Mercer study: Paid leave benefits expand amid compliance challenges

The rapid expansion of disability, sick, and leave mandates is posing compliance challenges, especially for multi-state employers, according to a new survey from the financial services firm Mercer. Nearly 7 in 10 employers who responded rank compliance as one of their top three concerns, up from about 5 in 10 in 2021. To address these challenges, 72% of employers reported increasing resources to ensure compliance.

Employers are grappling with leave administration, too, as 66% of employers cite improving leave administration among their top three concerns, up from 41% in 2021.

Mercer’s 2024 Absence and Disability Management Survey explores the changing landscape of paid leave benefits based on responses from more than 600 U.S. employers.

“At one time, employers’ main concern regarding time off was the impact on business operations,” Rich Fuerstenberg, a senior partner in Mercer’s U.S. Health and Benefits practice, said in a statement. “As leave programs have become more complex, that has changed. In our survey, compliance with state and local leave mandates and improving leave administration emerged as employers’ top two priorities.”

Paid parental leave and flexible paid time off surge

Over the past decade, employers have implemented paid parental leave to enable employees to spend more time with their children. It is now offered by 73% of employers, up from just 25% in 2015. Employers also are making paid parental leave programs more inclusive by offering paid leave to employees who become parents through adoption (67%) or surrogacy (33%), according to the survey. Paid parental leave is eight weeks on average.

Additionally, almost a third of employers (32%) provide flexible paid time off to at least some of their employees, up from 20% in 2021. Under such a policy, sometimes called “unlimited PTO,” employees are permitted to use their discretion in how much time they take off from work, subject to manager approval. Notably, 11% now offer flexible PTO to all workers, a marked change from prior years when typically only executives or salaried employees enjoyed this benefit.

Related: Many employers plan to implement big changes to leave programs, study finds

Similarly, employers now are recognizing the importance of PTO in helping employees manage traumatic events. While they have long provided paid bereavement leave for loss of an immediate family member (95%), employers recently started offering time for other significant losses, such as the death of an extended family member or close friend (54%), pregnancy loss (62%), or miscarriage (58%).

More fixed company holidays

The percentage of employers observing Juneteenth as a company holiday has jumped from 9% in 2021 to 41% in 2024, while the percentage of those observing Martin Luther King Jr. Day has risen from 55% to 63%. With the addition of these holidays, the median number of fixed holidays offered by employers now stands at 10.

“More companies are recognizing the importance of paid leave as a way to communicate their values and priorities to their employees,” Fuerstenberg said. “By providing paid time off for significant events and observing holidays that hold cultural and historical significance, employers are demonstrating their commitment to fostering an inclusive and supportive work environment. These initiatives not only benefit employees but also contribute to a stronger sense of community within the organization.”