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Sick Leave Laws Your Business Should Know

Max Freedman
Max Freedman

Depending on where your business is located, you may be required to provide employees with paid time off for when they – or, in some cases, close family members – are sick.

  • Employees use sick leave to recover from illness, seek domestic violence treatment or help close family members do one of the two.
  • You can effectively track employee sick leave accrual and usage by implementing concrete sick leave policies and purchasing time-tracking software.
  • Paid sick leave laws vary by city, county and state, and the federal Family and Medical Leave Act (FMLA) provides additional nationwide provisions.
  • This article is for new business owners who need to learn about sick leave laws and tracking.

Your employees are going to get sick. Sometimes, they may be able to work through it, but other times, it’s better for them to take time off to recover. That’s why sick leave laws exist. These laws vary by state, and some states don’t have sick leave laws at all – but there are federal rules to know, too. As an employer, it is vital that you have a clear understanding of sick leave laws and how they apply to your business and employees.

Editor’s note: Looking for the right time and attendance system for your business? Fill out the questionnaire below to have our vendor partners contact you about your needs.

How does sick leave work?

Sick leave is an employee benefit that entitles workers to time off when they – or, in some cases, close family members – are ill. In some instances, employees can use their sick leave to seek physical or mental health treatment related to domestic violence.

Generally, employees accrue one hour of paid sick leave every time they work a predetermined number of hours, with a cap on how many days off they can earn. For example, in New Jersey, employees accrue one hour of paid sick leave for every 30 hours they work and can earn at most 40 hours of paid sick leave per year. Different states have different rules – or no rules – for sick leave accrual.

While sick leave laws vary by state, there are currently no federal laws requiring employers provide paid sick leave. However, if your business is subject to the federal Family and Medical Leave Act (FMLA), your employees are entitled to sick leave, albeit unpaid.

Key takeaway: Employees can take sick leave to tend to illnesses or domestic violence treatment for themselves or close family members. The amount of time employees are entitled to varies by state.

How to track and manage sick leave

While most sick leave laws don’t explicitly state how employers must track their employees’ accrued sick leave and usage, it’s important to have consistent sick leave management policies in place. Implementing reliable sick leave management policies helps to keep track of how much sick time your employees have accrued and used. Good tracking practices also keep you compliant with sick leave laws.

To effectively track and manage your employees’ sick days, start by creating sick leave guidelines as part of your company’s paid-time-off policies. When doing so, make sure to fulfill all of the conditions that sick leave laws require and to include provisions for how your company will track your employees’ sick leave. [To learn more about crafting sick-leave and time-off policies, read our guide to creating company policies.]

One of these three tracking options is likely best for your business:

  • A spreadsheet. As with virtually any business-related numerical function, you can use a spreadsheet to track your employees’ accrued and used paid sick days. Create separate columns for accrued sick leave, used sick leave and remaining sick leave, and then create a row for each employee. You may also want to add a column for each type of family or medical leave, including personal leave and child care leave.
  • Payroll software. Just as payroll software tracks and calculates the hours your employees worked and corresponding wages, some software options also track paid time off, including sick leave accrual and usage. If your payroll software includes HR functions and time-and-attendance tracking, it should be capable of tracking sick leave.
  • Time-and-attendance systems. In addition to online payroll systems, you can use time and attendance software to track and manage paid time off. Many time-and-attendance solutions not only track paid time off but also allow employees to request the days they need off and managers to approve or deny those requests

Key takeaway: To effectively track and manage paid leave, create sick leave policies as part of your time-off policies, and use software to track your employees’ sick leave accrual and usage.

Sick leave FAQs

Because not all states have sick leave laws and no two states’ sick leave laws are identical, you might have questions about what compliance entails. These questions and answers should help you understand the intricacies of sick leave law:

What are the federal rules for sick leave?

The Family and Medical Leave Act (FMLA) governs federal sick leave law. Under the FMLA, eligible employees can receive up to 12 weeks of unpaid, job-protected leave. Note that the FMLA does not outline any provisions for paid sick leave.

The FMLA entitles eligible employees to return to the same job, or an equivalent job, with your company upon their return from leave. If one of your employees takes FMLA leave, you may not alter or terminate any of their health benefits.

Employees eligible for unpaid sick leave according to the FMLA must meet all the following criteria:

  • They must be employed by a public agency or a private business that employs at least 50 employees for at least 20 workweeks.
  • If employed by a private employer, the employee must work at a location where at least 50 other company employees work within 75 miles.
  • They must have worked at least 1,250 hours in the 12 months before their FMLA leave begins.
  • They must have worked at least 12 months in the seven years before their FMLA leave begins, unless interruptions in work were due to military leave or permitted through a collective bargaining agreement.

An eligible employee can take leave for the following reasons:

  • To spend time with a new child. This provision applies not only for childbirth but for the adoption and fostering of new children as well.
  • To care for a spouse, child or parent with a serious health condition. Serious health conditions include (but are not limited to) the following:
    • Overnight stays in medical facilities
    • Illnesses and injuries that prevent work or school attendance for at least three consecutive days and require ongoing medical treatment
    • Chronic conditions that prevent work or school attendance at least twice per year
    • Pregnancy and any related medical testing or symptoms
  • To care for their own serious health condition.
  • To attend to any urgent health needs of a spouse, child or parent on covered active duty or call to covered active duty status for the National Guard, reserves or regular armed forces.

