Sick Leave Policy Template for Small Businesses
Quick Answer
A sick leave policy explains who earns sick time, how much and how fast, what it can be used for, how employees report an absence, when documentation can be requested, what happens to unused hours and how sick leave relates to PTO. Many states and cities require paid sick leave with specific accrual, use, notice and documentation rules, so start with the template, then adjust it to meet every law where you have employees and keep accurate records of sick time earned and used.
Every business deals with sick employees, but many small businesses handle it case by case: one manager pays sick days, another doesn't, and nobody is sure how much time anyone has left. That inconsistency creates frustration and, in many states and cities, legal risk. A written sick leave policy sets clear rules for everyone.
This guide includes a free sick leave policy template and explains each section. It's general information, not legal advice. Paid sick leave laws vary widely, so check the rules where you have employees or have an employment attorney review your policy.
Free Sick Leave Policy Template
[Company Name] Sick Leave Policy
Effective date: [date] | Policy owner: [name/title]
1. Purpose. This policy provides paid sick leave so employees can take care of their health and their families without losing pay, and helps keep illness from spreading at work.
2. Eligibility. [All employees / Employees who work at least [number] hours per week] are eligible. [Accrual begins on the first day of employment; employees may use sick leave after [number] days.]
3. How sick leave is earned. Employees earn [1 hour of sick leave for every [number] hours worked] OR [receive [number] hours of sick leave at the start of each year].
4. Limits. Employees may use up to [number] hours per year. Unused sick leave [carries over up to [number] hours / does not carry over], subject to applicable law. Accrual is capped at [number] hours.
5. Covered reasons. Sick leave may be used for the employee's own illness, injury, medical care or preventive care; to care for a family member [as defined in this policy or by law]; [and other reasons required by applicable law, such as reasons related to domestic violence or public health emergencies].
6. Increments. Sick leave may be used in increments of [number] hours.
7. Notice. When the need is foreseeable, employees should give [number] days' notice. When it is not foreseeable, employees should notify [role] as soon as practicable, by [method], before their shift if possible.
8. Documentation. For absences of more than [number] consecutive days, the company may request reasonable documentation, as permitted by law. The company will not require details about the employee's or family member's medical condition.
9. Pay. Sick leave is paid at the employee's [regular rate of pay / rate required by law].
10. Separation. Unused sick leave [is / is not] paid out at separation, unless required by law. Employees rehired within [number] months will have their prior balance reinstated [as required by law].
11. No retaliation. The company will not retaliate against employees for requesting or using sick leave in accordance with this policy or applicable law.
12. State and local law. Where state or local law provides greater benefits, the company will follow that law.
Employee acknowledgment: Name: ________ Signature: ________ Date: ______
Free Sick Leave Request Form
Sick Leave Request / Notice
Employee: __________ | Date submitted: ______
Date(s) of absence: ______ to ______ | Hours: ______
Reason: ☐ Own illness or care ☐ Family member care ☐ Other covered reason
Notice given to: __________ | Method: ☐ Call ☐ Text ☐ App ☐ Email
Employee signature: __________ | Recorded by: __________ | Balance after: ______ hours
Why Small Businesses Need a Sick Leave Policy
- Consistency. Every employee is treated the same.
- Compliance. Many states and cities require paid sick leave.
- Healthier workplace. Sick employees stay home instead of spreading illness.
- Clear procedures. Employees know how to call out, and managers know how to respond.
- Accurate records. Balances and usage are tracked the same way for everyone.
Separate Sick Leave or Combined PTO?
| Approach | How it works | Considerations |
|---|---|---|
| Separate sick leave | Sick time is its own bank, apart from vacation | Clear for compliance; employees may still use sick time for its intended purpose |
| Combined PTO | One bank for vacation, sick and personal time | Simpler; must still meet sick leave law requirements where they apply |
A combined PTO policy can satisfy some state and local sick leave laws if it provides at least the same amount of time and meets the same use, notice and documentation rules. Check the specific law before relying on PTO. See what a normal PTO policy looks like.
Accrual vs. Front-Loading
| Method | How it works | Pros | Cons |
|---|---|---|---|
| Accrual | Employees earn hours as they work, such as 1 hour per 30 worked | Matches hours worked; common in sick leave laws | More tracking |
| Front-loading | Employees receive a set amount at the start of the year | Simple; time available right away | Hours available before they're earned |
Some laws allow front-loading as an alternative to accrual, sometimes with different carryover rules. See PTO accrual explained.
State and Local Paid Sick Leave Laws
There is no general federal requirement for private employers to provide paid sick leave, but many states and a number of cities and counties have their own paid sick leave laws. These laws often set:
- Which employers and employees are covered.
- The accrual rate and minimum amount of leave.
- Covered reasons, including family care.
- Notice requirements for employees.
- Limits on when employers can ask for documentation.
- Carryover, caps and rehire rules.
- Notice posting and recordkeeping requirements.
- Protection from retaliation.
If you have employees in more than one state or city, you may need different rules for different locations. Use your state labor department's website, your payroll provider or an employment attorney to confirm the requirements. See whether an employer can deny sick leave.
Notice and Call-Out Procedures
Tell employees exactly how to report a sick day: who to contact, by what method and how early. Make it easy, such as a text or app notification to a manager, and make sure the procedure doesn't require more notice than the law allows. Managers should record the absence the same day. See how to respond when an employee calls out sick and how to call in sick.
Documentation Rules
Many businesses want a doctor's note, but sick leave laws often limit when you can ask for one, such as only after more than a few consecutive days, and prohibit requiring details about the medical condition. Write the documentation rule to match the strictest law that applies to your employees, and apply it consistently.
