Allegheny County’s new paid parental leave policy is not just the first of its kind at the local level, it’s also based on a different model from existing statewide policies.
Most of the 14 states that offer paid parental leave pay for it directly through a payroll tax levied directly on workers and businesses. But some of those states, like New York, allow companies to opt out of the state plan and use private insurance instead.
In Allegheny County there isn’t a state- or county-wide plan to opt into. So companies will have to decide whether to pay for parental leave as it comes up – or to buy insurance that will reimburse them for the costs when it happens.
Nationally, several companies offer paid parental leave coverage or paid family and medical leave policies. Until now, none have had cause to do so for a county-level policy.
To get a sense of the considerations, Pittsburgh’s Public Source interviewed Dirk Doebler, the founder and CEO of Parento, which provides insurance for companies that offer paid parental leave. This conversation has been edited and condensed for clarity and brevity.
Q: What should a business be thinking about as they start offering parental leave for the first time or they’re expanding that benefit?
A: You’re going to need to budget for this. Even if it doesn’t go into effect until next year, you’re going to have to budget for it before the fourth quarter next year. You should start your planning now.
Q: Does a business need to have a separate plan from what’s written into the county’s law?
A: They really should write out a leave policy separately that matches this to make sure that the policy is compliant with the regulations and that if they ever got into any sort of issues, they had the policy that they could directly point to, that clearly matches the county plan or is more generous.
Q: Businesses with fewer than 15 employees are not going to be required to do this. What do you recommend for businesses with 13 employees or 16 employees, that are on the bubble?
A: If you go from 13 to 16 people at different parts of the year, you need to have that policy built in just to keep it standard. Groups that are like 10 employees and expect it to grow over the next year, probably want to take this into account and budget for it. If you don’t offer paid leave and then somebody has a child and then six months later you hire a 15th worker and you have to offer it, that’s a very demoralizing, frustrating situation for that [longstanding] employee and that employee is much more likely to leave.
Q: What about restaurants with waiters who make a lot of their money on tips. What do you recommend for them, where the amount they earn is not as clear cut on the front end?
A: That’s very tough because people are going to see organizations really inclined to pay [leave benefits based on] that lower minimum wage. And I think employees are going to expect the organization to cover them at a reasonable amount and not to have to forgo their typical tip income. So the organization is going to want to have a plan that provides some level of income, maybe between the total tip income they might typically have, and what they will be paid directly by the company.
Because it’s going to be really frustrating for those employees and they’re going to say, “I’ll have to go somewhere else.” It’s not about the money, it’s about how you were treated during this really critical phase of life.
Q: Another interesting industry is education. Do you think that school districts might try to provide incentives to encourage teachers to take as much of their leave as possible over the summer rather than during the school year when they have to pay for a long-term substitute?
A: We do work with a number of schools and we do see slightly greater leave taking in the summer because I think it’s easier for the teachers and the admin to try and have that child around the end of the school year. But it’s not the bulk of people doing it. You’re not going to see a significantly higher number.
What we see actually in education is it’s already really difficult to find good teachers and retain teachers. These tend to be employees who are more likely to turn over if you’re not offering paid parental leave. So the ROIs are actually generally quite a bit higher in education on paid parental leave just because they’re more likely to need it and they’re more likely to turn over if they don’t get it.
Q: Are there any financial reasons a business would want to start an insurance policy sooner than when the requirement finally kicks in around November 2027?
A: Every insurance company is going to have some level of restrictions. So if you hold off until the absolute last minute, there may not be coverage for someone you’re aware of having a child. It’s like, if you wait to buy homeowners insurance until your house is on fire and go out to get a quote — they’re not going to cover that. And so the sooner you implement it, the faster you get through any waiting periods and restrictions and ensure that when someone actually takes leave, the insurance is going to pick it up.
If you have somebody who gives birth over the summer and you want them to be eligible and you want to buy our insurance policy for Nov. 1, 2027, our insurance is not going to reimburse those expenses because you held off until the house is on fire.
Q: People are going to need to come with the details of their business to get an accurate quote. But can you give some indication of what demographic information you’re going to ask about? And which ones are going to cause their insurance costs to go up or down?
A: Age is the No. 1 driver of this by far. If you have all of your employees in their 20s and 30s, that’s obviously going to be more risky than if all of your employees are in their 50s. Those are going to be vastly different risk groups and require vastly different pricing. … Even if you don’t buy insurance, if you have everybody in their 30s, you’re much more likely to have someone have a kid every single year. And so we’re looking at age, gender, salary and income levels, and geographic location. So those are the primary factors but age is going to drive costs by far the most.
Q: What should parents or potential parents be thinking about?
A: If people are trying to have children or planning, I think they really want to have a conversation with their organization’s HR and figure out what their plan is for meeting this need. Because if you want to have a kid next year and your company’s going to hold off until November [to implement paid leave], then you may want to kind of hold off until you know that if you do have a child you’re more likely to have that leave.
Q: Is there anything else businesses should be thinking about?
A: If they’re too publicly negative about the new requirement, I think that harms their brand and can hurt their business because this is so overwhelmingly popular that you could end up having local boycotts of businesses if they come out too hard against it.
Q: If a business decides to sue the county over its new policy, how might that complicate things for you or for businesses?
A: That’s something we pay attention to because if somebody does sue, it could result in a court stay and delay things. If people hold off for months before bringing a suit, then that just creates more complexity and uncertainty for organizations because they need to make plans. They need to build a budget for it. They need to provide something to their employees.
Q: Can businesses turn off and on their insurance policy? Or do they have to keep it for the whole year?
A: It’s a one-year policy, so they do have to have it for the full year to get coverage. But we don’t charge the full premium upfront. So they can pay over time throughout the course of the year and that just makes it easier for everybody.
Oliver Morrison is the health and environment reporter at Pittsburgh’s Public Source and can be reached at oliver@publicsource.org.
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