Bill & Melinda Gates Foundation Pares Back Benefits But Still Offers More Than Most

The Seattle nonprofit is seeking to balance the benefits of generous time-off perks against the workforce disruption they can spark.
 
 

When my first child was born in the last century (1990), my parental leave benefits consisted of whatever vacation time I had banked -- which I ended using to drive cross-country with my wife and our 2-week-old son to start a new newspaper job.

Times sure have changed, and for the better ― starting with the help of the Family and Medical Leave Act passed in 1993, requiring employers with 50 or more workers to offer unpaid family or medical leave of up to 12 weeks to qualifying employees.

As proof of the progress on that front over the past 30 years, we need only look at the Bill and Melinda Gates Foundation’s recent decision to scale back the nonprofit’s parental-leave benefit from a very generous 52 weeks of paid time-off for the birth of a child to a still-ample six months. The new policy also will provide the returning parent with a $20,000 taxable stipend for child-care costs and other family necessities.

The reason for the change? A benefit offering employees a year off from work was not only proving to be too disruptive for employees who had to cover for the individual on leave, but it also was disruptive to the returning employee – who had to be “re-onboarded,” often in the context of goals and roles that had changed during the year they were gone.

“Ultimately, we concluded the 52-week leave was hindering the foundation’s purpose – to maximize our ability to help people around the world live healthy, productive lives,” Steven Rice, the foundation’s chief human resources officer, wrote in a recent company blog. “We want to make parental leave work for both new parents and the foundation overall, and still offer a generous and leading benefit in the U.S.”

Even at six months, the foundation’s parental-leave benefit is first-in-class. Other area companies, such as Amazon, Microsoft and Zillow, offer paid parental-leave perks ranging from 14 to 20 weeks, according to a report by Built in Seattle, an online community serving area startups and tech companies.

The trend in recent years is for companies to expand their parental-leave and related benefits as part of an effort to remain competitive and to lure and retain new talent, said Lisa Cleveland, a board member for the Seattle-based Employee Benefits Planning Association. In fact, over the past few years, Boeing, Nordstrom and Starbucks, for example, all have expanded parental-leave benefits, according to media reports.

That trend is likely to continue across a broader spectrum of companies in Washington, propelled by a new state law, effective this year, that requires employers and employees to pay premiums into a statewide insurance program that will generally cover up to 12 weeks of paid leave per year. Starting next year, employees can apply for paid family or medical leave under the new program, including seeking paid time off to care for a newborn.

Cleveland said even though parental-leave benefits can be attractive carrots in recruiting and retaining talent, there is a point at which the generosity of those benefits can become counterproductive, however.

“From an administrative standpoint, it’s always a burden to do something that’s more generous and outside the norms, because you have to maneuver through the trickle-down effect with the contracts you have with carriers for a variety of benefits,” she said.

Cleveland adds that if a company has a lot of young employees, it can compound those issues.

“I’ve got groups that have 10 pregnancies in a year,” she said. “What do you do if all those people are taking one year off?

So, the question now, it seems, isn’t whether parental-leave benefits are here to stay or not, but rather where the law of diminishing returns sets in on the length of the leave. In other words, at what point does time off from the job start to be counterproductive for both the employer and employee? That’s sure to be a controversial issue -- especially when it’s in the context of caring for children -- but it seems the Bill & Melinda Gates Foundation is already at the doorstep of that frontier.

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