Understand sick pay accrual limits in QuickBooks Desktop Payroll

In QuickBooks Desktop 2019, sick and vacation time accruals, balances, and shortfalls are displayed on the employee pay stubs for greater visibility. This also serves as better compliance with the mandated maximum accrual rates.

With QuickBooks Desktop 2019 R3 and later, you'll also be able to set a maximum for carryover sick pay.

In this article, you'll learn how to:

• Set sick maximum accrual limits
  • Maximum hours at a time
  • Maximum hours for the year
• Reset hour each new year
• Set sick and vacation time

Set sick maximum accrual limits

There are 2 ways to set the max accrual limits for sick pay in QuickBooks Desktop.

Maximum hours at a time

The total hours' someone can save up at once. They'll accrue hours as long as their balance is below the maximum. Employees can gain more than the maximum in a single year if they use some sick time.

Example: You set your maximum number of hours to 40. Maria accrues 40 hours by August and uses 10 hours in October. She'll add more sick time on her next paycheque even though the new year hasn’t started.

Maximum hours for the year 

The total hours someone can save in one year. Once they reach this maximum, they won't accrue anymore until the next year.

Example: Let's say you set your maximum number of hours to 40. Joe accrues 40 hours by August and uses 10 hours in October. He won't accrue any more sick time until the new year starts.

Reset hour each new year

If you choose this option, any hours your employee earned will reset.  To carry forward any balances to the next year, enter the hours in Maximum hours to carry over.

Example: If an employee has 12 hours of sick time remaining at year-end and you set the maximum hours to carryover at 10 hours, only 10 hours will continue to be available for the employee’s use. The other 2 hours will be lost.

Set sick and vacation time

This is in compliance with regulation.

1. Go to the Edit menu, then select Preferences.
2. Select Payroll and Employees, then go to the Company Preferences.
3. Select Sick and Vacation.
4. Under Set accrual limit, select the appropriate option for you:
   • Maximum hours at a time:
   • Maximum hours for the year:
5. Under Maximum hours to carryover, enter the maximum number of unused sick hours that you are allowing your employees to carry forward into the new year.

Note: Establishing the preference applies only to new hires going forward. You will have to go into each existing employee and set the Maximum hours to carry over for them individually.

To learn how to set up sick and vacation time in your QuickBooks, see Set up and track time off in payroll.