Netflix pioneers a year of parental leave: Will others follow?

Netflix makes the case that a generous leave policy will attract and keep better workers. But some caution that too much choice for employees may end up being confusing, producing 'choice paralysis.'

Paul Sakuma/File/AP
A person uses Netflix in Palo Alto, Calif., July 20, 2010. The video-streaming company announced Tuesday that it would allow employees unlimited paid paternal leave for one year after a child's birth or adoption.

Netflix – a preferred site of America’s couch potatoes – announced a new paid parental leave policy Tuesday that ranks as the most generous in the nation.

The video-streaming company is now allowing new moms and dads to take as much fully paid time off as they want in the first year after their child’s birth or adoption.

“We want employees to have the flexibility and confidence to balance the needs of their growing families without worrying about work or finances,” said Netflix chief talent officer Tawni Cranz in a statement.

"Netflix’s continued success hinges on us competing for and keeping the most talented individuals in their field," she added. "Experience shows people perform better at work when they’re not worrying about home." 

The policy allows parents to ease back into work at their own pace, whether that means part time, full time, or leaving and returning to work as their family commitments allow. 

Netflix’s unprecedented move casts critical light on policies for paid parental leave in the United States, which lags behind the rest of the developed world in providing paid leave. In fact, the US stands alone among wealthy countries in not providing paid maternity leave.

As for paternity leave? Forget about it.

And while it's true that the US does provide 12 weeks of unpaid leave through the Family and Medical Leave Act, the exemptions to the law are so broad as to leave it ineffective in many cases. The provisions that an employer must have at least 50 employees and that the employee must have worked at least 1,250 hours in the previous year mean more than 40 percent of private-sector workers fail to qualify for leave under the legislation.

As a result, parents sometimes are forced to take unpaid sick or vacation days or turn to short-term disability insurance or a state family-leave policy, which can recoup some of the income a parent loses while at home with the new child. But even that last option is limited, as only four states have publicly funded paid maternity leave.

Netflix’s new rule is designed to cut through these bureaucratic entanglements and make it easier for new parents by simply continuing to pay employees their normal salary throughout the year after their child’s birth or adoption.   

Still, unlimited parental and vacation leave has its share of critics. Some caution that too much choice for people may end up being restrictive or confusing, producing "choice paralysis."

“When vacation time is offered as an unlimited resource many people decide not to take advantage because it's too hard to figure out the right amount to take,” MIT Sloan School of Management professor Lotte Bailyn writes in Quartz.

Other critics say that having unlimited time off can make employees feel guilty for the time they do take because they fear resentment from other employees.

Netflix’s new policy is in effect an extension of a time-off policy that dates to when the company went public in 2002. Instead of a standard vacation policy – as in 10 vacation days, 10 holidays, and a handful of sick days per person – Netflix moved to an honor system with employees tracking their own days off and informing their managers in advance.

Former Netflix chief talent officer Patty McCord wrote in the Harvard Business Review that the company’s time-off policy had the benefit of eliminating additional accounting and human-resources costs, while also having positives that come from a corporate culture that treats employees like responsible people.

“The company's move to make [parental leave] more generous should be applauded,” John McDuling wrote in The Sydney Morning Herald. “It's a recognition that looking after your employees and financial growth aren't mutually exclusive, but mutually dependent. Hopefully it spurs other companies to act.”

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