Expansion of Paid Leave Mandates Creates Compliance Complexity for Employers, Says Mercer

Mercer, a business of Marsh McLennan (NYSE: MMC) and a global leader in helping clients realize their investment objectives, shape the future of work and enhance health and retirement outcomes for their people, today released the results of its 2024 Absence and Disability Management Survey. The results shed light on the changing landscape of paid leave benefits.

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

Top challenge for employers: compliance with state and local mandates

The rapid expansion of disability, sick and leave mandates poses compliance challenges, especially for multi-state employers. Nearly seven in 10 employers rank compliance as one of their top three concerns, up from about five in 10 in 2021. To address these challenges, 72% of employers reported increasing resources to ensure compliance.

Employers are also grappling with leave administration. The survey found that 66% of employers cited improving leave administration as one of their top three concerns, up from just 41% in 2021.

Paid parental leave and flexible paid time off (PTO) 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 are also making paid parental leave programs more inclusive by offering paid leave to employees who become parents through adoption (67%) or surrogacy (33%). This resonates with findings from an earlier Mercer survey showing that employers are making reproductive benefits more inclusive as well. Paid parental leave is eight weeks on average.

Almost a third of employers (32%) provide flexible PTO 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.

In addition, employers are recognizing the importance of PTO in helping employees manage traumatic events. While employers have long provided paid bereavement leave to mourn the loss of an immediate family member (95%), they have recently started to offer time for other significant losses, such as for 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 has risen from nine to 10 days.

“More companies are recognizing the importance of paid leave as a way to communicate their values and priorities to their employees,” said Mr. Fuerstenberg. “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.”

About Mercer’s Absence and Disability Management Survey 2024

Mercer surveyed 630 US organizations of all sizes on their absence and disability management practices from January to March 2024. Find more information here.

About Mercer

Mercer, a business of Marsh McLennan (NYSE: MMC), is a global leader in helping clients realize their investment objectives, shape the future of work and enhance health and retirement outcomes for their people. Marsh McLennan is a global leader in risk, strategy and people, advising clients in 130 countries across four businesses: Marsh, Guy Carpenter, Mercer and Oliver Wyman. With annual revenue of $23 billion and more than 85,000 colleagues, Marsh McLennan helps build the confidence to thrive through the power of perspective. For more information, visit mercer.com, or follow on LinkedIn and X.

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