Big news out of Netflix:
UPDATE: Netflix announces unlimited paid paternity and maternity leave for its employees during the 1st year after birth, adoption. • $NFLX— CNBC Now (@CNBCnow) August 4, 2015
On the one hand, this is a great deal more than most companies do for new parents. The US, basically alone among developed nations, doesn't mandate that companies provide paid family leave at all, and while in theory companies are required to allow 12 weeks of unpaid leave, exemptions to that rule mean that it applies to only about 40 percent of workers. In 2014, less than one in seven workers had access to paid leave. Companies that buck that trend and provide months of paid leave are to be commended.
But Netflix is also engaging in a trend that's at best silly and at worst actively harmful to workers: the idea of "unlimited" leave or vacation.
Leave and vacation will never be truly unlimited
Obviously no leave is truly unlimited. That's what it means to have a job. So in practice there are limits. Netflix, for example, gives its supposedly "unlimited" benefits "during the 1st year." Giving employees a full year off is good! But it's not what the word "unlimited" means.
It's also not the same thing as Netflix saying explicitly, "New parents aren't supposed to work the first year after the birth or adoption of their child." It's still optional. While you could, in theory, take the whole year off, are Netflix employees actually going to do that? Or are they going to feel pressure to get back on the job sooner, lest they fall behind their childless colleagues?
This is the basic problem with "unlimited" leave: It replaces clear, predictable limits with limits imposed by vague and arbitrary social pressure to work more. That's what the German tech company Travis CI found upon adopting an unlimited policy (via Melissa Dahl):
When people are uncertain about how many days it's okay to take off, you'll see curious things happen. People will hesitate to take a vacation as they don't want to seem like that person who's taking the most vacation days. It's a race to the bottom instead of a race towards a well rested and happy team…
Uncertainty about how many days are okay to take time off can also stir inequality. It can turn into a privilege for some people who may be more aggressive in taking vacations compared to people who feel like their work and their appreciation at work would suffer from being away for too long.
Some companies have noticed that people are too afraid to take advantage of unlimited leave. Evernote, the note-taking app, started giving workers $1,000 to take at least a week off. But when this was announced, its CEO hadn't vacationed in years. Is risking his, or other executives', approval really worth an extra $1,000 to workers? Some other places, like Travis CI, started a minimum vacation policy. That's far better, especially when it's generous; Travis CI mandates at least five weeks off. But a low minimum could have the same problem as a regular unlimited policy. If you're required to take one week off, and more is optional, are your bosses really not going to think less of you for going out of your way to take more?
Unlimited leave also hurts workers through decision paralysis. Allocating unlimited resources can be daunting, and just as research has shown that giving workers too many 401(k) mutual funds to choose from can lead to less and worse savings, unlimited vacation can overwhelm workers to the point that they don't use it to full effect.
So why do companies offer unlimited vacation? Two reasons. One, they know that workers won't actually use it, so it doesn't pose much of a danger from the employer's standpoint. Two, it eliminates a liability from their books. Vacation days show up as a cost on balance sheets, so unlimited vacation makes life easier on the accounting front.
Here's a better idea. Instead of unlimited leave and vacation, firms should just have generous leave and vacation: a year for new parents and five weeks a year for vacation with no rollover, say. If employers want to make that a minimum to increase flexibility, even better. But refusing to give number figures doesn't help matters.