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.
Paid leave cost analysis
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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FAQ
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.