Paid leave cost analysis

With no federal paid leave, employees are at the mercy of whether or not they live in a state with paid family and medical leave benefits. Employers have the opportunity (and responsibility) to step up and offer paid leave policies. Use this paid leave cost analysis tool to make the case for paid leave internally. 

The cost of paid leave

Enter your company’s details to calculate the estimated cost of offering paid leave. The final calculation takes into account your inputs, available state benefits, attrition costs, and internal time spent on leave. See the methodology section for more information.

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Paid leave program cost

$100,000
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With Cocoon

$100,000
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See how your paid leave policies stack up to your peers'

FAQ

These numbers seem a little high, can you help me understand why?

Our paid leave cost analysis tool takes into account direct and indirect costs related to paid leave. Attrition rates are often overlooked, but are incredibly important to understand the holistic cost of offering paid leave. Research shows that paid leave significantly increases the likelihood of a birthing parent returning to the workplace1-6. The more paid leave that is entered into this model, the lower the costs related to attrition. You can read more about attrition rate in the methodology below.

How can I pitch a paid leave program internally?

Paid leave is table stakes for today’s employees. Without a paid leave policy (or with a minimal paid leave policy) we’re missing out on top talent and losing internal talent. Our company’s paid leave policy is a reflection of how much we value our employees—not only is it the right thing to do, it’s a smart business decision. Supporting data: paid leave cost analysis and how your company matches up against peers.

Is there anywhere I can see what my peer companies are offering for paid leave?

Cocoon’s 2024 Paid leave benchmark report provides insight into how much time employers are offering for paid parental, medical, and caregiver leave across different company sizes and industries.

What does “fully paid” leave mean?

Fully paid, employer top-up, and 100% of pay all mean the same thing—an employer makes sure that employees receive their full pay when on leave, even if it comes from a variety of sources. These sources can include state benefits, private benefits, and employer pay. 

Why is the cost of offering paid leave lower when using Cocoon?

When employers handle leave internally or use other leave providers, they manage only certain aspects of the process, or they handle tasks manually. This leaves room for errors, a subpar employee experience, and no single source of truth for employees and employers. When not using Cocoon, we expect employees to receive approximately 70% of the total benefits available to them due to various factors—such as struggling to navigate state programs, misunderstanding how private disability programs interact with state disability programs, poorly handling incorrect or late claim submissions, and missing claim follow-ups.

When taking leave with Cocoon, we expect employees to receive approximately 99% of the benefits available to them. This is because we automate the most complex parts of compliance, claims, and pay which results in a more accurate and seamless leave experience.

What does Cocoon do again?

Cocoon is a leave management platform that uses first-of-its-kind technology to take the work out of employee leave. We partner with People teams at forward-thinking companies like Carta, Ironclad, and Vanta to save them hours per week, mitigate risk, and reduce stress for employees during life’s pivotal moments like welcoming a new baby or caring for a sick family member. Unlike traditional solutions, our software automates the most complex parts of compliance, claims, and payroll for a more efficient, modern, reliable experience. We support all FMLA leave types, personal leave, and ADA leave accommodations.

Methodology

Cocoon is a leave management software that automates the complexities of compliance, claims, and payroll for People teams and their employees. We advocate very strongly for comprehensive paid leave policies that support employees through all moments of life, and we understand this comes at a certain financial cost to employers. This paid leave cost analysis tool is meant to give employers a detailed view into the actual cost of implementing (or improving) paid leave policies. It takes into account indirect costs that are often overlooked, like attrition rates—you’ll see that the lower your paid leave policy is, the higher your attrition costs are. 

What assumptions are used in this calculator?

Annual leave rates

Among Cocoon customers, we see that an average of 7% of a company’s workforce takes leave throughout the year. This may vary for organizations of different sizes, so this field is editable in the calculator. We then use the company size input and the annual leave rate to get a total number of leaves. To get an accurate number of parental, medical, and caregiver leaves, we use the Department of Labor (DOL) 2020 data. To get the total number of birthing and non-birthing parent leaves, we use the average we see among Cocoon customers–51% birthing parent leaves and 49% non-birthing parent leaves. It’s important to break out birthing and non-birthing parental leave numbers specifically to more accurately calculate the Paid Family Leave (PFL) benefits for birthing and non-birthing parents, and state/private Disability Insurance (DI) benefits for birthing parents.

Number of employees in Paid Family Leave (PFL) states

Using anonymized Cocoon platform data, the average number of employees in PFL states is 66.3%.  If you select ‘Yes’ to answer the ‘Do you have employees in PFL states’ question, we use this percentage to calculate how many of your employees are eligible for PFL benefits. This impacts total benefits applied for and overall employer cost. If you select ‘No’, no PFL benefits will be taken into account in the calculation and we assume that the employer covers 100% of the cost of the offered paid leave.

