How to estimate parental and medical leave top-ups

How do you top up state paid parental leave without a leave management company?

If your company is big enough to have more than a handful of parental/medical/disability leaves in a year, you probably want a leave management company like Cocoon or Tilt. 

But if you only have a couple a year, it may not be worth it. I've been talking to a bunch of HR pros about how to top up manually. 

The problems: 

🤔 𝗛𝗼𝘄 𝗱𝗼 𝘆𝗼𝘂 𝗸𝗻𝗼𝘄 𝗵𝗼𝘄 𝗺𝘂𝗰𝗵 𝘁𝗼 𝘁𝗼𝗽 𝘂𝗽 𝗕𝗘𝗙𝗢𝗥𝗘 𝘁𝗵𝗲 𝘀𝘁𝗮𝘁𝗲 𝗮𝗽𝗽𝗿𝗼𝘃𝗲𝘀 𝘁𝗵𝗲 𝗰𝗹𝗮𝗶𝗺?

I once saw a dad in Oregon whose claim wasn't approved until after he came back to work.

🧮 𝗛𝗼𝘄 𝗱𝗼 𝘆𝗼𝘂 𝗰𝗼𝗻𝘃𝗲𝗿𝘁 𝘀𝘁𝗮𝘁𝗲 𝗯𝗲𝗻𝗲𝗳𝗶𝘁𝘀 (𝗽𝗮𝗶𝗱 𝘄𝗲𝗲𝗸𝗹𝘆) 𝘁𝗼 𝗮 𝘀𝗲𝗺𝗶𝗺𝗼𝗻𝘁𝗵𝗹𝘆 𝗽𝗮𝘆 𝗰𝘆𝗰𝗹𝗲?

1 month = 4.28 weeks, except when it's 4.48 weeks, except when it's 4 weeks.

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Here's how I do it:

1️⃣ I make a conservative estimate about how much the state will pay. Most states have benefit calculators that do the work for you. 

When in doubt, I round down. 

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2️⃣ I calculate the top-up based on the conservative estimate in Step 1. For semimonthly, the formula is:

[(Annual salary÷ 52 weeks) – (Estimated weekly benefit from the state)] x 52 weeks ÷ 24 semimonthly pay cycles

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3️⃣ I pay their top-up amount on regular payday until their state claim is approved. (You'll probably have to process this as an off-cycle payroll.)

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4️⃣ When the state claim is approved, I reconcile any differences between my estimate and what the state actually approved. Since I was conservative, any differences will probably be in the employee's favor (meaning I didn't overpay). 

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5️⃣ I make them whole in a lump sum. If I overestimated the state payments (has never happened), I decrease the remaining payments slightly (or I don't, because it's not worth quibbling over). 

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6️⃣ I then continue to pay the adjusted top-up amount on the regular pay cycle (better if their return date is unknown) or pay a lump sum for the rest of their leave (just make sure to spread out the pay period over the full remainder of their leave so they don't get killed on taxes).

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You can do something similar with private short-term disability. 

I made a quick and dirty calculator, if you want to use it.

Check out the Calculator