Sick leave policy essentials: A guide to eligibility, accrual, and employee requests

An employee wakes up sick and lets you know they won't be in for a few days. What happens next? Whether the time is paid depends on where your business operates, how your leave policy is structured, and whether state or local law requires paid sick leave.

A clear sick leave policy takes the guesswork out of those situations. It helps employees know what to expect and gives managers a uniform process to follow.

This guide explains what a sick leave policy typically includes, when one is required, and how to create a policy your team can understand and follow.

What is a sick leave policy?

A sick leave policy explains how employees can take time off for illness and outlines the expectations for both employees and managers. It establishes how sick leave works within your business, including who can use it, how it's provided, and the process employees should follow when they need time away from work.

Sick leave vs. PTO

Sick leave and paid time off (PTO) aren't the same thing, even though many small businesses use the terms interchangeably. PTO is often a single bank of hours employees can use for vacation, personal time, or illness. Sick leave is reserved for health-related absences.

Where state or local law requires paid sick leave, general PTO policies only satisfy those requirements if employees can use the time for the same reasons and under the same conditions the law requires.

Is sick leave required by law?

For most private employers, the answer depends on where the business operates. No federal law requires paid sick leave, but many state and local governments do. Some employers may also have obligations under federal contracts.

State and local laws

Paid sick leave requirements are established by state and local governments, and not all states have them. Where paid sick leave laws apply, the rules may address which employers the law applies to, how employees earn leave, when it can be used, and whether unused time carries over.

Federal contracts

Businesses with federal contracts may have additional paid sick leave obligations as part of their contract terms. Employers working with federal agencies should review those requirements separately rather than assume standard employment laws apply.

Ways to structure sick leave

Employers generally choose from a few structures when deciding how to offer sick leave:

• Accrual-based leave. Employees earn a set amount of sick time for every hour or pay period worked, similar to how vacation time often accrues.
• Frontloaded leave. The full annual allotment is granted at the start of the year or upon hire, rather than building up gradually.
• PTO-bank leave. Sick time is combined with vacation and personal days into a single pool employees can draw from for any reason.
• Unpaid leave. Employees can take time off for illness, but the business isn't obligated to pay for it unless local law says otherwise.

What to include in a sick leave policy

A sick leave policy should answer the questions employees and managers are most likely to have before someone needs time away from work. At a minimum, include the following elements.

Eligibility

Eligibility rules should clearly explain which employees are covered, including whether part-time, seasonal, or temporary employees qualify. In many states and localities, paid sick leave laws extend to part-time and seasonal employees, so employers should confirm the requirements that apply where their employees work.

Explain how employees earn sick leave, the rate at which it accrues, and when they can begin using it. Check applicable state and local requirements, including minimum accrual rates and limits on waiting periods. If your policy grants leave upfront instead of accruing it over time, specify how much employees receive and when, and confirm that this approach meets applicable requirements.

Caps and carryover

State whether employees can carry unused sick leave into the next year and whether a maximum balance applies. Keep in mind that some state and local laws set minimum carryover requirements.

Usage increments

Clarify the smallest amount of sick leave employees can use at one time, such as hourly increments or half-day blocks. Straightforward guidelines help managers administer leave consistently.

Permitted reasons for use

Clearly explain when employees can use sick leave under your policy, including:

• Personal health needs: Physical or mental illness, injury, medical appointments, treatment, and preventive care, such as routine checkups.
• Family care: Caring for a covered family member, such as a spouse, child, or parent, during an illness or helping them access treatment or preventive care. Definitions of “family member” vary by state and local law and may include additional relationships.
• Safety-related needs: Where required by law, time to seek medical care, counseling, legal assistance, relocation, or other support related to domestic violence, sexual assault, or stalking affecting an employee or a covered family member.

Include any other uses required by applicable state or local law, and clearly define which family members your policy covers.

Notice and documentation

Explain how employees should report an absence and when documentation, such as a doctor's note, may be requested. Be sure those requirements comply with applicable state and local laws.

Anti-retaliation protections

State that employees won't be disciplined or retaliated against for using sick leave they're entitled to take. Many paid sick leave laws include anti-retaliation protections.

Interaction with other leave

Explain how sick leave works alongside PTO, the Family and Medical Leave Act (FMLA), and other leave your business offers. Also address how leave may be considered a reasonable accommodation under the Americans with Disabilities Act (ADA). Help employees understand which policies may apply, how they can overlap, and whom to contact with questions.

Before you finalize your policy

Keep in mind that some state and local paid sick leave laws specify how these provisions must be written or administered. For example, laws may establish how quickly employees earn sick leave, whether unused time carries over, or when documentation can be requested. Before finalizing your policy, confirm that it meets the requirements where your employees work.

Sick leave laws vary by state

Many states and, in some cases, cities or counties have paid sick leave laws. Where paid sick leave laws apply, requirements vary by jurisdiction and can change over time. In some jurisdictions, local ordinances add requirements or provide greater employee protections than state law.

Check both state and local requirements to determine which rules apply where your employees work. State labor department websites are typically the best source for current information.

If your business has employees in multiple states, be sure to confirm that any company-wide policy complies with the requirements in each jurisdiction.

Sick leave policy best practices

The following best practices can help you build and maintain an effective sick leave policy.

Put it in writing

Document the policy instead of relying on verbal agreements or informal practices. A written policy is easier to apply consistently and provides a point of reference if questions come up.

Apply the policy consistently

Handle similar situations the same way for every employee. Inconsistent decisions can create confusion, undermine trust, and increase compliance risks.

Train managers on the policy

Front-line managers are usually the ones fielding sick time requests. They need to know the rules well enough to apply them correctly.

Explain the policy during onboarding

Employees should understand how sick leave works before they need to use it. Set expectations from the start by reviewing the policy during the onboarding process.

Review the policy regularly

Laws change, and a policy written a few years ago may no longer meet current requirements. Your policy should always be aligned with current laws and the way your business administers sick leave.

Manage your sick leave policy with QuickBooks Workforce

A sick leave policy is easier to administer when leave tracking and payroll work together. QuickBooks Workforce combines team management and payroll tools to help employers track sick leave, process approved time off, and keep employee records up to date.

• Track sick leave automatically. PTO balances and sick leave accruals stay up to date, even across different accrual schedules.
• Handle requests. Employees can submit leave requests through the employee portal and managers can approve them.
• Keep payroll accurate. Approved sick leave syncs with Workforce Payroll to help ensure employees are paid correctly and records are current.
• Manage employee information in one place. Team management tools keep employee records, leave balances, and payroll information together so employers can administer sick leave consistently.

Every business will eventually have an employee call in sick. Having a well-designed policy and the right tools helps employers respond with confidence.