In addition to the military provision, the FMLA’s 12 weeks of unpaid leave expands to 26 weeks if the person in question is a covered military serviceperson.

Which states pay sick leave?

The following states have sick leave laws requiring employers to offer paid sick leave to eligible employees:

  • Arizona
  • California, with additional sick leave laws in Berkeley, Emeryville, Los Angeles, Oakland, San Diego, San Francisco and Santa Monica
  • Connecticut
  • Maine
  • Maryland
  • Massachusetts
  • Michigan
  • New Jersey, with additional sick leave laws in Bloomfield, East Orange, Irvington, Jersey City, Montclair, Newark, Passaic, Paterson and Trenton
  • Oregon, with additional sick leave laws in Portland
  • Rhode Island
  • Vermont
  • Washington, with additional sick leave laws in Seattle and Tacoma

The following cities and counties have their own paid sick leave laws despite no state-level regulations:

  • Chicago
  • Cook County, Illinois
  • Duluth, Minnesota
  • Minneapolis
  • Paul, Minnesota
  • Westchester County, New York
  • New York
  • Philadelphia
  • Pittsburgh
  • Austin, Texas
  • Dallas
  • San Antonio

If your business operates in any of these locations, you must comply with their sick leave laws. To learn more about the sick leave laws in each of these locations, visit Workplace Fairness’ list of state, city and county sick leave laws.

Does paid sick leave apply to all employees?

Most state, city and county paid sick leave laws cover all employees. On the other hand, the FMLA, which is the only federal sick leave law, does not cover paid sick leave at all.

What is mandated sick leave?

Mandated sick leave is any sick leave time that an employer must give to an employee as set forth by their state, county or city. Mandated sick leave also refers to the unpaid sick leave time employers must give employees under the FMLA.

How do public health emergencies affect mandated sick leave?

The government may implement expanded, temporary mandated sick leave laws during public health emergencies. That’s exactly what happened at the outset of the COVID-19 pandemic, when Congress included mandated sick leave as part of the Families First Coronavirus Response Act. Under this legislation, covered employers – which include private employers with fewer than 500 employees and public employers of all sizes – must provide 80 hours of paid sick leave to employees who cannot work remotely and meet the following requirements:

  • They are under mandated federal, state or local COVID-19 quarantine or are caring for people under such orders.
  • They are under mandated self-quarantine for COVID-19 or are caring for people under such orders.
  • They are showing COVID-19 symptoms and need to be tested and diagnosed.
  • They are caring for children whose schools or places of child care are closed and whose usual caregivers are unavailable due to COVID-19.

The Families First Coronavirus Response Act also temporarily expands the unpaid sick leave provisions of the FMLA for all of 2020. It applies the usual provisions to all private employers with fewer than 500 employees while adding benefits for employees who cannot work remotely and meet the following criteria:

  • They are caring for minors whose schools or places of child care are closed and whose usual caregivers are unavailable due to COVID-19.
  • They have been employed by the employer for at least 30 days, regardless of the number of hours worked during this period.

Additionally, after the first 10 days of this emergency COVID-19 unpaid sick leave, employers must begin paying employees for their sick leave. Employers must pay sick leave of at least two-thirds the employee’s usual pay rate, and they can use all money paid toward expanded FMLA sick leave as tax credits to be subtracted from the employer’s Medicare and Social Security tax liabilities.

What happens if an employer rehires an employee who had unused sick leave?

In many states, cities and counties that require employers to provide paid sick leave, employers must reinstate all previously unused sick time for employees they rehire within a law-specified time frame. Consult your region’s sick leave laws to determine the time frame that applies to you.

Can an employer refuse sick time?

If your location’s law requires you to offer sick time, you cannot deny your employees the opportunity to use it. If you do so, you may face lawsuits from your employees.

Does sick pay reset every calendar year?

In many locations that require employers to provide paid sick leave, employees can carry sick leave accrued in one calendar year into the next year. However, the maximum number of paid sick hours an employee can take per year will remain unchanged.

How much is an employee required to be paid for sick time used?

While the answer to this question may vary by location, paid sick leave laws often call for employers to pay for sick leave at the same rates they would pay employees for standard work hours. However, there may be a daily cap on sick leave compensation.

The FLMA expansion under the Families First Coronavirus Response Act sets these payment caps for federal paid sick leave:

  • If your employees take FMLA COVID-19 child care leave or self-quarantine leave, you may pay them at most $200 per day on leave. For child care leave, the total payment cap is $12,000, and for self-quarantine leave, the total payment cap is $2,000.
  • For all other forms of FMLA COVID-19 leave, you must pay employees at their regular pay rate or the applicable minimum wage – whichever is higher. The payment cap is $511 per day and $5,110 total.

How does the sick time law apply to temporary employees?

Only California, Washington and Portland, Oregon, include temporary employees in their sick leave laws. If your company operates in any of these locations, consult your location’s sick leave laws to determine how you must tally and provide temporary employees with paid sick leave.

Image Credit: Photoboyko / Getty Images
Max Freedman
Max Freedman
Contributing Writer
Max Freedman is a content writer who has written hundreds of articles about small business strategy and operations, with a focus on finance and HR topics. He's also published articles on payroll, small business funding, and content marketing. In addition to covering these business fundamentals, Max also writes about improving company culture, optimizing business social media pages, and choosing appropriate organizational structures for small businesses.