PunchPaid Sick Leave Laws: What Small Employers Have to Provide (2026)
Paid Sick Leave Laws: What Small Employers Have to Provide (2026)
The short answer: There is no federal law requiring private employers to provide paid sick leave. But around twenty states and Washington, D.C. now require it, most on the same accrual standard of one hour of sick time for every 30 hours worked, and cities layer their own rules on top. Whether you owe paid sick leave depends entirely on where your people work. The one thing every version of the law has in common is that the amount an employee earns is a function of hours actually worked, which means your obligation is only as accurate as your record of those hours. Punch timestamps every shift, accrues sick time on its own, and keeps a live balance you can defend.
Sick leave is the benefit small employers most often get wrong, because the federal answer and the state answer point in opposite directions. Federally, you owe nothing. In a growing list of states, you owe a precise amount tied to a precise formula. Here is what the law actually requires, how the accrual math works, and where the money quietly goes missing.
Federal Law Does Not Require Paid Sick Leave
Start with the floor, because it is lower than people expect. The Fair Labor Standards Act sets minimum wage and overtime, but it does not require payment for time not worked, and that includes time out sick. The Department of Labor is explicit: the FLSA does not require payment for time not worked, such as vacations or sick leave. Those are benefits set by agreement between an employer and an employee.
The Family and Medical Leave Act is the closest thing to a federal rule, and it only covers employers with 50 or more employees. Even then it requires unpaid, job-protected leave, not paid sick time. For most small businesses, FMLA does not apply and federal law imposes no paid sick leave obligation at all.
If your team works in a state with no sick leave law, paid sick time is your choice. You can offer it, structure it however you like, or not offer it. That freedom ends the moment you have an employee in a state or city that mandates it.
The State and Local Patchwork
This is where the obligation appears. As of 2026, around twenty states plus Washington, D.C. require private employers to provide paid sick leave, and the count keeps climbing. The list includes Arizona, California, Colorado, Connecticut, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, Oregon, Rhode Island, Vermont, and Washington, among others.
The map moved recently. Voters in three states approved sick leave by ballot in late 2024. Alaska's law took effect July 1, 2025, and Nebraska's took effect October 1, 2025. Missouri's also passed and took effect on May 1, 2025, then the state legislature repealed it, with the repeal effective August 28, 2025. That sequence is a useful reminder: sick leave law is not settled, and last year's answer is not automatically this year's.
Below the state level, cities and counties run their own ordinances. In several states an employer can be under both a state law and a stricter local one at the same time. If you operate in more than one location, you are almost certainly under more than one rule, and the strictest applicable rule usually wins. The practical consequence is that "we have one sick leave policy for the whole company" is often not enough. You need a policy that meets the highest bar any of your people fall under.
How the Accrual Standard Actually Works
Most of these laws are built on the same engine, so once you understand one you understand the shape of all of them.
The common accrual rate is one hour of paid sick time for every 30 hours worked. An employee who works a 40-hour week earns about 1.33 hours of sick time that week. Over a full year of full-time work, that lands near 69 hours, which is why most laws cap annual accrual or usage somewhere between 24 and 72 hours, with 40 hours being one of the most common ceilings. Nebraska's new law, for example, lets employees earn and use up to 40 or 56 hours per year depending on employer size.
Three details decide whether your policy is compliant:
The accrual rate. One hour per 30 hours worked is the standard, but some jurisdictions are more generous. Match or beat the rate that applies where the person works.
The cap. Laws limit how much can accrue or be used in a year. You can cap a balance so it stops growing, but the cap has to sit at or above the legal minimum, not below it.
Carryover. Many laws require unused sick time to roll into the next year, up to a limit, rather than resetting to zero. A use-it-or-lose-it reset that ignores a carryover requirement is a common and expensive mistake.
Some employers skip accrual entirely and front-load the full annual amount on day one. That is allowed under most laws and simpler to explain, but it carries its own risk: an employee can use the whole balance early and leave before earning it. Accrual ties the balance to time actually worked, which is fairer over a partial year and is the model the laws were written around.
Every one of these details depends on the same input. Accrual is hours of leave per hours worked. Caps and carryover are measured against a running balance. If the underlying hours are an estimate, every number built on top of them is an estimate too.
Why the Hours Record Is the Whole Foundation
Here is the part small employers miss. Paid sick leave is not really a leave problem. It is a timekeeping problem wearing a leave costume.
You cannot accrue one hour per 30 worked without an exact count of hours worked. You cannot prove an employee had a balance to draw from without a running ledger of what they earned and used. And when an employee claims they were denied sick time they had earned, the only thing that settles it is a record with dates, hours, and an approver attached. A balance that lives in a manager's memory or a spreadsheet nobody updated is not a defense. It is a liability.