Average weekly benefit amount & length of time

We collected 2024 PFL rates1-12 for all states and found a weekly average of $1,188.30. This is used to calculate the total PFL benefits available to birthing parents, non-birthing parents, and caregivers. We also collected the 2024 DI rates1-12 for all states and found a weekly average of $1,091.67. This is used to calculate the total benefits available for birthing parents and medical leaves. 

The number of 2024 PFL benefit weeks in each state were collected to find an average of 10.54 weeks. This is used to calculate the average PFL and DI benefits available to employees. PFL average length was used as a proxy for average DI length because of the wide range of DI benefits (ranging from 6 to 52 weeks). The mode (the number that appears most often) for DI benefits was 12 weeks, but we chose to use the more conservative number in order to avoid misrepresenting employer cost by attributing too much to DI benefits.

We use state DI information as a proxy for private disability insurance information because private disability plans (offered by employers) range so widely. We typically see 12 weeks with a weekly wage cap and these plans work in conjunction with state disability benefits. In order to avoid asking people using the calculator to enter in their own short term disability information, we are making the assumption it is close to the state DI averages.

Average disability length

Birthing parents

The average length of disability for a birthing parent is 7 weeks because those who give birth vaginally are typically given 6 weeks of disability and those who give birth via c-section are typically given 8 weeks of disability. We want to acknowledge that there are cases where birthing parents require additional disability time—whether that be pre-birth disability, or extended post-birth disability due to complications. That being said, the average amount of post-birth disability time prescribed by a physician is 6 or 8 weeks, so we use the average of those for these calculations. This value is used to calculate the state and/or private disability benefits that are available for birthing parents. 

Medical leaves

The DOL reports that the average medical leave is 6.5 weeks. This value is used to calculate the state and/or private disability benefits for medical leaves. 

Average attrition rates

Several studies point to the positive impact of paid parental leave policies on employee attrition rates, but there is no comprehensive source of truth. We used data from several sources (New America, Accenture & KPMG, Women’s Empowerment Principles) to chart the attrition rates of various paid leave policies. From that data we were able to create an “attrition curve” that calculates the exponential impact of increasing paid leave. 

Available attrition data for medical and caregiver leave lags behind parental leave considerably. We applied a similar attrition curve to Cocoon’s benchmark data to establish attrition rates for medical and caregiver leave.

Average cost to recruit a new employee

Gallup published a report in 2019 that cited the average cost to replace an employee is .5-2x of their salary. We are using the low end (.5x) of this range. This is used to calculate 50% of the average salary at the company by the estimated rate of attrition. 

Total benefits applied for

Without Cocoon

If you answer ‘Yes’ to the ‘Do you have employees in PFL states?’ question, we assume that employees are applying for and receiving 70% of total available state and private benefits. We assume only 70% of benefits are received due to a lack of accountability and errors that come without using a software solution like Cocoon. This value is used to calculate total employer cost, because state/private benefits offsets total cost. If you answer ‘No’ we assume that 0% of total state benefits available are applied for and received.

With Cocoon

When using Cocoon to manage employee leave, we assume 99% of all state and private benefits available are applied for and received. This is because Cocoon facilitates a higher application and acceptance rate with our software.

People & legal team costs

People team costs

Cocoon conducted a survey in 2023 of over 200+ employers and found that the average HR team spends about 15 hours a week on leave-related items (sending compliance notices, checking eligibility, ensuring the employer is registered with the state, helping with leave design and entitlement balances, insurance and state claim application assistance, coordinating leave pay with payroll, and answering employee questions. 

According to data pulled from Pave on April 11, 2024, the average 50th percentile salary for a P4 People Operations employee at a company with 1,000+ employees is $149,250. We break this down into an hourly rate of $75.53.

Legal team costs

We consulted our legal team of experts to get an estimate of how much time legal teams spend reviewing leave-related items. According to data pulled from Pave on April 11, 2024, the average 50th percentile salary for a P5 Legal Counsel employee at a company with 1,000+ employees is $240,000. We break this down into an hourly rate of $117.79.

These values are used to calculate the total cost of internal time spent on leave.

Cocoon time savings

Cocoon platform data shows that HR teams using Cocoon spend 60% less time on leave-related tasks. 

What goes into the calculations?

