In Brief
Mid-market employers face rising complexity in leave administration as laws evolve and employee expectations grow. New data from NFP’s 2026 U.S. Leave Management Report highlights five trends: sick leave harmonization, uneven PTO usage, redesign of admin models, parental-leave equity, and expanded holiday calendars. Use these insights to reduce risk, lift engagement, and free HR capacity for strategic work.
Leave benefits have become central to how employees evaluate employers. When people feel supported during critical life moments, whether welcoming a child, caring for an aging parent, or managing their own health, they bring more energy and commitment to work. Organizations that get leave right see measurable gains in retention, productivity, and employer brand.
The challenge is that leave management has grown more complex. Regulatory landscapes shift constantly, employee expectations have evolved beyond traditional programs, and HR teams face mounting pressure to do more with less. This creates real opportunity for forward-thinking employers who modernize their leave programs to differentiate themselves, reduce compliance risk, and free up HR capacity for strategic work.
Five trends reshaping leave management
NFP's Human Capital Solutions practice recently released the 2026 U.S. Leave Management Report, based on a survey of 796 employers. Most respondents (71%) represent organizations with fewer than 500 employees, offering a clear window into how mid-market companies are navigating leave challenges.
Here are five trends from that report to consider for the year ahead.
1. Sick leave harmonization across states
Multistate employers have historically struggled with the patchwork of state and local sick leave laws. This year's data shows that 52% of organizations now use holistic internal policies designed to meet or exceed requirements across all jurisdictions, rather than administering separate sick leave buckets by location.
This shift reduces administrative complexity, addresses equity concerns, and provides a buffer against compliance risk. The challenge is cost. Extending the most generous benefit to all employees means some workers receive more than their local laws require. But many employers find this offset by administrative savings, reduced turnover, and competitive advantage.
Recommended actions: Map all state and local sick leave requirements applying to your workforce. Identify the most generous standard across dimensions like accrual rate, maximum balance, and covered uses. Design a single policy that meets or exceeds that standard everywhere, document any jurisdiction-specific overlays, and automate accrual tracking in your HRIS.
2. PTO remains dominant, but usage is still uneven
Paid time off (PTO) continues as the most popular leave structure, with 61% of employers using PTO-only plans. Around 26% offer a vacation plan, while 11% provide a mix of both.
Despite this flexibility, roughly 40% of employees still only use half or less of their available time off. This under-utilization represents a missed opportunity for wellbeing and productivity. Employees who don't take adequate time off are more likely to experience burnout and disengagement, while organizations carry significant PTO liabilities.
Recommended actions: Implement automated reminders alerting employees to current balances. Consider minimum-use expectations for mental health and well-being. Train managers to model good time-off behavior and encourage their teams to use available days. Review carryover and payout policies to ensure they don't inadvertently discourage usage. Some of our clients prefer adopting an Unlimited PTO plan (with parameters in the policy to manage usage). If you are exploring adopting an Unlimited PTO, or a Flexible PTO plan, consider some of these tips.
3. Admin models are being rethought
Seventy-three percent of employers manage leave internally, and roughly two-thirds do so without software support. Fifty percent spend three or more hours administering an individual’s leave, time that could be invested in strategic work.
Many organizations using leave management software report no meaningful efficiency gains, often due to underutilization. Teams implement systems but never fully adopt features like automated workflows, templates, or integrated communications.
For organizations that outsource, 53% prioritize the ability to bundle leave management with other services when selecting vendors. The top benefit of outsourcing is compliance support (38%), though roughly 40% report less-than-good vendor performance in areas such as managing company-specific policies.
Recommended actions: Quantify your current cost (hours per leave, error rate, cycle time) and compliance exposure. If you use software, audit feature adoption and integrate with payroll/HRIS; if you outsource, set SLAs for responsiveness, policy configuration, and ADA coordination.
