Payroll Best Practices for Managing Paid Sick Leave

As of March 2023, 78% of private-sector employees in the United States had access to paid sick leave provided by their employer. This percentage has increased in recent years as more states have passed paid sick leave laws requiring employers to expand coverage in order to stay in compliance. In 2025, even more employees will gain access to paid sick leave as new state laws take effect in Missouri (starting May 1), Alaska (starting July 1), and Nebraska (starting October 1). In light of this trend, here are the HR and payroll best practices that we recommend for your business:

Understand Federal, State, and Local Regulations

While there is no federal law requiring paid sick leave for private-sector employees, businesses must comply with the laws applicable to each location where they operate. For example:

• New York: Employers with 100+ employees must provide up to 56 hours of paid sick leave annually; smaller businesses have scaled requirements.
  
  
• Washington, D.C.: Under the Accrued Sick and Safe Leave Act, accrual requirements vary by employer size, with a minimum of 1 hour per 37 hours worked.

Keep It Simple

Rather than creating individual policies for each state’s sick leave requirements and then assigning them based on where the employees are located, you may want to consider this simplified alternative: Find the most detailed regulation in the states where you do business and build your paid sick leave policy from that starting point. You’ll end up with one policy that should meet the requirements of all your employees. As a bonus, no employees should end up feeling like they have a less generous paid leave package than their colleagues.

Clearly Communicate Your Policy

A well-defined paid sick leave policy promotes transparency and reduces misunderstandings. Be sure to include:

• ✔️ How paid sick leave is accrued (e.g., 1 hour per 30 hours worked)
  
  
• ✔️ Eligibility criteria for paid leave, unpaid leave, and FMLA protections
  
  
• ✔️ Steps for requesting sick leave and any required documentation (e.g., doctor’s notes)

Select the Right Payroll Software

Once you’ve crafted your policy and shared it with your team, be sure to pick the right software to help you manage it going forward. Payroll software from providers like ADP and Rippling can help you maintain accurate records and stay in compliance as paid sick leave laws continue to evolve. In short, it’s a great problem for software to help solve!

Need Help?

Please let us know if you have any questions about your company’s specific situation or choosing the best payroll software for your business. We’re happy to help!

📞 Call us at (703) 672-1225

📧 Email us at payroll@paysteady.com