encourage your employees to let you know when a pregnancy becomes a part of their lives so you can both congratulate them and prepare for the birth when it comes.

Some of the basics that may be addressed in your parental or adoption leave policy include:

  • Length of time the employee must have been employed to be eligible (full time or part time)
  • Length of leave and if it is paid or unpaid
  • Who can take leave if both parents are employees
  • The window of time in which the leave must be taken
  • If unused accrued time off must be applied
  • Expectations of holiday pay during the leave
  • If health care benefits will be maintained (if applicable)
  • An agreed upon return date before the employee’s position is considered voluntarily terminated

It stands to reason that your employees’ performance may be impacted as the pregnancy progresses. Compensate for this ahead of time by figuring out which tasks can be performed preemptively, which you’ll need to distribute amongst other employees, and which you’ll need to put on the back burner for the time being. Pregnancy can be an unpredictable event, but you should at least have the better part of a quarter to adapt and plan accordingly.

Finally—and this is the most important part—build your policy around support of the staff member in question. Weathering the months after their departure may pose a challenge, but you can improve your employee’s satisfaction with his or her job when he or she knows you are supportive and understanding. Remember, losing critical staff temporarily because of maternity or paternity leave is far better than losing them permanently due to lack of support.

Need more HR guidance?

Customizing a maternity and/or paternity leave policy is just the tip of the iceberg when it comes to HR and leave policies. If you don’t have an HR department and are trying to stay on top of legislation and compliance yourself, consider outsourcing your HR functions for a nominal fee.

Learn More About Our HR Help Center


At Abacus Payroll, we understand that maternity and paternity leave etiquette may seem daunting. For more information on how you can create a seamless, low-stress policy, while abiding by all applicable laws, call us at 856-667-6225.

Note: This article is presented for informational purposes only. Refer to your state laws and HR contact for how this pertains to your individual situation.

About the Author: Abacus Payroll

Abacus Payroll, Inc. is a leading provider of payroll solutions for businesses of all sizes. Whether yours is a family-owned small business or a national corporation, we provide payroll, tax and other financial services on time and at an affordable price. Unlike other payroll providers, Abacus Payroll will assign your very own payroll specialist who will understand your payroll needs inside and out. So no more speaking to a different person each time, no more sitting on hold for hours and most importantly no more missed deadlines! Contact us today to see how we can help your business. You can count on us.