Providing Paid Leave
Designing your business as a system of care.
Last week I published a deep dive into the abysmal state of paid family leave in the United States:
The TLDR of that piece is that we don’t have anywhere near adequate systems of leave or care, and that sucks, particularly for those of us in resource-limited tiny businesses. However, we can still do our best set up our businesses in the direction of care.
Our tiny businesses cannot adequately replace social systems of care and, at the same time, we can design our businesses as systems of care taking.
The tension is that you may very well fall short of your values and ideals because of the context of the larger system.
How you support someone stepping away for a significant period of time will depend on the overall health of your business, it’s current life cycle, and your business model (and probably a few dozen other things).
My own family leave research rabbit hole was prompted by creating a policy to support a Wanderwell team member taking leave for the birth of their first child (a boy! born at the end of February!); they are currently on leave for 16 weeks.
In it’s current form Wanderwell employs three people, including myself. Every member of the team works directly with clients in a revenue generating position. Which means anyone taking leave for an extended period of time is a big deal!
That’s why we talk about employee leave as a stress test for a business’s overall health. (My other favorite test to run with clients: can you take 2-3 weeks of honest-to-goddess vacation?1) Even if you don’t have any leave on the horizon, using a hypothetical will show where your operations, financials, and model could use strengthening.
I’m going into some detail about how we did it not because I we’re some perfect model of how it should go down, but because there just aren’t that many templates and in a very tiny company. How we did it is not necessarily how you will do it, nor how you should.
Instead, do the best you can to care for your people, while respecting your resources.
Resources include money, yes, but also time and energy.
There’s a few main areas to figure out:
Policies: policies are to businesses as boundaries are to people. Policies clarify what care your business provides (and what it doesn’t), and ensures that team members are treated equitably. They also create guardrails to keep your business legally compliant.
Money: profit is a form of future care taking. The profit you earn (and save) today enables paying future wages, including during a leave, and including for your own vacation. Because of the lack of paid leave options in the US context, profit often = team members paid leave.
Systems & Documentation: the more clear, organized, and documented, your systems and processes are, the more ease with which someone can step away.
The Policy Part
Wanderwell didn’t have a family leave policy prior to this winter, for the very mundane reason that it hadn’t come up before— company policies and handbooks do not spring fully formed out of the ocean on a half shell, but rather evolve piece by piece over time— but, I also wish I had made one sooner.
For very small businesses in most states there are no regulations. FMLA only applies to companies with more than 50 employees, though some states have lower thresholds. So it may be the case that you are obligated to do absolutely nothing: you don’t have to offer paid leave, and you don’t have to offer someone their job back if they take extended leave. That’s probably not, dear reader, what you’re aiming for, so…
How to create a policy:
State Matters— If you have team members in one state: easier. If, like WW, you have team members in multiple state, you’ll want to understand what’s required and what’s covered in every state where a team member works. Here’s a pretty good chart of policies state by state.
Write your ideal policy— if money were no object, and all logistics were taken care of, what would the ideal be?
Check your ideal against reality— while I personally would love folks to take 6 months off fully paid, that’s not something the business can support. Using your ideal, check it now against what’s actually feasible:
1. If the leave will be paid, who pays? Social insurance, private insurance, or the company out-of-pocket? A combination of insurance and company?
2. For how many weeks?
3. What’s covered? Many policies today have an expansive view of family and reasons someone may need paid leave.Most small businesses cannot cover an employee’s salary for weeks on end while they’re out, so your goal is to balance generosity with what your business can comfortably support.
How we did it:
Wanderwell is registered in Vermont, with team members in New York and Washington State. Washington State’s 16 weeks of leave at 90% of salary is an outlier; New York has a mandatory policy, but funded via obtaining private insurance, providing up to 12 weeks of leave at a max of 67% of wages.
Our policy is for Family & Medical Leave: employees may take up to 12 weeks of paid leave for a pretty broad range of circumstances, with Wanderwell covering the difference between ”any third party benefit” and their salary up to 40%; if there’s no benefit, they’ll receive the full percentage. If employees wish to take more than 12 weeks, we won’t cover wages, but will generally approve unpaid time off if we can. Third party benefits are state funded program’s like Washington’s, or disability insurance (either mandatory like NY State, or voluntary). If we hire someone in a state with no support, I’d likely obtain private disability insurance.
It’s possible that under this sort of policy that one employee would receive their full salary while on leave and another wouldn’t— another downside of a patchwork state system.
The Money Part
Who’s Paying?
How much you end up covering, and the impact on your business’s finances will totally depend on the context that I wrote about above: if you get lucky and do business in a state with a robust social funding program, maybe it won’t cost you much. If you are in a state with no support, you’ll need to make some careful decisions around what you can sustainably support.
