You created a vacation policy for your team because you know the benefits of well-rested employees—whether they rested for a week at the beach or in bed with the flu.
However, "time off" isn't all one thing in the eyes of the law. Here's the difference between vacation and sick leave, and why your policy needs to treat them differently.
Vacation vs. sick leave, defined
Vacation is paid time off (PTO), such as personal days or personal time, that employees can generally use for any reason, while sick leave is paid time off for health-related needs, such as going to medical appointments.
While the biggest difference between vacation and sick leave is how the two types of leave are used, the table below lays out all the important differences you should know as an employer.
Also, keep in mind there’s no federal requirement to offer paid sick time or vacation. The sick leave column describes the states and cities that mandate it and the specifics vary by law, so check your state's requirements.
Difference | Vacation | Sick leave |
Required to be offered | No (except for 3 states requiring paid leave that can be used for any purpose) | Yes (in 18 states) |
Controlled by | Employer policy | Employee’s right to use |
Can be used for | Any reason, per employer policy | Health-related needs |
Requires advance notice | Depends on employer policy | Reasonable notice where possible |
Documentation | Depends on employer policy | Sometimes |
Carries over from year to year | Depends on employer policy unless states ban use-it-or-lose-it policies | Required in many states |
Paid out when an employee leaves | Sometimes | Not required |
Retaliation protection | None specific to vacation | Yes |
Four regulatory differences between vacation and sick leave
Review these regulatory differences between vacation and sick leave to keep your policy both compliant and fair to your team.
Vacation | Sick leave | |
Rights | Employees don’t have a right to vacation. | If your employee works in a state where paid sick leave is required, an employee has an absolute right to take an accrued sick day, no matter the employer’s wishes. |
Discipline | Employers generally reserve the right to allow, deny, and set policies around how employees use their time off. | You generally can't discipline an employee for taking accrued sick leave, even for unforeseeable absences with delayed notice. |
Reason | Vacation time can be used for any reason (per the employer’s policy), such as moving, a driver’s license renewal, or even sickness. | Employees may only use sick leave for purposes related to health reasons (varying by state or local mandate). |
Payout | Once you start offering paid vacation leave, you become subject to payout regulations in some states (get the full guide to vacation payouts by state). | No states currently require unused sick leave to be paid out when an employee leaves the company. |
Paid sick leave and vacation laws differ from state-to-state, so be sure to check your employee’s state employment laws.
One thing to keep in mind: If you offer PTO-only leave policies or an unlimited PTO policy, sick leave adds a wrinkle. Statutory sick leave is built on accrual, while unlimited PTO removes the accrual requirement. Without a tracked balance, it can be difficult for employers to show employees their available sick leave, apply state carryover rules, or calculate a payout. To resolve the mismatch, we recommend consulting with an attorney or HR expert.
Tip: Gusto’s Plus and Premium customers can get direct access to HR experts for live advice.
Accrual methods for vacation and sick leave
Paid time off accrual works differently for sick leave than it does for paid vacation leave. While vacation has no standard accrual method (it’s up to the employer), state paid sick leave laws often set a minimum accrual rate. For example, California requires employers to provide at least 1 hour of paid sick leave per 30 hours worked, with 24 hours available by the 120th day of employment and the full 40 hours by the 200th day.
Tracking accrual rates manually can be complicated, especially if you hire employees in more than one state. To make it easier on you, Gusto automatically calculates and tracks time off so that the right accrual rate applies to each employee.
FAQs
How do vacation and sick leave interact with FMLA?
Employers can require, or employees can elect, that accrued paid sick or vacation time run concurrently with their Family and Medical Leave Act (FMLA) leave. This way, the employee gets paid from that accrued time during what would otherwise be an unpaid, job-protected absence. Since most paid sick leave balances are much smaller than a full FMLA leave, this usually means the leave is paid for a portion of the 12 weeks using the sick leave, and unpaid for the remainder, even though job protection continues throughout.
Can employees use sick leave for jury duty?
It depends on the state. Jury duty isn't medically related, so statutory paid sick leave generally can't be used for it. However, California expanded its sick leave law in 2025 to cover jury service and subpoenaed witness appearances. Separately, several states prohibit employers from requiring an employee to use vacation, sick leave, or PTO for a summons, such as Oregon, Arizona, and Ohio.
Can an employee use sick leave when caring for a sick family member?
Yes, virtually every state sick leave law covers caring for a family member, not just the employee's own illness. But the definition for family members isn't standard. Most laws cover children, parents, spouses, and siblings, while some extend it to anyone whose "close association" functions like family, and California added a broader "designated person" category in 2023.
Can an employer ask for a doctor's note for a sick day?
Sometimes, but state and local sick leave laws limit it. Many jurisdictions, including New Jersey, Arizona, New York City, and Chicago, bar employers from requiring medical documentation unless the absence runs more than three consecutive workdays. No jurisdiction allows employers to require that the note provide the diagnosis.
Can an employer deny a sick day request?
Generally no, where a state or local sick leave law applies. Statutory sick leave is protected time off: employees have a right to use it on request, and disciplining someone for taking it is considered retaliation. Employers can require reasonable advance notice when the need is foreseeable. When a state doesn’t have mandated sick leave, your PTO policy should govern.
