The cost of ignoring leave: Why mental health and caregiving absences are a business issue

For many employers, leave administration is viewed through the lens of compliance: how to stay in line with FMLA, meet state mandates, and manage internal workflows.

But for employees, especially parents, caregivers, and those managing mental health, leave isn’t just a policy. It’s often a crisis point—and one that’s becoming more common.

Mental health-related leaves are on the rise. Caregiving demands—whether for children, aging loved ones, or both—are pulling more mid-career employees out of the workforce. And employers that treat leave as a moment-in-time event are losing out on talent, productivity, and dollars.

Supporting leave isn’t just a moral imperative. It’s a strategic one. Especially when the average leave of absence costs employers anywhere from $12,000 to $50,000+ per employee.

Let’s break that down 👇

The real cost of paid leave

Paid leave isn’t just lost hours. The U.S. Bureau of Labor Statistics reports it costs employers about $3.00 per hour worked, or 7.4–7.6% of total compensation (BLS, 2024). For an $80,000 employee, that’s roughly $5,600 annually. A typical 12-week leave can cost $12,000–$20,000+, and longer leaves or executive roles may reach $50,000+ (SHRM, 2018).

Wage replacement is only part of the cost. Employers also face:

• Temporary backfill or overtime: $3,000–$15,000+
• Lost productivity: $2,000–$10,000+
• Administrative overhead: $500–$2,000
• Turnover risk (if employee doesn’t return): $15,000–$40,000+ (SHRM, Gallup, 2023)

The rising cost of caregiver and mental health leaves

Caregiver leaves are growing, and they’re not limited to parents of newborns.

1. 1 in 5 employees is providing care to an aging or ill adult
2. Mental health-related absences are among the top drivers of disability claims
3. These leaves often occur in mid-career roles, where backfill is complex and turnover is expensive

Left unsupported, these employees are more likely to take extended or unplanned leaves—and less likely to return. That’s a financial liability.

Why supporting the full leave journey matters

Many leaves of absence—especially caregiving and mental health—begin with months of unnoticed stress. Without early support, absences last longer, and employees may never return.

Employers who invest in proactive support see fewer, shorter leaves and better retention. Cleo partners with employers to provide personalized help before, during, and after leave—offering emotional support, care coordination, and reentry assistance.

Employers that invest in comprehensive leave benefits like Cleo see:

• Fewer unplanned leaves
• Shorter absences
• Lower healthcare and disability claims
• Improved retention and DEI outcomes

The bottom line

Leave is costly—but these costs are avoidable. Treating leave as a strategic investment, not just compliance, saves money and protects your workforce.

Cleo helps you get ahead of leave costs by supporting employees through every stage—boosting wellbeing and your bottom line.