This is exactly the gap a real time-tracking app closes. When every shift is captured to the minute, the hours-worked figure that accrual depends on is already correct at the source. The balance is not reconstructed at year end. It builds itself, shift by shift, and it is right because the hours under it are right.
How to Set a Sick Leave Policy That Holds Up
Whether the law requires it or you offer it by choice, a written policy prevents most disputes. Five things to pin down.
Where each person works. Your obligation follows the employee's work location, not your headquarters. Map every state and city you have people in, and identify the strictest rule that applies.
The accrual rate and cap. State the earning rate and the annual ceiling in writing, set at or above the legal minimum for each location.
Carryover. Say plainly whether unused time rolls over and up to what limit. Match the law where one applies.
What counts as a covered reason. Sick leave laws typically cover the employee's own illness, care for a family member, and often domestic-violence or public-health situations. List the qualifying reasons so nobody guesses.
How time is requested and recorded. Give employees one place to request sick time and keep a permanent entry for every approval. The record is the policy's spine.
A policy that answers those five questions, applied the same way for everyone, is what turns a sick day from a payroll argument into a routine entry.
How Punch Tracks Sick Leave Without the Spreadsheet
Sick leave policy is yours to write. The ledger it runs on has to be exact, and that is where Punch does the work.
Every shift in Punch is timestamped to the minute, so the hours-worked total that accrual depends on is accurate before you calculate anything. Sick time is one of the leave types you configure directly. You set how many hours a year it earns, and Punch spreads that across every pay period on your weekly or bi-weekly schedule automatically, so the balance grows on its own instead of waiting for someone to update it. You can cap a balance so it stops at the ceiling your policy or state law allows, and tenure milestones can step the rate up for longer-tenured staff without touching a single individual record.
When an employee needs a sick day, they request it from the same app they use to punch in and out. They pick sick as the leave type, choose the dates and hours, and it lands in the manager's review queue as structured data, not a text someone has to interpret later. The manager sees the employee's current balance right next to the request and gets a warning if approving would push it negative. Approved sick time draws down a real, live balance and becomes a permanent entry with an approver and a timestamp. That entry is what answers "how many days do I have left" and what settles any future dispute without a debate.
Approved hours and balances carry straight into Reports and payroll exports, QuickBooks Online and Excel among them, so the numbers your policy runs on are the same numbers payroll pays on. And because it all sits on top of an accurate punch record, your sick leave accrual is applied to real hours instead of guesses. If your crew works from job sites, Punch confirms location with a geofence at punch-in only. It is a boundary on a map, never a camera in anyone's face, and punch-out and lunch are never gated by location.
Every plan includes every feature, PTO and sick leave accrual included, owners are always free, and the price is flat per workspace instead of per employee, so tracking sick time for a bigger team never inflates the bill.
Frequently Asked Questions
Is paid sick leave required by law?
Not by federal law. The FLSA does not require private employers to provide paid sick leave. However, around twenty states plus Washington, D.C. require it as of 2026, and many cities have their own ordinances. Whether you owe paid sick leave depends on where your employees work.
How much sick leave do employees earn?
The most common standard is one hour of paid sick time for every 30 hours worked. A full-time employee earns roughly 1.33 hours per 40-hour week. Most laws cap annual accrual or usage between 24 and 72 hours, with 40 hours a frequent ceiling. Check the specific rate and cap for each location where you have staff.
Which states added paid sick leave recently?
Voters approved sick leave in three states in late 2024. Alaska's law took effect July 1, 2025, and Nebraska's took effect October 1, 2025. Missouri's took effect May 1, 2025, then was repealed by the legislature effective August 28, 2025. Sick leave law changes often, so confirm the current rule for your states.
Do I have to let unused sick time carry over?
Many state sick leave laws require unused time to roll into the next year up to a limit, rather than resetting to zero. A use-it-or-lose-it reset that ignores a carryover requirement is a common compliance mistake. Confirm the carryover rule for each location and write it into your policy.
How does Punch track sick leave?
You configure sick time as a leave type, set the annual hours it earns, and Punch accrues it automatically across each pay period, with optional caps and tenure steps. Employees request sick days in the app, managers approve against a live balance with a negative-balance warning, and approved time draws down that balance as a permanent, timestamped record that exports to payroll.
Write the Policy, Trust the Ledger
Paid sick leave is one of the fastest-moving areas of employment law, and the obligation is precise where it exists. The accrual rate, the cap, and the carryover all rest on one number: hours actually worked. Get that number wrong and every balance built on it is wrong too.
Punch keeps an exact, timestamped record of every shift, accrues sick and other leave on its own, and exports clean balances to payroll so your policy runs on real numbers instead of a spreadsheet nobody trusts. Every plan includes every feature, owners are always free, and the price is flat per workspace instead of per employee. The 14-day free trial starts on signup, no credit card required.