Netflix Announces New 'Unlimited' Maternity and Paternity Leave

The Internet streaming provider announced the benefits change aimed to help new parents during first year after birth.
5:11 | 08/05/15

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Transcript for Netflix Announces New 'Unlimited' Maternity and Paternity Leave
It is time for the "Heat index" and this morning's hot button. That big announcement from netflix that will give unlimited fully paid paternity and maternity leave to its employees. That is a crucial issue for so many workers and our business correspondent Rebecca Jarvis here with more. Reporter: Until now a benefit so generous was virtually unheard of but thanks to this unprecedented move by netflix, every single salaried employee at their company is entitled to a full year off after having or adopting a child. This morning, netflix, the company known for offering customers unlimited streaming content like "House of cards" and "Orange is the new black" -- What's going on. Reporter: -- Announcing a new unlimited feature for its employees. As much time off as they want during the first year after a child's birth or adoption with pay. The first year of a baby's life is critical for bonding and brain development. We know that babies who have strong attachments to their parents are healthier and have higher I.Q.S so having as much time as you need to bond with your baby is really important. We just gave them a great gift. Reporter: In the U.S. New parents are legally entitled to 12 weeks of unpaid leave. But there isn't a policy mandating paid leave of any kind. This is also probably the most generous policy by any big company that we've seen. Reporter: And only a handful of companies offer plans as generous as netflix like Richard Branson's virgin group. Announcing earlier this summer that new moms and dads can take a paid year off but limping the policy to senior employees mostly outside the U.S. Newer tech companies tend to be the most giving with Google offering new mothers five paid months off and Facebook offering moms and dads four. Netflix says the new policy like their unlimited time off which grants employees unlimited vacation time will help them compete and retain the postal leapted individuals in their field. Netflix is setting the tone for tech companies and that it motivates other companies to try to keep up with netflix. Reporter: And it's not just tech companies who are taking notice. This morning I'm hearing from all sorts of companies who are looking at this new policy which could be good news for a lot of employees in a lot of different types ofcans, as well. Boy, it sure could, Rebecca, thanks very much. "Gma" workplace contributor Tory Johnson here as well. Hearing unlimited full year moms and dads, what's the catch? What's the catch? I think, you know, initially you think this would be a dream for my family but could it be a detriment to my career? And there are a lot of people who are asking that. Yesterday after the netflix announcement actually we read from one blogger who posted online something eloquent. "It's hard enough for a woman to find a high level well-paying job think of all the things that could change with your company in the time you were gone." All the things that may find you irrell plant by the time you walk back into the office and I think that for a lot of people there's this stigma, fear of being out of sight, out of mind. What is that going to mean for me? Not something in our heads. In fact, there is a Cornell study done that found that the less time women take off the easier it is to advance in their jobs. That makes sense. Not just perceived. Exactly. An interesting take. Rebecca, let me ask you this. Why is netflix doing this now when so few other companies are? Well, first of all, it benefits them. It makes them much more competitive to all the new employees who might want to work for them or the current employees who are thinking about leaving and going elsewhere where the policies are more generous but one thing that's really interesting to think about, the stock market has improved. The jobs market has improved and companies need to do more to keep their employees, so this is good news actually for other people working at other companies because they're taking notice of this and if it really works for netflix, it's going to work in other places too. Also doesn't hurt that netflix is doing quite well right now. All time highs, exactly. What does this mean, Tory, sort of big picture for the workplace in general? So I think for it to have the greatest impact, we actually have to take advantage of these policies and so that means not just sort of have the policy but that we're willing to take the time off. You're saying women, men. Women and men. Men. Definitely. And men are the key here. There are three states so it's not just the cool companies that are doing this but three states Rhode Island, New Jersey and California, that have paid parental leave policies and one study that looked at California found that men who are entitled to six weeks of paid time off when the baby was born took actually less than one week so they were back to work. It takes away the stigma if everybody takes it. We have to take advantage of it. New trend for big companies. I think a lot of companies are looking at this. I'm hearing whispers and this is truly good news for a lot of different people because I am hearing whispers this morning that a number of companies, maybe not a full year of paid leave but a lot of companies are looking at more leave and more paid leave for their employees. We'll track this. Great information, thank you both very much. If you want to advocate for benefits tweet your questions to Tory @toryjohnson. Next up, super shopping

This transcript has been automatically generated and may not be 100% accurate.

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