Sick Leave and Attendance Policies
Make sure your attendance or point system doesn't count protected sick leave as an unexcused absence. Penalizing legally protected sick time can violate sick leave laws even if the attendance policy is applied to everyone. See the attendance policy template.
Part-Time and Seasonal Employees
Many sick leave laws cover part-time and seasonal employees too, with accrual based on hours worked. If you exclude any group from your policy, check that the law where they work allows it. See PTO for part-time employees.
Recordkeeping
Keep records of sick leave earned, used and remaining for each employee, along with the dates used. Many sick leave laws require employers to keep these records for a set period and to show employees their balance, often on pay stubs or in a system they can access. Accurate tracking also prevents disputes.
| Record | Why |
|---|---|
| Hours earned by pay period | Shows accrual is correct |
| Hours used and dates | Supports pay and balances |
| Current balance | Employees can see what they have |
| Carryover and caps applied | Year-end accuracy |
Rolling Out the Policy
- Check state and local laws for every location.
- Fill in the template and have it reviewed.
- Set up accrual and balances in your PTO or payroll system.
- Train managers on call-outs, documentation and no-retaliation rules.
- Share the policy and collect acknowledgments.
- Post any required notices.
Example: A Restaurant With Two Locations
A restaurant owner had two locations in different cities, one with a local paid sick leave law and one without. Managers handled sick days differently, and the owner wasn't sure the first location was compliant. She adopted one sick leave policy that met the stricter local law at both locations, set accrual in her PTO system, trained managers on documentation limits and stopped counting sick days in the attendance points system. Call-out disputes dropped, and she had records to show compliance.
Common Mistakes
- No written policy, so managers decide case by case.
- Ignoring local laws in cities or counties.
- Asking for doctor's notes where the law limits it.
- Counting protected sick leave as attendance violations.
- Not tracking balances accurately.
- Excluding part-time employees without checking the law.
Sick Leave Policy Checklist
| Step | Done? |
|---|---|
| Check state and local sick leave laws | |
| Choose separate sick leave or combined PTO | |
| Set eligibility, accrual or front-loading | |
| Define covered reasons and family members | |
| Set notice and documentation rules | |
| Set carryover, caps and separation rules | |
| Set up tracking and balances | |
| Train managers and collect acknowledgments |
Defining Family Members
Many sick leave laws let employees use sick time to care for family members, and some define family broadly, including parents, children, spouses, domestic partners, siblings, grandparents and others. Use the definition required by the laws that apply to you, or a broader one if you prefer. A narrow definition in your policy can conflict with a law that covers more relatives.
Sick Leave Increments and Partial Days
Decide the smallest amount of sick time an employee can use, such as one hour or the time clock's rounding increment. Some laws set a minimum increment employers can require. Allowing partial days helps employees attend medical appointments without losing a full day's pay.
Sick Leave for Exempt Employees
Exempt employees can use sick leave like everyone else, but be careful with partial-day deductions from salary when sick leave runs out. Salary basis rules limit deductions for exempt employees, so check your policy and the rules before deducting pay. See the 4-hour rule for exempt employees.
Sick Leave During Flu Season
Winter brings more sick calls. A clear policy and an easy call-out process make it more likely that sick employees stay home instead of spreading illness. Pair your policy with a coverage plan so shifts stay staffed. See cold and flu season staffing.
Common Questions From Employees
- "How much sick time do I have?" Check your balance in the PTO system or on your pay stub.
- "Can I use sick time for a doctor's appointment?" Yes, preventive care is a covered reason.
- "Do I need a doctor's note?" Only as the policy allows, such as for longer absences.
- "Can I use sick time to care for my child?" Yes, family care is covered.
Sick Leave Policy Quick Reference
| Item | Common approach |
|---|---|
| Eligibility | All employees, including part-time where required |
| Accrual | Hours earned per hours worked, or front-loaded |
| Covered reasons | Own and family illness, care and preventive care |
| Notice | As soon as practicable for unforeseeable absences |
| Documentation | Only as allowed, often after several days |
| Carryover | As required by law, with caps |
Example: A Home Services Company
A home services company with technicians in two states used a single combined PTO policy. After reviewing both states' rules, the owner found that one state required separate sick leave accrual for part-time employees, who weren't covered by the PTO policy. She added a sick leave policy that covered everyone, set accrual by hours worked in her PTO system and trained the office manager on documentation limits. The company now shows every employee their sick balance on their pay stub.
Reviewing the Policy Each Year
Sick leave laws change often, with new states and cities adding requirements or updating accrual rates and covered reasons. Review your policy every year, ideally in the fall so updates can start January 1, and whenever you hire in a new state or city. See annual policy review.
Getting Started This Week
- List every state and city where you have employees.
- Check each one's paid sick leave rules.
- Fill in the template using the strictest applicable rules.
- Set up accrual and balances in your PTO system.
- Train managers and share the policy with employees.
Revisit balances and accrual settings after the first pay period to confirm everything is calculating correctly, and fix any errors before employees notice them.
Ask a few employees whether the policy is clear, and adjust the wording before the next review.
Clear wording prevents most sick leave disputes before they start.
Keep a copy of every version you publish.
Review it every year.
Final Thoughts
A sick leave policy gives employees clear rules and gives managers a consistent way to handle sick days. Start with the template, adjust it for every state and local law that applies, define covered reasons and family members, set notice and documentation rules that follow the law and track balances accurately. Train managers, keep sick time out of attendance points and review the policy every year as laws change.
Track Sick Leave With Updoot
Updoot's PTO tracking accrues sick leave by hours worked, applies caps and carryover and shows every employee their balance, so your policy is applied the same way every time.