Setting Yourself Up for Financial Success During Maternity/Paternity Leave

It’s time! The flawless phrase from every movie about having children. You’ve had your baby shower, been to all the classes, and set up the nursery; now you are about to go on maternity/paternity leave. Here are the things you will need to weigh prior to your time away from work under the Family and Medical Leave Act (FMLA), Short-Term Disability (STD), employer-sponsored options, and the differences in the states in which I’m registered: WA, CA, and TX.
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At the national level, the Family and Medical Leave Act (FMLA) establishes a baseline for maternity and paternity leave: eligible employees of covered employers (generally companies with 50 or more employees) can take up to 12 weeks of unpaid, job-protected leave for the birth of a child, adoption, or to care for a family member with a serious health condition. FMLA applies uniformly across all states, including CA, WA, and TX, provided the employee meets the eligibility criteria (12 months of service and at least 1,250 hours worked over the past year). However, FMLA does not provide wage replacement—it simply guarantees unpaid leave and job protection.

Short-term disability (STD) insurance is another way employees can replace income around childbirth, especially for the medical/disability portion of maternity leave when they are physically unable to work. STD benefits are typically employer-provided (or privately purchased) and vary widely by plan. These policies generally pay a portion of pre-disability earnings (often 40–70%) for a limited period after childbirth and are not job-protected unless paired with FMLA or a state law that extends protection. In states like California with mandated SDI, workers automatically contribute to that pool and qualify for pregnancy-related disability benefits, but in Washington and Texas, STD depends on employer offerings or voluntary plans.

Beyond federal and state statutory benefits, many employers offer paid parental leave packages to remain competitive, especially in industries facing labor shortages. These employer-sponsored options can range from a few weeks of fully paid leave to enhanced packages that supplement state benefits or extend leave beyond FMLA’s 12 weeks. In California and Washington, employers often coordinate their own paid leave with state benefits (for example, topping up PFL or PFML income so employees receive full salary), while employers in Texas may choose to offer paid leave voluntarily or through voluntary insurance plans allowed by state law; uptake of those plans, however, has been limited.

States can layer on additional benefits, particularly through paid family leave programs or state disability insurance. California offers two key state programs: State Disability Insurance (SDI) for pregnancy-related disability (which often covers a portion of wages around childbirth) and Paid Family Leave (PFL), which provides partial pay for up to eight weeks to bond with a new child. These benefits are funded by employee contributions into SDI and are distinct from job protection. Washington operates a statewide Paid Family and Medical Leave (PFML) program that provides wage-replacement leave for family and medical reasons, offering up to 12 weeks of paid leave, or up to 16–18 weeks in combined or complicated situations, with benefits based on a percentage of wages. Texas, by contrast, does not have a mandated state paid family leave or disability program for private workers; most new parents must rely on FMLA and any employer policy.

Resources: (Paid Leave Washington), (Paycor), (Employment Development Department), (Texas Workforce Commission)

​Reviewing all of your benefit options with your employer could help put you in a better position than you think. As a dually licensed financial advisor and Washington insurance agent, I work with my clients to plan for the road ahead and identify the opportunities their employers offer, as well as options within the marketplace, to help maintain income.

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