Accruing Sick and Vacation Time

Recently, more questions have been arising about this feature in QuickBooks. We examined this a few years ago when California instituted a requirement in 2015. This law required one hour of paid sick time be accrued for every thirty hours worked. Let’s revisit how to do this. The instruction, of course, can be applied to any sick or vacation benefits you may wish to provide.

We will setup this time off accrual in Employee Defaults, that way it will be the default setting every time we hire a new employee.

Open the Employee Center. From the Manage Employee Information dropdown menu, choose Change New Employee Default Settings. Click on the button, Sick/Vacation.

The top portion of the Sick and Vacation window is the portion we will use. It is specifically labeled for sick time, the bottom portion for vacation.

The accrual period is set for “Every hour on paycheck.” In this instance, that’s what we need. A certain fraction of an hour for each hour worked.

The next field tells QuickBooks how much time to accrue for every hour worked. In the sample file for Rock Castle Construction, time is set to show in hours and minutes. This is a setting in preferences. The time could show as a decimal.

In our case, the amount of time to accrue per paid hour is two minutes. 0:02:00. This setting will accrue sixty minutes by the time the employee has worked thirty hours, exactly what we need.

If time showed as a decimal, this amount would show as .03333.

The employee will be allowed to accrue a maximum of forty-eight hours. At that point, time ceases to accrue until some hours are used, bringing the amount available below forty-eight again.

The hours will not reset each year, a setting that is not permissible in many areas.

Note the checkboxes in the bottom portion of the window. We don’t want paid sick to accrue on sick and vacation time used, so we will make that selection here.

Above is a paycheck created for a Rock Castle employee. Note the circled areas on the right. The lower of the two shows that Gregg has accrued 2:40 in sick for the hours on his check. That’s eighty hours times two minutes each, resulting in 160 minutes, or two hours and forty minutes, for this paycheck.

The double headed arrow points out that we have added one hour of sick time to be paid. This lowers the amount of sick time available to 1:40. That is the amount shown by the top circled area, Sick Available.