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As of July 1, 2016, federal law mandates that employers must provide employees with a minimum of four days of sick time per year, accrued at a rate of one day for every 30 hours worked. This change requires adjustments in payroll and accounting to manage an additional liability that doesn’t appear on the balance sheet, complicating record-keeping. If a company has a vacation policy, it can be compliant as long as it is structured as a paid time off (PTO) policy that exceeds four days. However, the challenge arises since PTO must be paid out when an employee leaves, adding further complexity to employee compensation management.
