How Netflix’s Generous Parental Leave Policy Supports Federal and California Law

A few weeks ago, Netflix announced its generous new paid parental leave policy, and Microsoft, Adobe Systems, Goldman Sachs, Nestlé and other industry leaders followed suit. Expanding paternity or maternity leave benefits attract employees with the promise of better work-life balance, and moves like this by leading companies foreshadow what may become an industry norm.

This trickledown effect has affected other employee benefits as well. Matching 401K contributions, paid vacation leave, and life insurance are not mandated by California law but have become standard in many industry-leading employment compensation packages. The trend started with larger firms offering these benefits to attract a skilled workforce, and soon smaller companies followed suit to compete in the marketplace. Employers offering these benefits are now in a much better position to attract and retain talent. Parental leave benefits may become common as well, particularly as more Millennials reach child bearing years.

Both the federal Family and Medical Leave Act (“FMLA”) and the California Family Rights Act (“CFRA”) require qualifying employers to allow employees to take up to 12 job-protected unpaid workweeks off to care for a newborn or newly adopted child. (29 U.S.C. § 28, et al.; Cal. Gov’t Code § 12945.2.) The Acts run concurrently and offer only job protection — that is, protection from termination for taking this time off. California also offers the Paid Family Leave (“PFL”) program, a component of the State Disability Insurance (“SDI”) program, which also runs concurrently with the FMLA and CFRA. Under PFL, new parents can receive up to six weeks of benefits (55% of income) while taking time off to bond with a new child. The benefits are paid by the state to employees who have paid into the SDI program. Thus, the most a father with a newborn child can take off is six weeks of paid and job-protected leave under a combination of the PFL and CFRA, and another six weeks of unpaid job-protected leave under the CFRA.

Pregnancy Disability Leave (“PDL”) under California law is yet another added protection, and it does not run concurrently with the CFRA. (Cal. Gov’t Code § 12945(a)(1).) In this context, it is only available to female employees experiencing disability related to pregnancy or childbirth. The benefit offers four months of job-protected and paid time off (again at 55% of normal income). Accordingly, the most a mother with a newborn child can take off under California law is four months of paid and job-protected leave under the PDL (if she is experiencing disability due to the pregnancy or childbirth), plus six weeks of paid and job-protected leave under a combination of the PFL and CFRA, and an additional six weeks of unpaid and job-protected leave under the CFRA.

California’s more expansive state-law protections make FMLA protections moot for California employees. But in most states, 12 weeks of unpaid job-protected leave under federal law is the only legally mandated benefit available to new parents. However, to attract and retain the right talent, businesses like Netflix are voluntarily expanding their parental leave benefits. Netflix’s new policy allows new parents to take off as much time as they want during the first year after their child’s birth or adoption. This seems to be a natural expansion from Netflix’s existing policy regarding unlimited vacation and is clearly intended to boost morale and attract and retain the highest level of employees in the industry. To compete, other industry players have been following suit, and this trend will eventually lead its way down to smaller businesses.

On the other hand, a yearlong carte blanche leave for new parents creates many concerns for businesses, including absenteeism, unpredictability in the workforce, and the costs associated with paying for empty seats. That’s why it is important, with a policy like Netflix’s, to have employees confer with management regarding their workload and family needs before determining how much leave will actually be taken. Further, while Netflix’s policy is intended to be expansive and somewhat undefined, it may create a conflict between what leave employees are “allowed” to take versus what they find acceptable given the company’s culture. Employees otherwise eligible to take leave may feel discouraged because of unspoken pressures to not seem like a slacker, or a fear of management favoritism towards employees taking shorter or no leave periods. So a clearer and well-defined leave policy with less discretion left to the manager or employee might be more successful in encouraging employees to take the leave. Depending on the business, its culture, and size, this approach could be more effective in reaching the goal of boosting morale and employee retention while keeping costs low.

Thus, startups, small businesses, and growing businesses in California seeking to expand or establish leave policies and employee benefits will need to balance these business considerations while also conferring with counsel to make sure they are meeting all of California’s legislative mandates regarding parental leave.

Karineh Tarbinian

Karineh Tarbinian

Karineh Tarbinian is an associate attorney with Brown White & Osborn LLP. She handles a wide variety of civil litigation and has a special interest in employment, construction, and real estate law.
Karineh Tarbinian