4. Parental leave equity for all caregivers
NFP finds that 59% of employers now offer parental leave, but 27% still maintain distinctions between "primary" and "secondary" caregivers, typically providing more time to primary caregivers.
This practice exposes the organization to legal risk and undermines inclusion. Recent high-profile lawsuits (e.g., JPMorgan’s $5M settlement) underscore the danger of gender-based distinctions in parental-leave policies.
Recommended actions: Review parental leave policies to identify any language differentiating between caregivers. Redesign your policy to ensure equal bonding time for all parents, regardless of birth, adoption, or foster placement. Update language and documentation, handle medical recovery via disability, train managers on the changes, and ensure your administration can track and apply policies consistently. For practical post-leave support, see our recommended strategies for retaining working parents.
5. Holiday calendars are expanding
Holiday benefits are evolving to reflect cultural shifts and employee preferences. 44% of employers now recognize Juneteenth as a paid holiday, while 70% recognize the day after Thanksgiving. Forty-one percent offer additional holidays beyond the traditional federal calendar, including floating holidays employees can use for personally meaningful observances.
Another emerging practice is Summer Fridays, where employees receive half or full days off during the summer months. Currently, about 1 in 5 employers offer this company-wide today, while another 1 in 5 plan to do so. This low-cost perk signals trust and flexibility while creating a meaningful benefit that can have a tremendous positive impact on retention and morale.
Recommended actions: Align your holiday calendar to workforce demographics and competitor practices. Consider adding holidays that support your workforce's values. Publish clear pay rules for non-exempt employees working holidays. Coordinate calendars across regions if you operate globally. Evaluate whether Summer Fridays might fit your culture.
How leave management can be a lever for engagement
When designed effectively, leave becomes a powerful tool for employee engagement. According to NFP’s report, 60% of employers said their leave benefits influence talent retention.
Five actions can help you leverage leave as an engagement tool:
- Simplify and clarify your policies so employees actually understand what's available to them. Complex policies that require employees to decode eligibility rules or coordinate multiple programs create frustration rather than support.
- Train managers to encourage leave usage and model healthy boundaries themselves. Manager behavior signals what's truly valued, and employees take cues from whether their leaders use the time available.
- Close equity gaps across demographics, roles, and locations so everyone feels the benefit is designed for them. Visible disparities in who gets what benefits undermine trust and inclusion efforts.
- Communicate proactively about available leave, not just when someone has an immediate need. Regular reminders and education help employees plan and feel confident using benefits.
- Use data to track patterns and identify where policies aren't working as intended. Low utilization, concentration of usage in specific groups, or frequent confusion questions all signal opportunities for improvement.
What to do next
Leave management in 2026 requires balancing compliance with evolving regulations while meeting rising employee expectations. Start with a baseline assessment of your policies, processes, and tools. Identify high-impact upgrades such as sick leave harmonization, gender-neutral parental leave, or enabling underused HRIS features, and then pilot, communicate, and measure. Here are a few helpful resources as you get started:
- Leave benchmarking explainer
- HRIS tools & resources
- HRIS implementation pitfalls to avoid
- Strategies to retain working parents
Need help? We help mid-market employers modernize their leave programs by balancing compliance, equity, and culture while also freeing HR capacity. Book a call with a Helios HR consultant to benchmark your program or optimize your HRIS today.
FAQ
What’s the best leave structure for a multistate employer?
A single, harmonized sick leave policy that meets or exceeds all jurisdictions, plus documented overlays and HRIS automation to avoid errors.
How can we raise PTO usage without forcing it?
Make balances visible, normalize time off via manager role-modeling, and consider minimum-use expectations. Review carryover/payout rules that may discourage use.
Is it risky to distinguish between primary and secondary caregivers?
Yes. Lawsuits and settlements show gender-based distinctions can be discriminatory. Equal bonding leave is safer and fairer.
When should we outsource leave administration?
When complexity outpaces internal capacity, or you need stronger compliance controls. If you outsource, set SLAs and confirm vendor ability to apply company-specific policies.