Why imposing one 12 week standard on all businesses neglects their complex needs.

For many businesses, 12 weeks for a leave benefit is not a good fit. It may heavily challenge their ability to be reliable.

Reliability is at the heart of every business activity that seeks to build trust and loyalty. Yet heavy government intervention deprives them of the management tools they typically rely on in this most critical of objectives.

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When I served on the Colorado Paid Family Leave Task Force, the discussion about duration was very focused on the needs of the employee while the needs of diverse businesses were largely neglected. A more moderate option was rejected. A duration of 4 – 6 weeks could have served as a foundation that individual businesses would build on depending on their circumstances. Since then, I have heard even more reports from businesses about why the duration matters. Proponents didn’t take the time to understand their challenges.

Why duration matters

Imagine a midsize business with about two hundred employees that already offers four weeks of PTO (paid time off) a year. With relatively short periods of a week or two, others can fill in the gaps. For long leaves, like a year, the employer might recruit a replacement. But for 12 weeks, nearly 3 months – that is too long to cover with existing employees and too short to hire qualified temporary help. To hire, train and integrate an employee into many work roles is a long-term prospect that drains time and resources from other positions.

Hiring a temp is not always an option due to a lack of availability or affordability

A longtime staffing industry executive shared how hard it is to motivate or attract professionals to a temporary position. It seems reasonable. Onboarding, integrating into a new work environment, like any significant change, takes work. It takes building knowledge and relationships – often in fast-moving or demanding environments. Perhaps there would be a few willing candidates hoping for a permanent position. But most qualified candidates would demand premium rates for the temporary circumstances if they were interested at all.

The mandate penalizes the companies who have had the most success discovering a satisfactory compromise directly with their employees.

A government mandate to accommodate one legally enforced standard penalizes those companies with high retention rates. The lack of turnover becomes a liability if the law requires the employer to accommodate and reinstate the returning employee, regardless of how much of the leave they exhaust. In a legal environment that adds risk to separations and terminations, this leaves larger firms at an advantage as they more easily sustain an unanticipated bump up in staffing numbers. 

We should recognize that the employers who have earned their high retention rates, have done so through active communication and by treating their employees fairly. They are likely offering an inspiring or satisfying work experience relative to their industry peers.

Small is different

Small firms exist in industries with all levels of skill and expertise. But their limited overall staffing numbers make accommodating the government paid leave benefit an additional challenge. In Colorado, when a new paid leave mandate goes live in 2024, even the smallest employers will be legally bound to reinstate the employee returning from a state-administered paid leave. So while a large employer might have more wiggle room, a small firm does not. Despite the investment in training and establishing relationships, they will have to let the temporary hire go to accommodate the returning employee – with no real certainty that the returning employee will stay.

Most small businesses fight every day to maintain their footprint in fiercely competitive markets. How will they make the grade for reliability with their clients and customers if the government is giving their employees a broad legal pass not to be?

Complex systems thrive with options. This program starves options.

The new government benefit is between employees and the State. It leaves employers in only a compliance role and imposes risks associated with increased labor costs and disruptions from absences. Now gone are the options that have always allowed us to move forward or customize for individual needs. In their place are non-negotiable provisions that will build risks into all businesses – and some more than others.

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Part of my contribution to the final task force report was an addendum that itemized the common challenges and risks that small businesses face when an absence disrupts their operation.