Netflix announced Tuesday it will begin offering "unlimited" paid time off to employees during their first year as new parents, one of the most generous parental leave packages offered in the competitive tech industry.
The video-streaming company now allows mothers and fathers to take as much time off as they desire during the first year after their child's birth or adoption, while earning their normal salary. The updated policy is intended to help the company retain valuable employees, according to Tawni Cranz, Netflix's chief talent officer.
"Netflix's continued success hinges on us competing for and keeping the most talented individuals in their field," Cranz said in a blog announcing the leave expansion. "Experience shows people perform better at work when they're not worrying about home."
Federal law requires many companies in the US to offer at least 12 weeks of unpaid maternity leave, according to the Society for Human Resource Management. And 21 percent of US organizations offer paid maternity leave, but just 2 percent of US organizations offer unlimited paid leave.
Netflix's updated policy ranks among the most generous in an industry fiercely competing to attract and retain talented employees. At the high end is Twitter, which offers 20 weeks of paid leave to birth mothers, according to a recent survey by The Atlantic. Google offers biological mothers up to 18 weeks in paid maternity leave, with up to 22 weeks if there are complications. Likewise on Wednesday, a day after Netflix's announcement, Microsoft said its extending leave for moms and dads up to 12 weeks with full pay.
Facebook offers new parents 4 months of paid leave, as well as $4,000 in cash. Apple offers expectant mothers up to 4 weeks of leave prior to delivery and 14 weeks after. Both companies also offer adoption services and subsidize the cost of freezing eggs for female staff, up to $20,000. Netflix's updated parental leave policy allows both mothers and fathers of newborns and adoptees to set their own work schedule, letting them return on a full- or part-time basis and take leaves as necessary during their first year with new children.
SusanWojcicki, the CEO of YouTube, offered some insight into the benefits of expanded maternity leave in the Wall Street Journal last year. Noting that she was the first employee to go on paid maternity leave at Google, Wojcicki wrote that when Google increased its paid maternity leave from 12 weeks to 18 in 2007, "the rate at which new moms left Google fell by 50 percent."
But some experts warn that unlimited paid time off policies may backfire in work-intensive environments like tech, where engineers are constantly trying to look good. Karen Cates, who teaches about executive leadership at Northwestern University, told Marketplace Wednesday, "In practice, what's going to happen is that folks who decide to take longer [time off] are probably going to wind up working from home."
Culture changes start with the top executives, the report explains, so everyone else knows it's OK to take the company up on an offer like unlimited paid time off.
Netflix's new policy was announced on the same day the company's stock hit a new high, closing at $121.15, an increase of $8.59, or 7.6 percent.
Updated 8/5, 3:08 pm: with additional expert comment and Microsoft announcement.