An announcement by Virgin Group founder Richard Branson this week rattled the employee benefits landscape, promising a full year of paid time off for parents of newborn or newly adopted children.
This announcement comes on the heels of the U.K.'s new Shared Parental Leave legislation that says new parents can share time off and are eligible to take up to six months. According to Branson, he just wanted to take the legislation a step further.
"If you take care of your employees they will take care of your business," Branson wrote on Virgin's website on Wednesday, also referencing his company's adoption of an unlimited vacation days (non)policy.
Unlike the U.K. and most other industrialized nations, the U.S. doesn't require employers to offer any form of paid parental leave, often forcing new moms to use vacation and sick days or take unpaid leave.
But some American companies are latching on to more generous policies, citing child developmental studies and employee retention strategies. In 2007, Google extended paid maternity leave from 12 to 18 weeks, with full salary and benefits. For some employees, leave can last as long as 22 weeks.
"Twelve-week olds are at a very different place developmentally than are 18-week olds. So we changed our maternity leave to 18 weeks--it just felt like the right thing to do," a Google spokesperson told Inc.com.
But an altruistic ideal and developmental science aren't the only reasons to extend paid leave for new parents. After Google's policy change, the company found that new moms left the company at half the rate they were previously.
Paid leave for new parents, regardless of gender, also helps companies retain women, something Silicon Valley struggles with, by promoting gender equality in the workplace. Giving both parents time off is associated with more freedom for women to choose when they want to go back to work.
While Virgin's policy is extremely generous, it only affects 0.2 percent of workers--Virgin Management employees who have been at the company for four years. Employees with less than two years with the company will receive a fourth of their salary.
"Access to paid leave within that company is so bifurcated between upper management and everyone else. And that's what we're seeing in the U.S. as well," Vicki Shabo, vice president at the National Partnership for Women & Families, said.
This divide of the workforce is part of the motivation behind the Family and Medical Leave Insurance Act, reintroduced this year by Senator Kirsten Gillibrand (D., New York) and Representative Rosa DeLauro (D., Connecticut). If passed it would create a new fund, made up of federal money and employer contributions, and be administered by the Social Security Administration to ensure twelve weeks of paid leave in case of a medical or family life event.
Business leaders like Richard Branson are not only getting ahead of public policy, they are helping drive the conversation on what's good for employees--and also smart business.