QuickBooks Payroll Bulletin | March 2007

San Francisco Sick Leave Law

Larger cities such as San Francisco are often bellwethers of change at a state or national level. A new ordinance in San Francisco might have future implications elsewhere.

Effective Feb. 5, 2007, all businesses must provide paid sick leave for their employees working within the city and the county of San Francisco under the San Francisco Sick Leave Ordinance that was passed by voters in November 2006. Here are the highlights of the ordinance:

  • A covered employee is defined as "any person who is employed within the geographic boundaries" of San Francisco, which means that regardless of where the employer's headquarters may be located, the employer must provide paid sick leave to all employees who work in the city and county of San Francisco.
  • Paid sick leave begins to accrue on Feb. 5, 2007, or, for employees hired after that, 90 calendar days after their first day of work.
  • The ordinance is not limited to nonexempt employees.
  • The ordinance includes exempt employees (including supervisors and managers); full-time, part-time, and temporary employees; and participants in a Welfare to Work Program (i.e., any public assistance program administered by the Human Services Agency).
  • Employees accrue 1 hour of paid sick leave for every 30 hours they work (accrual rate 1 hour leave/30 hours worked = 0.03333).
  • Paid sick leave shall accrue only in hour-unit increments—not in fractions or prorated amounts.
  • At businesses with fewer than 10 employees, there is a cap of 40 hours of accrued paid sick leave per employee.
  • At businesses with 10 or more employees, the cap is 72 hours per employee.
  • The sick leave must carry over from year to year but is subject to the applicable accrual caps (40 hours or 72 hours total).
  • Employers that already provide a sufficient paid leave policy that employees can use for the same purpose are not required to provide additional paid sick leave.
  • Employers must post a notice about the sick leave law at the job site. Copies of this notice are available at www.sfgov.org/site/uploadedfiles/olse/Paid_Sick_Leave_Poster.pdf.
  • The ordinance does not preempt or limit other laws that provide for greater accrual of sick leave.
  • Employers must retain records of hours worked and sick leave taken for four years.
  • For more information, contact the San Francisco Office of Labor Standards Enforcement at (415) 554-6271.
  • Guidance has not yet been provided on the tracking of hours for exempt management employees or for seasonal businesses or temporary agency workers.

Amount of Paid Sick Leave

The following examples show how much sick leave employees would accrue:

  • A full-time employee (52 weeks/year x 40 hours/week) would work 2,080 hours and accrue 69 hours/year of paid sick leave.
  • In a small business, an employee would reach the 40-hour cap after working 1,200 hours. For a full-time employee, this would take 30 weeks.
  • For all other businesses, an employee would reach the 72-hour cap after working 2,160 hours, or 54 weeks for a full-time employee.

QuickBooks Setup for Tracking Accruals and Paying Accrued Sick Leave

To track this sick accrual for hourly employees in QuickBooks, use the employee setup:

  1. Select Add or Edit an Existing Employee.
  2. Select Payroll and Compensation Info.
  3. In the Payroll Info tab, click the Sick/Vacation button.
  4. In the Sick section, choose the accrual period Every hour on paycheck.
  5. In the Hours accrued per hour paid field, enter the accrual rate 0.03333 (rounded 1/30).
  6. In the Maximum number of hours field, enter the maximum number of hours at 40 for small businesses (fewer than 10 employees).
    Or, enter the maximum number of hours at 72 for larger businesses (10 or more employees).
  7. In the Begin accruing sick time on field, enter 02/05/2007 or 90 days following the hire date if later than Feb. 5, 2007.

When you create hourly paychecks for these employees, the sick hours accrue as set up on these employees. The accrual calculates on hours worked and caps at the maximum, as specified.

To enter sick hours to be paid on a paycheck following the accrual:

  1. From the Employees menu, choose Pay Employees.
  2. Select the employees for whom you want to enter sick hours and click Enter hours and preview check before creating.
  3. Click Create to display the Preview Paycheck window.
  4. Enter the number of hours actually worked for the pay period on the regular hourly payroll item.
  5. Choose the appropriate sick payroll item from the list and enter the number of sick hours in the Hours column. For example, based on a 40-hour work week, you would enter 32 regular hours and 8 sick hours, if the employee took 8 hours of accrued sick time.

QuickBooks calculates the regular and sick pay based on the hours and hourly rate on these payroll items and reduces the accrued sick hours by the hours paid.

QuickBooks Payroll Bulletin
Editor: Lise Quintana
Publisher: Intuit
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