Do you have clients who frequently pursue government contracts? It can be a solid pathway to growth, steady revenue, and new markets for contractors and the insurance brokers who serve them.
There are almost 40,000 bids open today for government contracts around the US, spanning a range of business opportunities including construction, professional services, maintenance, and IT, according to data from Procuretap.com.
It’s also a highly competitive field, which means government contractors need to use every tool they can to set themselves apart.
Most brokers think of paid family and medical leave as a compliance issue. Government contractors see it differently. For companies competing for public sector contracts, employee benefits can influence whether they make the shortlist or lose to a better-prepared competitor.
Mandated Benefits: Widespread and Growing
As of May 2026, over 40 states offer dedicated paid family leave for state government employees, according to data from ABetterBalance.org. This is not just limited to the 14 states and DC, who have mandated PFML programs.
By providing private benefits, employers in the private sector seeking government contracts can meet government requirements and stand out amidst a large pool of candidates.
Beyond Required Paid Family and Medical Leave Lies New Profit Opportunities
Here at The DBL Center, we often talk about compliance. We want to help our brokers ensure that their clients meet the required regulations for PFML in their states. It’s important and we’ve made it our mission for nearly a decade when New York first rolled out Paid Family Leave, a program that was the best of its kind at the time. We have supported private programs for disability leave in New York, New Jersey and Hawaii for more than four decades.
But the vast majority of states still don’t require private companies to offer disability insurance, medical or paid family leave to their employees. Americans still desperately need these benefits, even where they aren’t required by law. We haven’t talked about that enough.
Tax Incentives Make It More Enticing for Employers Across the US to Offer PFML
Staying competitive and staying compliant with government contractor requirements should be enough for business owners to seriously consider offering PFML benefits. t Tax incentives sweeten the deal.
The One Big Beautiful Bill Act (OBBA) extended the 45S tax credit for employers who offer PFML in states where it’s not required or who provided better benefits than required by the state.
For contractors evaluating benefit costs, the extension of the Section 45S tax credit may help offset some of the investment. In certain situations, employers can claim a credit based on qualifying PFML premiums paid, even if no employee ultimately uses the benefit during the tax year.
What employers and brokers need to know: Employers with a PFML policy in force can calculate the tax credit as a percentage of premiums paid, rather than as a credit on the benefits paid out. Simplifying the credit is a way to encourage more employers to use it.
The Bottom Line
Businesses can grow with the new public sector contracts and offer better benefits with tax incentives. Insurance brokers can better serve their clients and open new pipelines by approaching employers in states with no PFML requirements to offer this benefit to employees on a voluntary or cost-shared basis.
PFML and leave benefits create a competitive advantage and a tax-credit opportunity for employers. Brokers should embrace the chance to have a compliance conversation with their clients and explore other risk gaps, including ancillary benefits.
The DBL Center team can help guide you through it all.
