Planning for a family can be an exciting time, but it can also be a bit intimidating when you consider how much time you'll have to spend away from work. You'll need to consider your finances, insurance, and so much more.
First, you need to understand what maternity and paternity leave are (also called family leave, family medical leave, and parental leave) and how they apply—or don't—to you.
What are maternity leave and paternity leave?
Maternity leave is when a woman stops working because she is about to give birth, has just given birth, or has adopted a baby. Similarly, men who adopt or have partners who have just given birth to a baby are eligible for paternity leave.
Not all workplaces have official leave policies, and, when they do, the time is usually unpaid. When paid leave is offered, it is often partially paid and/or made up of sick leave and vacation leave or a short-term disability policy (such policies only apply to women, not men, as pregnancy is considered a disability).
FMLA, maternity leave and paternity leave
"This topic is really hard to navigate at the federal and state level," says Missy Narula, founder and CEO of Exhale Parent. "In California, for example, there are approximately seven different rights, all with varying requirements for the employer and employee."
While no federal standard for maternity or paternity leave exists, three states—California, New Jersey, and Rhode Island— as well as the District of Columbia, have state-protected unpaid parental leave. Four states—Hawaii, New Jersey, New York, and Rhode Island—have disability laws that cover a woman's pregnancy and the birth of a child.
If your employer has 50 or more employees within 75 miles of your workplace and you have worked a minimum of 1,250 hours during the prior year, then the federal Family Medical Leave Act (FMLA) applies—likewise, if your employer is a public agency, or is a public or private elementary or secondary school.
"A handful of states also mandate a company provide paid leave," advises employment attorney David Reischer.
Under FMLA, both men and women are eligible for up to 12 weeks of unpaid time off for the birth or adoption of a child or the taking in of a foster child. Both men and women are eligible for this leave within one year of the child's arrival. Even though this leave is unpaid, employers are required to continue your healthcare coverage during FMLA leave.
Usually, short-term disability, sick time, and vacation time are spent concurrently with FMLA leave to ensure that parents will have at least some of their time paid in full.
How long is maternity or paternity leave?
A number of factors determine how long leave will be. It depends upon the policy and the pregnancy.
Policies typically offer anywhere from four to 12 weeks or more. Some women have complications that extend leave beyond what the policy dictates. These extensions, when medically necessary, are generally also covered by short-term disability policies.
Do I receive benefits while on maternity/paternity leave?
If you qualify for FMLA, your employer must maintain your health insurance plan while you're on leave. If you do not return from FMLA leave, however, your employer has the legal right to request reimbursement of health insurance premium payments.
Don't expect to accrue sick or vacation time or time toward seniority when you're on leave. FMLA doesn't require employers to allow you to accrue benefits. You also can't contribute to your 401(k) or flexible spending account because you're not receiving a paycheck, which means you can't contribute pre-tax dollars.
(If your employer offers fully paid maternity leave, not through short-term disability policies, it may also cover your other employment benefits during FMLA leave.)
When should I start my leave?
Many women work right up until they go into labor and start their leave at that time. Others may decide to start their leave just before their due date, and still, others may be ordered by their doctors to start leave early.
When and how should I request leave?
While mostly a personal decision, under FMLA, you are required to give 30 days' notice. In practice, however, most women become visibly pregnant after just a few months and tell their employer after the first trimester when the risk of miscarriage is reduced.
What if I want to extend my leave?
The best thing to do to ensure you have enough money to live on while on unpaid leave is to figure out how much it costs you to live, on average, per week. This means going through all your necessary expenditures for the past year and dividing the total figure by 52. Then, multiply that number by at least 12 to cover your weeks of leave time—and start saving.
If you do not have time to save up for your leave, you have other options, such as:
- Take an early distribution from your company pension, 401(k), or IRA
- Take a cash advance on your wages
- Borrow against the cash value in your life insurance policy
- Take an equity loan on your home
- Draw on a personal line of credit or a bank loan
- Make a cash advance on your credit card
Will I have my job when I come back from leave?
Employers with 15 or more employees are bound by the Pregnancy Discrimination Act. Under the act, employers must treat a pregnant employee the same as someone who goes out on leave for a broken leg. FMLA also protects people working in larger organizations, as described above.
If you believe you lost your job because you are pregnant, don't be afraid to speak up.
Welcoming a child into your family is a special time, but it doesn't have to be stressful. Plan ahead (when possible), save money for expenses, and know your rights at work.