Microsoft will start requiring partners and suppliers to offer paid family leave, and it will help cover the costs

  • The company's U.S. suppliers will be required to offer a minimum of 12 weeks of paid parental leave at up to $1,000 per week.
  • Microsoft said it will assist its partners in complying with the new policy and realizes "that this may ultimately result in increased costs for Microsoft."
Microsoft's CEO Satya Nadella speaks to participants during the Viva Technologie show at Parc des Expositions Porte de Versailles on May 24, 2018, in Paris.
Chesnot | Getty Images
Microsoft's CEO Satya Nadella speaks to participants during the Viva Technologie show at Parc des Expositions Porte de Versailles on May 24, 2018, in Paris.

Microsoft will start requiring business partners and suppliers to offer paid family leave, the company said in a blog post published Thursday, expanding the scope of its support for new parents.

The company's U.S. suppliers will be required to offer a minimum of 12 weeks of paid parental leave at up to $1,000 per week. There are a couple caveats: The requirement applies only to suppliers with more than 50 employees and "covers supplier employees who perform substantial work for Microsoft" — though it's unclear what constitutes "substantial."

"We have long recognized that the health, well-being and diversity of our employees helps Microsoft succeed," Dev Stahlkopf, general counsel at Microsoft, said in the post.

"We also know that we rely on a wide array of other companies to supply us with goods and services that reflect their core competencies, and that the people who work for our suppliers also are critical to our success," Stahlkopf said.

Microsoft said it will assist its partners in complying with the new policy and realizes "that this may ultimately result in increased costs for Microsoft."

In 2015, Microsoft announced a similar policy that would require suppliers to offer their employees paid time off.

Read the company's full announcement:

Building on our 2015 announcement
Three years ago, we announced that we would require a wide variety of suppliers that do business with Microsoft in the United States to provide their employees with the important benefit of paid time off. Today we are announcing that over the next year we will take a further step, to ensure that these suppliers also provide their employees who handle our work with paid parental leave.

We have long recognized that the health, well-being and diversity of our employees helps Microsoft succeed. That's why we provide industry-leading benefits for our employees, including comprehensive health and wellness programs for families, paid vacation, paid sick leave and paid time off for new parents.

We also know that we rely on a wide array of other companies to supply us with goods and services that reflect their core competencies, and that the people who work for our suppliers also are critical to our success. That is why we took the step three years ago to require our U.S. suppliers doing substantial business with Microsoft to provide paid time off for their employees. Paid time off is good both for employers and employees, and it was the right step for our business. By implementing that requirement, we were able to focus our resources on businesses that share with us a commitment providing employees with important benefits such as paid time off. We believe now is the time to work with our suppliers to take a next important step.

What we're doing
Over the next 12 months we will work with our U.S. suppliers to implement this new paid parental leave policy. It will require that suppliers offer their employees a minimum of 12 weeks paid parental leave, up to $1,000 per week. This change applies to all parents employed by our suppliers who take time off for the birth or adoption of a child. The new policy applies to suppliers with more than 50 employees and covers supplier employees who perform substantial work for Microsoft. This minimum threshold applies to all of our suppliers across the U.S. and is not intended to supplant a state law that is more generous. Many of our suppliers already offer strong benefits packages to their employees, and suppliers are of course welcome to offer more expansive leave benefits to their employees.

Our new supplier parental leave requirement is informed by important work on paid parental leave done in states, including Washington. In 2017, Washington state passed family leave legislation, including paid parental leave. This new law will take effect in 2020. As we looked at this legislation, however, we realized that while it will benefit the employees of our suppliers in Washington state, it will leave thousands of valued contributors outside of Washington behind. So, we made a decision to apply Washington's parental leave requirement more broadly, and not to wait until 2020 to begin implementation.

Microsoft will work with our suppliers to understand the impacts of this change, and we will make these changes in a thoughtful way. We appreciate that this may ultimately result in increased costs for Microsoft, and we'll put a process in place for addressing these issues with our suppliers. Our first step will be reaching out to our suppliers to discuss the impact of this policy change.

The case for paid parental leave
We recognize today's announcement comes during an ongoing national dialogue about the importance of paid parental leave. The case for paid parental leave is clear. Studies show that paid parental leave enriches the lives of families. Women who take paid maternity leave are more likely to be in the workforce a year later and earn more than mothers who do not receive paid time off. Employers who offer paid time off for new mothers experience improved productivity, higher morale and lower turnover rates. And, paid parental leave is not solely a benefit for women. Data from California's paid family leave program shows that men take paternity leave at twice the rate and for longer periods of time when the leave is paid. This increased bonding and time spent caring for young children is correlated with positive outcomes such as higher test scores for these children. Further, when men and women have the opportunity to take paid leave, it can help counteract gender caregiving stereotypes, neutralize stigmas and promote equity in the home and office.

Despite these clear benefits, just 13 percent of private sector workers in the U.S. have access to paid parental leave. And the lack of access to parental leave cuts broadly across professions — according to the Bureau of Labor Statistics, 22 percent of professional positions and 7 to 8 percent of workers in service and maintenance jobs have access to paid parental leave.

Like many large employers, we welcome the opportunity to engage in the important national conversation about how all U.S. workers, regardless of where they work, can access paid parental leave. In the meantime, we will continue to focus our resources on doing business with companies that share our commitment to increase workforce inclusion and support employees and their families. As we gain experience with this new approach, we'll share what we learn with others. And as always, we'll look forward to learning more ourselves.