Table of contents
  1. Paid and Unpaid Sick Leave
  2. Comparing Sick Leave to Paid Time Off
  3. How Is Sick Leave Allocated?
  4. How To Create a Sick Leave Policy
  5. Sick Leave Best Practices
  6. Conclusion

Sick leave is a paid or unpaid absence from work due to illness, injury, or preventive health care. Employees may take sick leave to care for themselves or family members. 

Requirements for providing sick leave vary across the United States. Therefore, most companies establish a policy to outline when an employee may take sick leave. Sick leave policies also detail the circumstances under which leave will be paid. 

When designing your policy, it’s important to consider your business needs and local regulations. You should also ensure your policy is easy to understand and well-supported by tools for tracking sick leave absences. 

At a federal level, US employers are not required to provide paid sick leave to employees. However, unpaid sick leave is required across the US if your business is subject to the Family and Medical Leave Act (FMLA). Your employee must also meet eligibility requirements to be eligible for FMLA leave

In certain states or municipalities, you may be required to provide paid sick leave for your employees. For instance, in California, an employee who has worked at least 30 days in the year earns a minimum of 1 hour of paid sick leave per 30 hours worked. To make things even more complicated, 8 cities within California have their own more generous policies. 

Check with your state’s local Department of Labor office for assistance if you’re unsure of the regulations in your area. 

For a limited time, the Families First Coronavirus Response Act (FFCRA) required paid leave for absences related to coronavirus infection and quarantine. However, that measure has now expired. 

Comparing Sick Leave to Paid Time Off

Paid time off, or PTO, grants employees pay for time when they’re not working. These policies often group employee sick days and vacation days into the same bracket. If you operate in one of the areas requiring paid sick leave, or if your employee’s absence may qualify as FMLA leave, then a general PTO policy may fall short. 

For example, you should keep in mind the possible overlap of vacation pay with sick leave. Many employers prefer that employees who are absent on unpaid sick leave, such as FMLA leave, use their vacation pay to cover some or all of the sickness absence. This prevents an employee from requesting a paid vacation absence soon after they return from FMLA leave. It also provides income to an employee during a time when they may not otherwise qualify for pay.

Consider also that your sick leave policy will need to be more flexible than a PTO policy, as time off for illness and injury cannot always be planned in advance. 

How Is Sick Leave Allocated?

How you choose to structure your sick leave policy will impact how employees are given access to paid leave. It will also set a benchmark for when leave becomes excessive. There are three typical formats for policies: accrual, lump sum, and unlimited leave. 


In an accrual system, employees accumulate a set amount of leave for each week or month worked. For example, your policy could indicate that all full-time employees receive one day of sick leave for every month that they work. These days accrue, or add up, over the months that the employee works.

Lump sum

In a lump sum system, your policy will grant a set amount of leave for an entire year. For instance, your policy could give 10 days per year, available from January 1. For new hires, lump sum policies typically grant a prorated amount of leave for the first year. This means that an employee starting with the company mid-way through the year would receive 5 days of sick leave for their first year of employment. 


Unlimited sick leave policies are just that. Typically, all full-time employees can take sick leave as and when they need it, without limitation.

Employers who offer unlimited policies do not have to track accruals during the year. However, tracking sick leave may still be required for legal reasons, and you’ll want to stay on top of days off sick to identify any signs of policy abuse. You may also wish to require employees to submit a doctor’s note or other health documentation if their absence exceeds a week. 

How To Create a Sick Leave Policy

Whether you’re putting together your first sick leave policy or reviewing what you have in place, follow these tips to set a clear and straightforward policy.

Check legal requirements

Make sure you understand the local laws that apply to your business. If you operate in multiple states, you should ensure that your paid leave policy meets the requirements for each one. 

Some larger employers opt to have multiple policies varying by state or region to balance business needs with compliance. This can also make updating policies easier as state laws change. 

Compare expectations in your industry

Your policy needs to reflect your budget for paid leave, but also needs to compete with other employers in your industry. To recruit and retain top talent, you need to understand what your employees expect from their sick leave allowances. 

Decide on your rules 

Once you decide how much paid and unpaid leave to offer, you need to set out the rules for how employees will avail of it. You must decide whether to adopt an accrual, lump sum, or unlimited leave plan. If you choose to offer unlimited sick leave, consider how this policy will impact your business. 

When an employee wishes to use leave, how will they be granted permission to do so? Employers often require employees to call in and report sick days. Some request advance notice of medical procedures or doctor visits. You may wish to allow employees to report sickness absences through a self-service portal. This will help to streamline the process.

At the end of each year, your employees need to understand what will happen to their unused sick leave balance. Just over half of employers allow unused hours to be rolled over to the next year, but many include a cap on how many hours each employee may hold.

Create and communicate a written policy

With so many rules to set out, it’s vital that you communicate your policy in writing. This can be part of your employee handbook and should be reviewed regularly to check for necessary updates. 

Communicate the policy and any updates to your employees to ensure everyone is aware of your expectations. Also, make sure that you verify each employee has received the policy. You can collate digital signatures using a responsive communication tool like Connecteam

Put a system in place to track sick leave

Staying on top of employee use of sick leave is necessary to align with legal requirements. Software like the Connecteam app can help make this task less daunting. You’ll be able to ensure that all absences are recorded appropriately as either sickness or vacation. It can be also used to track employee accrual and use of sick leave. 

Reporting through these systems can highlight rates of use and identify any abuse of the system. You’ll also be able to spot employees who have used a large amount of leave in a short time. In these cases, it’s important to reach out to them early on to ensure they are supported.

Sick Leave Best Practices

When it comes to setting up your company’s sick leave policies and expectations, there are a few best practices that connect with employees.

Make it straightforward

First, your employees should easily understand how much leave they have, how they should expect to use it, and how you feel about it in general. Achieving this goal comes down to writing your policy carefully and adopting tools to support your employees. 

No employee wants to hunt through internal bureaucracy when all they need is to report a day off sick. If your system is complicated, employees may feel that taking time off sick is frowned upon. Self-service tools, such as those offered by Connecteam, help empower employees to report and record sick leave absences easily.

Make it flexible

When an employee is sick or caring for a family member, they have not entered the situation by choice. While your policy rules are important, remember to maintain empathy for employees who have found themselves in a tough spot. Don’t rule out flexible options such as a temporary offer to work remotely or a change of shifts to allow for doctor appointments.

Flexibility is particularly important when an absence is due to a long-term condition. Note that employees may be eligible for FMLA unpaid absences even if they have exhausted their paid sick leave. 

Make it generous, if you can

Even in areas of the US that do not require employers to provide paid sick leave, most employees will expect you to provide some. Remember that paid sick leave is part of your employee benefits package. The more generous you can be, the more favorably you will compare with competitors.


Time away from work for illness or injury is something every employee needs on occasion. Setting up a sick leave policy is, therefore, vital for your business. Legal requirements for your policy still vary greatly across the US, making careful research necessary. 

Keep in mind that your employees will likely expect some amount of paid sick leave, whether it is legally required or not. Consider how much paid sick leave you’re able to offer, and develop a policy that makes it easy for employees to understand their entitlements.

Putting in place self-service tools will also make the process of accruing and using sick leave more straightforward. As a result, you’ll be well-positioned as an employer who cares for and supports your employees.