By SARAH E. NEEDLEMAN The Wall Street Journal
Entrepreneurs focused on growing their businesses are sometimes caught off guard when employees start growing their families.
Sendero Business Services LP, a management-consulting firm in Dallas, wasn’t prepared when a manager became pregnant in 2007 and asked what its maternity-leave policy entailed, says co-owner and partner Ruth Farrar.
“I said, ‘I’ll get back to you,’ ” she recalls replying to the woman, because the small firm, then three years old, didn’t yet have one. She says Sendero then quickly decided to give the expectant mother two months of paid time off for maternity leave, plus other benefits.
“Our impulse was to be too generous,” says Ms. Farrar, adding that two more female employees came forward a month later announcing they were also pregnant.
When starting a small business, planning ahead in case an employee or an employee’s spouse becomes pregnant isn’t top of mind for many owners. But by taking the time to carefully research legal obligations, insurance options and other key issues early on, entrepreneurs may be able to avoid making costly mistakes.
“You don’t want to unknowingly grant something you don’t have to grant,” says Jay Zweig, an employment attorney and partner in Phoenix for law firm Bryan Cave LLP.
For example, he says business owners should be aware that under the federal government’s Family and Medical Leave Act, employers with less than 50 workers are not obligated to give paid or unpaid time off to pregnant workers.
Meanwhile, state laws vary on whether employers must continue to compensate workers while on maternity leave, says Mr. Zweig. For this reason, he cautions business owners to consult with an employment lawyer when creating a maternity-leave policy, rather than use information posted to the Web or what a former employer gave them as a guide.
Another piece of advice for business owners: Find out if you can tap your insurance provider’s disability coverage.
Tammy Wise, owner of Wise Group, a marketing firm in Cleveland, says she didn’t realize she could’ve done that when she agreed in 2004 to give her nine employees —all women—up to 12 weeks off for maternity leave at 70% of their salary for eight of those weeks.
Ms. Wise later expanded her coverage, but learned a valuable lesson this past July when her provider changed its benefits policy. She failed to read the new version carefully and when two employees took maternity leave, she discovered that coverage had dropped to four weeks from six. Had she paid closer attention, she says she would’ve adjusted her firm’s policy in this area accordingly.
Small-business bosses may also want to put some thought into how they treat expectant mothers on their staffs. Consider, for example, that last year nearly 6,200 pregnancy-discrimination complaints were filed with the U.S. Equal Employment Opportunity Commission. Roughly 1,500 resulted in settlements totaling $16.8 million, the government agency reports.
Business owners may be found guilty of pregnancy bias for failing to provide an expectant worker with accommodations deemed reasonable under some state laws, such as time off for doctor visits, says Jack Tuckner, a founding partner with Tuckner, Sipser, Weinstock & Sipser LLP, a boutique law firm in New York specializing in women’s rights in the workpace. Others may be held accountable for treating pregnant staff members with hostility or for refusing to let them work.
“You can’t tell a woman to take time off because she’s pregnant if she’s capable of working and wants to,” says Mr. Tuckner, even if the owner’s intentions are to benefit her well-being. “Legally she can work until her water breaks.”
Finally, business owners may also want to consider ahead of time how they’ll keep their firms operating smoothly while one or more employees goes on maternity or paternity leave. Hiring freelance talent may be an option. Another may be to divide the absent employees work among remaining staffers.
But what if the business owner is the one going on leave?
James Reinhart, co-founder of ThredUp Inc., a six-month-old Web company in Cambridge, Mass., is currently grappling with this issue. His wife, a schoolteacher, is due to have their first child in July.
“The demands of a start-up mean that I can only take a few days off,” he says. “Then I have to get back at it.”