Analysts say it’s a first for large American firms, which often outsource culinary, housekeeping and receptionist work to contractors that may not supply paid leave.
“We want to focus our resources on doing business with companies that share our values,” said Dev Stahlkopf, Microsoft’s corporate vice president and general counsel.
Per the requirement, mothers and fathers who perform work for Microsoft — biological and adoptive — must receive 12 weeks of leave at two-thirds of their wages or up to $1,000 weekly, Stahlkopf said.
The announcement comes as Washington state, where the company is based, prepares to introduce paid family leave for workers, the fifth state to do so.
Under the new law, which takes effect in 2020, workers can collect up to $1,000 weekly.
Microsoft now partners with more than 1,000 firms across the U.S. — half of which work outside Washington state.
Abby McCloskey, a conservative economist who has studied the issue, said Microsoft is sending the message that paid family leave should be a core worker benefit and not just a perk to lure top talent.
“This is a big change from how paid family leave has been viewed in the past,” she said. “There’s a cultural shift occurring as more employers offer paid leave, which is the good news.”
Fifty-eight percent of companies cover some wages during maternity leave, according to the Society for Human Resource Management, a national nonprofit, while just 12 percent do the same for paternity leave.
But some analysts cautioned that some employers could have trouble meeting Microsoft’s standard.
“Some medium and small companies cannot afford to fund such long leaves in combination with having to pay other employees to cover the work of the absent employee,” said Aparna Mathur, an economist at the American Enterprise Institute, a right-leaning think tank in Washington. “That is one reason they are not offering these policies, even though they recognize the benefits that such a policy can offer their workers.”
Unlike other industrialized nations, federal law guarantees only 12 weeks of unpaid, job-protected leave for those employed at companies with at least 50 staffers. (Smaller businesses are excluded from the rule.)
Worker advocates say the dearth of paid leave is why an estimated quarter of working mothers in the U.S. return to work less than two weeks after childbirth, whether they’re physically ready or not.
Microsoft’s new requirement for partners is less generous than what it offers to its own staffers. Direct employees receive 12 weeks of paid family leave at full pay, and birth mothers receive an additional eight paid weeks for physical recovery.
This isn’t the first time the company has laid out employment-related conditions for service providers.
Three years ago, Microsoft said it would partner exclusively with companies that gave employees at least 15 days of paid sick or vacation time.
Heather Boushey, executive director and chief economist at the Washington Center for Equitable Growth, a progressive think tank, said Microsoft’s policy is significant because service workers rarely have access to paid family leave.
“Everyone cares about what workers are getting at the marquee firm,” she said, “but no one cares about the smaller suppliers, the firms that are providing the housekeeping services, the janitorial services, the reception services.”
Mathur, the AEI economist, applauded the idea’s intention but said she’d rather see publicly funded support for working parents.
“We want to make sure that paid leave is provided in a way that imposes minimum costs on employers, otherwise we could see employees, especially women, face discrimination in hiring and salaries,” she said.
President Trump was the first Republican in the White House to say he wants to see a national paid-leave program, but no concrete plan from the administration has materialized.