Netflix recently announced they will give new parents unlimited maternity leave after a new baby is born, or adopted.
Netflix shook up the corporate world in early August by announcing a new maternity and paternity leave policy that dramatically raises the benefits bar.
The company now offers “unlimited” paid maternity and paternity leave for its employees during the first year after the birth or an adoption of a child.
This new policy far exceeds those in place at other companies across the country and greatly outpaces requirements of the federal Family and Medical Leave Act of 1993.
How it Works
Netflix’s new policy applies to its employees only during the first year of a child’s life or following its adoption.
The idea, Netflix explained in a blog post, is to make sure its employees have the flexibility and confidence they need to balance their growing family’s needs without having fret over finances or work.
The program provides them their normal pay directly from Netflix, “eliminating the headache of switching to state or disability pay.”
Employees who take advantage of the policy are offered flexibility in applying the benefits.
They can, for example, take as much or as little time as they want without a difference in pay. Parents can also opt to return part-time and still earn full-time pay during that first year.
In addition, they can return to work and then opt to go back out on leave should they feel the need to do so.
What the Law Requires
Netflix’s new policy goes well beyond the requirements of the federal leave act. That act requires companies of a certain size to provide their employees with up to 12 weeks of unpaid, rather than paid, leave for medical reasons or the birth of a child.
Due to the number of exemptions, only about 60% of American workers, less than a fifth of all new mothers, are covered by the act, a White House report states.
While some employers offer disability or maternity pay by their own choice, the law does not require corporations to do so. Many companies that do provide pay for workers out on maternity leave only do so for a very limited period of time during the first few months of a child’s life, not the first full year.
Why Netflix Did It
Netflix sees its new policy as an important one for promoting its culture of “freedom and responsibility,” while also serving as a strong retention tool.
“Netflix’s continued success hinges on us competing for and keeping the most talented individuals in their field,” Tawni Cranz, Netflix’s chief talent officer, explained in the blog post. “Experience shows people perform better at work when they’re not worrying about home.”
Experience Does Back the Move
Netflix’s policy announcement comes on the heels of other companies extending the length of their employees’ leave options.
Twitter, for example, offers up to 20 weeks of paid maternity and 10 weeks of paid paternity leave. Facebook offers four months of paid leave for both mothers and fathers and a $4,000 stipend for each new child born or adopted.
Google also extended its paid leave to 18 weeks back in 2007. Since it made the extension decision, Google has found that returning mothers leave the company at roughly half the pace they did before, demonstrating that retention rates can be improved by more liberal leave policies.
While the implications of Netflix’s move over the long haul remain to be seen, the announcement paid off on the stock market.
The day Netflix announced the new policy, its shares rose to a new high of $122.79.
