Look, if you www.workast.com run a small business, you already have a million things competing for your time and money. Hiring, sales, keeping the lights on — benefits can feel like a luxury you just can’t afford. But here’s the thing: a well-crafted maternity and paternity leave policy isn’t some pricey perk only big companies can offer. It’s a competitive advantage that helps you attract and keep great employees. And yes, there are smart, affordable ways to make it work.
Why Bother with Paid Parental Leave?
Ever wonder why so many startups and small businesses are jumping into benefits? It’s simple: benefits are a magnet for talent. Most people know that “more money” isn’t the only reason they stay at a job. They want to feel valued, supported, and able to balance work with life. Paid parental leave checks all those boxes.
Consider this:
- Employees who get paid family leave are more loyal and productive. It cuts down on turnover costs, which can run high — sometimes up to 30% of an employee's salary. It sends a strong message that your company cares about their well-being, not just their output.
Sound too good to be true? Not at all. But here’s the catch: small businesses often ignore what employees actually value and end up with one-size-fits-all policies that don’t work—or no policies at all.
So, What’s the Catch? How to Afford Paid Parental Leave
Many small business owners feel squeezed by finances, worried that adding paid parental leave means shelling out a year’s rent. But if you plan smart, it can cost as little as 5-10% of your total payroll to cover benefits — and that includes parental leave, health coverage, and a few other key perks.
Here’s what you need to focus on:
Use affordable health coverage options like QSEHRA and ICHRA. Leverage tax credits through state and federal programs like SHOP. Offer low-cost, high-impact perks around parental leave that show you care.1. Affordable Health Coverage: QSEHRA and ICHRA
Let's break down two acronyms that can save your business serious money:
Plan What It Is How It Helps with Paid Parental Leave QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) A way to reimburse employees tax-free for individual health insurance premiums and medical expenses. Allows you to provide healthcare dollars that employees can spend as they want, including covering pregnancy-related costs, which complements your parental leave policy. ICHRA (Individual Coverage Health Reimbursement Arrangement) Newer and more flexible than QSEHRA, ICHRA lets employers reimburse employees for individual health plans, including family coverage. Great for companies wanting to customize benefits by role, helping parents secure the coverage they need during and after leave.Both options let you avoid pricey group plans and save your business money while still supporting parents during their leave.
2. Using Tax Credits Like SHOP to Lower Your Costs
The SHOP Marketplace (Small Business Health Options Program) offers a big perk: tax credits that can cover up to 50% of your premium costs if you have fewer than 25 employees and pay average wages under $60,000. That’s real money back in your pocket that can fund your parental leave program.
Remember, the best small business benefits packages don’t just pile on cost—they use every tax credit and reimbursement available to make benefits affordable. Don’t leave money on the table.
3. High-Impact, Low-Cost Perks Around Paid Parental Leave
Not every valuable perk has to cost a fortune. Sometimes, the things employees value most during maternity or paternity leave are the human touches and flexibility you can provide at low to zero cost.
- Flexible scheduling before and after leave. Work-from-home options during transition periods. Providing helpful resources — like access to apps and tools such as Workast — that help manage workload and communication, reducing stress on new parents. Access to employee assistance programs or parenting support groups.
These aren’t just “nice” perks—they make people feel supported and understood, helping your business retain talent long after parental leave ends.
Understanding State Paid Family Leave Laws
Another piece of the puzzle is knowing your obligations under state rules. Several states have their own paid family leave laws, which can add complexity — but also opportunity.
For example:
- California, New York, New Jersey, and a handful of others have state-run programs that kick in to provide partial wage replacement during leave. Some states require small businesses to contribute directly to these programs, others let employees pay premiums.
Here’s the bottom line: You need to familiarize yourself with the state paid family leave laws that apply to your business. Sites like HealthCare.gov provide resources for understanding these regulations and connecting with appropriate programs.
Common Mistake: Ignoring What Employees Actually Value
Here’s a no-nonsense piece of advice from 15 years of working with small businesses: don’t make assumptions about what your employees want. The biggest misstep in rolling out any benefits program—including paid parental leave—is guessing instead of asking.
Ask your team what matters most. It might surprise you. Sometimes the highest-cost solutions aren’t the most appreciated. Sometimes what looks like a minor perk can deliver outsized loyalty and performance.
When you design your maternity and paternity leave policy, think about:
- How long do your employees feel is enough paid time off? What support systems do they want when transitioning back to work? How can your small business build trust and flexibility during this life event?
Summary: Build a Paid Parental Leave Policy That Works
Here’s how a small business can get a policy in place without breaking the bank:
Paid parental leave doesn’t have to be a pipe dream for your small business. With the right strategy, it’s an affordable investment that pays dividends in employee loyalty, morale, and overall company success.
Need help building your benefits package or figuring out how to afford paid parental leave? Don’t hesitate to reach out. I always say, a good PTO policy beats a ping-pong table any day — and paid parental leave is even better.
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