Total cost of a paid leave program

This is the sum of the total paid out to employees on leave, the cost of attrition related to leave, and the cost of internal time spent on leave

Total paid out to employees on leave

  • [The cost of offering paid leave across all leave types across all states (those with PFL programs and those without)] - [The total benefits applied for]

Cost to the employer

The same equation structure is used across all leave types—this example shows the calculations for birthing parents.

In PFL states

If any paid leave is entered in the calculator: 

  • [Number of birthing parent leaves] x [Average percent of employees in PFL states] x [Average weekly salary of employee] x [Number of paid weeks of leave offered to birthing parents]

If no paid leave is entered, the employer cost in PFL states is $0. Note that there is ​​no direct cost to the employer, but offering no paid leave significantly increases attrition in this model

In non-PFL states

If any paid leave is entered in the calculator:

  • [Number of birthing parent leaves] x [Average percentage of employees not in PFL states] x [Average weekly salary of employee] x [Number of weeks of paid leave offered to birthing parents]

If no paid leave is entered, the employer cost in PFL states is $0. Note that there is ​​no direct cost to the employer, but offering no paid leave significantly increases attrition in this model

Total PFL benefits available to employees

To get this value, we calculate the total amount of benefits available to employees based on the entered inputs (company size, annual leave rate, and whether or not you have employees in PFL states). The same equation structure is used across all leave types—this example shows the calculations for birthing parents.

If a paid parental leave policy for birthing parents is entered that is more than the average PFL benefit length of 10.5 weeks: 

  • [Number of birthing parent leaves] x [Average percentage of employees in PFL states] x [Average PFL benefit length] x [Average PFL benefit amount]

If a paid parental leave policy for birthing parents is entered that is less than the average PFL benefit length of 10.5 weeks:

  • [Number of birthing parent leaves] x [Average percent of employees PFL states] x [Number of weeks of paid leave offered by the employer for birthing parents] x [Average PFL benefit amount]

Total state and/or private disability benefits available to employees 

The same equation structure is used across all leave types—this example shows the calculations for birthing parents.

If a paid parental leave policy for birthing parents is entered that is more than the average parental leave disability length of 7 weeks: 

  • [Number of birthing parent leaves] x [Average parental leave disability length] x [Average state disability insurance (DI) benefit amount]

If a paid parental leave policy for birthing parents is entered that is less than the average parental leave disability length of 7 weeks:

  • [Number of birthing parent leaves] x [Number of weeks of paid leave offered by the employer for birthing parents by the average DI benefit amount]

Savings with Cocoon

The savings of offering a paid leave program while using Cocoon are found by adding the total paid out to employees on leave when using Cocoon, the cost of attrition related to leave, and the cost of internal time spent on leave when using Cocoon. 

Total paid to employees when using Cocoon

Total benefits applied for with Cocoon

  • [Total benefits available to employees] x [99%]

Total paid out to employees when using Cocoon

  • [Total employer cost without using Cocoon] - [Total benefits applied for when using Cocoon] - [Total benefits applied for when not using Cocoon]

Cost of internal time spent on leave when using Cocoon

HR and Legal leave costs with Cocoon

  • [Total HR and Legal costs] x [40%]
References

1 National Partnership for Women and Families, Pay Matters: The Positive Economic Impacts of Paid Family Leave for Families, Business, and the Public

2 Oxford Academic, The Impact of Different Social-Policy Frameworks on Social Inequalities among Women in the European Union: The Labour-Market Participation of Mothers

3 California Employment Development Department, The Economic and Social Impacts of Paid Leave in California

4 United States Census Bureau, Maternity Leave and Employment Patterns of First-Time Mothers: 1961-2008

5 CEPR, Leaves That Pay: Employer and Worker Experiences With Paid Family Leave in California

6 SHRM, Working Mothers Want Better Parental Benefits

7 California Employment Development Department, Paid Family Leave Benefit Payment Amounts.

8 Colorado Family and Medical Leave Insurance Program (FAMLI), Premium and Benefits Calculator.

9 Connecticut Paid Leave, Learn how benefits are calculated. 

10 DC Paid Family Leave, Benefits Calculator.

11 Spring Consulting Group, Updates in 2024 to the Paid Family and Medical Leave Landscape. 

12 Massachusetts Department of Family and Medical Leave, PFML overview and benefits

13 New Hampshire Paid Family and Medical Leave, Cost of Premium

14 New Jersey Department of Labor and Workforce Development, Family Leave Insurance

15 New York Paid Family Leave, New York PFL Updates for 2024

16 Paid Leave Oregon, Common questions about Paid Leave

17 Rhode Island Paid Leave, Your Paid Leave Options

18 Washington Paid Family and Medical Leave, Find out how Paid Leave works