Employers on Notice After Estée Lauder Parental Leave Settlement

A recent $1.1 million EEOC settlement with Estée Lauder Companies over disparate parental leave practices raises the stakes for companies that provide the benefit.

The EEOC said this is the first case it can identify involving discrimination in providing paternal leave for new fathers. The agency argued that by providing longer leave for “primary caregivers” than for “secondary caregivers,” and allowing for different return-to-work policies—such as offering modified work schedules to new mothers and not new fathers—Estée Lauder engaged in sex discrimination. In a case still pending, the American Civil Liberties Union filed a complaint with the EEOC when JP Morgan Chase & Co. denied primary caregiver leave to a male worker because his wife was assumed to have that role.

“Parental leave needs to be offered to men and women on an equal basis,” regional EEOC attorney Debra M. Lawrence said in a statement provided to Bloomberg Law July 18. “If the EEOC discovers that this is not taking place, we will look into it.”

The agency’s stance puts plenty of companies on notice. The prevalence of paid parental leave increased between 2016 and 2018, according to research from the Society for Human Resource Management. Paid maternity leave increased from 26 percent in 2016 to 35 percent in 2018, and paid paternity leave increased from 21 percent in 2016 to 29 percent in 2018, SHRM found. Traditionally, organizations grant more parental leave to women due to medical necessity associated with childbirth.

Corporate culture may be exacerbating parental leave disparities because men don’t always take their full leave, or any leave at all. A 2016 parental leave survey from Deloitte LLP found that one in three male respondents said they wouldn’t take advantage of paid parental leave benefits because it could put their job in jeopardy.

Employers Changing Policies

What are employers doing to minimize risk? One solution is shifting to gender-neutral policies.

“In the past five to six years, I’ve seen a lot of my clients going back and examining policies around parental leave, to make sure everybody is getting benefits on an equal basis,” Jason Branciforte, shareholder in the Washington office of management-side law firm Littler Mendelson, told Bloomberg Law July 17. For companies that haven’t done this kind of review, the Estée Lauder settlement “is going to get people’s attention,” he said.

In fact, Estée Lauder changed its parental leave policy in May to give 20 weeks of leave to new parents, regardless of gender. Other high-profile companies like Anheuser-Busch InBev, Cisco Systems Inc., and Legg Mason Inc. have made similar changes.

“This settlement represents an especially positive step because it appears to have resulted in increasing benefits for more workers, rather than cutting them back. All parents, regardless of their gender, deserve to be able to take the time they need to bond with their children,” Galen Sherwin, senior staff attorney at the ACLU and co-counsel in the JP Morgan lawsuit, told Bloomberg law in an email July 17.

Simplifying Leave

Simplifying leave plans is another solution. Absent a federal mandate to provide paid leave, companies in cities or states with paid leave laws already are navigating a complex compliance puzzle, Mandana Massoumi, a partner in Manatt, Phelps & Phillips LLP’s labor and employment practice in Costa Mesa, Calif., told Bloomberg Law July 17.

In California, for example, companies must comply with the New Parent Leave Act (S.B. 63), the California Family Rights Act, and the Pregnancy Disability Leave law, Massoumi said. “It’s important that companies try to stay on top of all of these developments to ensure compliance.”

Today it’s also probably “much easier” for companies to administer one all-encompassing leave policy, Branciforte said, by designing a benefit that gives a certain amount of leave “for bonding time.”

Generous, streamlined policies also may have the added benefit of making a company more attractive to top talent, Massoumi said. “More and more companies are bolstering their bonding or leave packages as a form of recruiting and retaining talent.”