Because the state of Washington will cover up to 90% an employee’s salary, Wanderwell will pay the difference between that coverage and the employee’s full salary for the first 12 weeks.
Outside of the states with social insurance programs (ie, the majority of the country), your options are private disability insurance, pay for leave yourself, or do nothing.
Short term disability policies vary, however, and most only support illness or injury, so those adopting, a non-pregnant parent, or those caring for a family member often aren’t covered.
More Than Wages
While in larger companies it’s easier to shift work around or bring in internal temp help, in a tiny company, you may very well have to hire coverage or forego new work for a period while someone is out.
With the monthly cadence of accounting work, we hired coverage, which included the impeccable and fortuitous timing of a former team member returning and a trusted freelancer.
We planned for about three weeks of training overlap, front loaded because babies sometimes come earlier than planned (which is exactly what happened). Overlap adds payroll expense, but cuts down on stress and potential for dropped balls.
For coverage, especially for a planned leave, what overlap do you need for training? One of the dumb parts of disability & leave coverages, at least for planned circumstances like giving birth, is that the employee usually can’t apply until they actually have their baby.
Which almost always means there’s a gap between the team member taking leave and payments from the state or insurance. This might be something you want to help with.
Can an employee use PTO to cover a gap in benefits?
Could you front benefits? Pay salary in full until benefits kick in, and then "true up" later?Wanderwell set up two things to do our best to make sure employees don’t miss a paycheck: they can use PTO at the beginning, or if they don’t have enough or don’t want to use PTO, we “may” cover their salary until benefits kick in and then balance it out later.
For policies where you’re banking on abundance, throwing in a discretionary “may” is not the worst idea: in a future scenario where we didn’t have the cash flow, I might not float double payroll to cover for lagging state benefits.
Yes, it’s outrageous that my tiny business is fronting money for the state government, but I don’t want team members to miss paychecks because of a sluggish government. In a different state, one of our clients didn’t receive their state funded family leave payments until months later. Whether you can swing this kind of coverage will depend on whether you’re hiring extra coverage, business cash flow, and profit savings. You may not have cash flow to cover a bunch of extra payroll, that doesn’t mean your business is bad or not run well!
Between overlap prior to leave and the family leave payroll, our people costs for the first six months of the year will be higher than normal for sure. One of the reasons that we save profit is to provide future care. Profit is not just my money to take as the owner, it’s something that exists to care for the entire team.
The Systems Part
When we say “business stress test”, one of the big pass/fail areas tests whether your processes and systems are clear and documented so that others can step in with minimal confusion and dropped balls.
Like policies, process documentation and SOPs don’t happen all at once (and are never finished! Sigh.), and what you need to document for day-to-day might be a bit different than for extended leave. We used Loom to record some things that are particular or require many steps (hellllooo journal entries), which saves a lot of time.
What processes need documentation? What need updates?
Who needs to know what by when? Will you communicate with clients or community? We communicated with clients a few times, starting about 2 months out, and set some expectations that the month of March might be slightly off schedule with the switch over. Even then, someone let me know after that they hadn’t read any of my mass emails and had no idea! So, you can never communicate enough!
Finally, A Frustrating Part
I would be lying if I wrote this all easy breezy and didn’t fess up: having a key team member out for 16 weeks is massively inconvenient from a business perspective! We’d normally open up spots from our client waitlist around March, after our busy season, but we’re going to slow that roll.
I’m saying no a lot. Toggling my own expectations and plans.
So, the part of me that functions on willpower— making things happen!— is feeling a little grumbly and impatient.
But then, I remind myself, we’re in relationship.
Me, my business, my team.
Part of being in relationship— instead of being in control— is to allow the business to have a period of maintenance; to build a business to support families and humans and not function solely as a money making system.
That means designing for periods of rest, not just for individuals but for the entire business.
That means allowing your employees full lives to “intrude” on a business plan.
Our businesses are microcosms of a larger world. We can certainly run them as maximalist extraction systems, where illness and new babies are treated as inconveniences, where we feel that we’re owed something in exchange for leave, or we can build them as systems that support cycles of growth and rest.
Listen to a Whiskey Friday’s episode about Paid Leave:
If you have any questions, or interesting stories about how you’re creating care within your own business, please reach out — just hit reply if you’re reading this via email, or send me a note at kate [at] wanderwellconsulting.com.
Founders and owner operators taking leave, while not dissimilar, is a slightly different flavor of worm. I’ll get back to that another time.
If you need help
is running an impeccably timed workshop this week on her version: The Fiji Test. Being whisked off to the beach is an infinitely cheerier circumstance to contemplate than being hit by a bus, if you need some support in thinking through systems, I recommend checking it out!