Paid Sick Leave: Creating a Policy That Works

paid sick leave
Managing and tracking paid sick leave, along with other types of paid time off (PTO) generally falls to HR professionals.

Key points:

  • The Federal government does not currently mandate paid sick leave; a number of states and cities do
  • Offering paid sick leave—even if not legally required to do so—has significant benefits for both employees and businesses
  • A time off tracking software solution or HRIS like SentircHR can help you easily keep tabs on employees’ hours and leave

The COVID-19 pandemic highlighted to many the importance of staying home when sick to rest and recover, and to prevent the spread of illness to coworkers. As a result, paid sick leave is being offered by more and more employers—voluntarily or in accordance with state or municipal laws. Paid sick leave is currently available to 75% of private sector employees in the US and over 90% of state and local government workers, though policies vary greatly.

Managing and tracking paid sick leave, along with vacation, family leave, and other types of paid time off (PTO) generally falls to HR professionals. In this post we look at how paid sick leave works and the importance of compliance. We’ll also offer tips to help you manage this sometimes complex benefit.

What is Paid Sick Leave?

Paid sick leave is when employers pay employees for time taken off work due to illness or injury. Employees may be entitled to sick leave in cases of:

  • Illness (physical or mental)
  • Acute injuries that interfere with an employee’s ability to complete tasks
  • Caregiving for a spouse, child, or other dependent
  • Pregnancy-related conditions
  • Conditions or illnesses that require bed rest
  • Hospitalization
  • Medical appointments for diagnosis, treatment, or care   

In many cases, paid sick leave is an optional benefit that employers extend.

The US Federal government does not require employers to offer payment for days taken off work due to sickness. However, some states and localities do have paid-sick-leave mandates, which you need to be aware of if you are operating in these jurisdictions.

For now, 16 states, Washington, D.C., and a growing number of cities currently have paid sick leave laws, detailed in this chart.  

Organizations with employees in multiple locations will need to understand and stay compliant with each location’s paid sick leave laws.

Sick leave vs. sick pay

While the Federal government does not mandate paid sick leave, its Family and Medical Leave Act requires covered employers to provide qualifying employees unpaid leave for specified reasons (e.g. serious health conditions, the birth or adoption of a child, care of family member with qualifying conditions).

Under the Act, an individual’s job must be protected for up to 12 weeks while they are on leave, or up to 26 weeks of military caregiver leave.

Why Offer Paid Sick Leave?

Even if you are not required to offer paid sick leave to your employees, doing so may bring notable advantages to your business.

Support employee health

As became abundantly clear during the peak of COVID-19, when employees do not have access to paid sick leave, they may push themselves to go to work, even when they are feeling unwell and could potentially spread illness to others. This can lead to a loss of productivity or, worse, complete work stoppage due to widespread employee sickness.

Paid sick days encourage employees to stay home, recover quickly, and keep their illness to themselves.

Offer a competitive benefit

About 75% of individuals working in the private industry sector have paid sick benefits. As an employee perk, paid sick days are appreciated and soon may be all but expected. Particularly with the pandemic still a part of everyday life, many will be looking to their employers for sick leave support.

Increase retention

Offering paid sick days to employees has been shown to reduce turnover. As is the case with other benefits, offering paid sick days helps employees feel valued and cared for—and that can go a long way toward boosting job satisfaction and morale.

Elements of Paid Sick Leave Policy

Sick leave policies vary greatly depending on the employer and the business location. No matter how you decide to administer paid sick leave, the policy should be clearly communicated through the employee handbook and applied consistently as it is defined in the policy. Below are several points to consider as you craft your policy.

How paid sick leave is accumulated

Employers who offer paid sick leave often do so on an accrual basis (for example, one hour of paid sick leave earned per week of work) or offer a set maximum number of paid sick days per year. Unless you are bound by state or local legislation, decisions about awarding sick leave rest with the organization.

According to the US Bureau of Labor Statistics, among workers with paid sick leave:

  • 68% have a fixed number of days (an average of eight) per year
  • 3% have as-needed paid sick days, with no set maximum number of days
  • 29% have a “consolidated” plan; a set number of PTO days may be used for sick time, vacation, or other personal days


A sick leave policy should answer these questions:

  • How long after their start date until an employee is eligible for sick leave?
  • Do part-time or temporary employees qualify for paid sick leave? How much?
  • Under which circumstances may an employee use sick leave? Does caregiving qualify?
  • Do you require a doctor’s note?
  • Who should the employee advise about the need to use sick leave, and how should they communicate that information (phone or email)?

Carry-over provisions

What happens to unused sick days at the end of the year, or if a person retires or quits?

Among employers that offer a set number of sick days per year, 57% allow employees to carry unused days over to the next year (although 36% cap the number of days that can be accumulated).

Some employers allow employees to cash out unused sick days at the end of the year or if they leave the organization. In other cases, unused sick days are forfeited.

Compensation amount

Sick leave is most often paid at the employee’s regular base rate of pay (not including additional income like tips or overtime, for example). It is not considered “worked time” as defined by the FLSA and should be categorized separately on the person’s paycheck details. It is taxed at the same rate as the employee’s regular earnings. Paid sick time is taxable income just as regular earnings would be. 


If you are operating in a state with paid sick leave legislation—or have some employees working in jurisdictions that do—ensure you are following the state-specific regulations for:

  • Sick leave eligibility
  • Waiting periods
  • Accrual, cap, and carryover rules

Sophisticated payroll software like SentricHR can help you manage compliance and administration of paid sick leave , even if you have employees in multiple locations.

How to Calculate Paid Sick Leave

How you calculate paid sick leave will depend on how you have decided to award this benefit—if sick leave accumulates over time or if it is awarded annually. It will also depend on what increments you allow: can an employee claim an hour’s leave for a medical appointment? Or must they take leave by the half day or full day?

Consider using time-tracking software to automatically and simply keep track of sick leave earned and used.

Easy Sick Leave Management with an HRIS

An all-in-one HRIS like SentircHR can help you track employees’ hours and different types of PTO and leave. Once the employee information is in place, the time-tracking features will automatically monitor and balance time off earned and requested.

SentricHR’s employee self-service feature also offers transparency, letting employees check their eligible time off whenever they have questions—a time-saver for HR.

To learn more about our time-tracking software, schedule a demo today.


The Sentric Team

The Sentric Team

At Sentric, we help businesses make people management easier with industry-leading technology and standout support.

Sentric HR & Payroll Insights

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