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Paid Time Off and Sick Leave

Square Payroll allows you to set up a paid time off (PTO) policy for your employees. This can be used to calculate accruals and track the PTO balance for vacation and sick leave policies.

You can choose between two types of tracking: based on hours worked (accrual) or fixed amount. In an accrual policy, your employee earns a certain amount of hours based on the number of hours worked. In a fixed amount policy, your employee receives a set amount of PTO hours.

These policies can also be set up for employees from their Payroll Team profile or from Payroll Settings for all employees without a current PTO or Sick Leave policy, and for all future employees.

Set Up Your PTO Policy

If you have a paid time off policy you can also set this up from your employees’ profiles. To do so:

  1. Visit the Payroll Team tab in your Payroll dashboard.
  2. Select the employee you would like to set up a PTO policy for.
  3. Under Paid Time Off (PTO), toggle on Track this employee’s paid time off.
  4. For Tracking Method, select either Based on hours worked or Fixed amount.
  5. For Based on hours worked, enter the number of hours your employee should work for each PTO hour earned, and for Fixed amount enter their total PTO hours into the Current Balance field.
  6. If you wish to limit the maximum amount of PTO hours your employee can accrue, enter the amount into Accrual Limit.
    Note: Accrual limit only limits the maximum amount of hours your employee can have in their Current Balance. This will not limit the amount of PTO hours your employee can use.
  7. Click Save.

You will need to repeat this process for each of your employees with a PTO policy.

Set Up Your Sick Leave Policy

If you have a Sick Leave policy you can also set this up from your employees’ profiles. To do so:

  1. Visit the Payroll Team tab in your Payroll dashboard.
  2. Select the employee you would like to set up a Sick Leave policy for.
  3. Under Sick Leave, toggle on Track this employee’s sick leave.
  4. For Tracking Method, select either Based on hours worked or Fixed amount.
  5. For Based on hours worked, enter the number of hours your employee should work for each Sick Leave hour earned, and for Fixed amount enter their total Sick Leave hours into the Current Balance field.
  6. If you wish to limit the maximum amount of sick leave hours your employee can accrue, enter the amount into Accrual Limit.
    Note: Accrual limit only limits the maximum amount of hours your employee can have in their Current Balance. This will not limit the amount of PTO hours your employee can use.
  7. Click Save.

You will need to repeat this process for each of your employees with a sick leave policy.

Pay Out PTO and Sick Leave Hours

As an employer, it’s quick and simple to pay out PTO hours when your employees take them. To pay out PTO hours:

  1. Click Run Payroll in the Payroll section of your online Square Dashboard.
  2. If you have set up a PTO policy for one of your employees, you will see a PTO Hours column on the far right.
  3. Enter the PTO hours taken by your employee.
    Note: Your employee will only receive pay for PTO hours if they have an hourly rate entered. If they do not have an hourly rate, the PTO balance will decrease but no pay will be added to the paycheck.
  4. Proceed with sending the pay run. When you send payroll, the PTO hours you pay out will be automatically deducted from your employee’s available balance.

If an employee does not have a PTO policy set up, you will be unable to enter PTO hours for that employee.

Employees can accumulate a negative PTO balance if the amount of PTO hours used surpasses their existing balance.

View PTO and Sick Leave Balances

View PTO and Sick Leave Balances - Employer

You are able to track your employee’s PTO and Sick Leave balances in each employees’ profile within your Payroll Team page.

The available PTO and Sick Leave balances will also automatically appear at the bottom of each pay stub for employees with PTO and Sick Leave policies. You must provide the pay stub containing PTO and Sick Leave balances to your manual check employees with their paycheck.

View PTO and Sick Leave Balances - Employee

Employees can track their PTO and Sick Leave balances on their pay stubs. Direct deposit employees can view their balance on their pay stubs by accessing the Pay Stubs section of the employee dashboard. Employers are responsible for providing the pay stub containing PTO and Sick Leave balances to manual check employees with their paycheck.

Edit PTO and Sick Leave Policies and/or Hours

You can edit an employee’s PTO and Sick Leave policies and/or hours at any time:

  1. Visit Payroll Team in your Payroll dashboard.
  2. Select the employee whose PTO and Sick Leave policies and/or balances need to be updated.
  3. Scroll down to Paid Time Off or Sick Leave and update your employee’s policies and/or hours as needed.
  4. Click Save.

Updating an employee’s PTO and Sick Leave balances and/or policies will only apply to future pay runs and will not affect past pay runs or pay stubs.

PTO FAQs

Can I set up PTO and Sick Leave policies for all of my employees at once?

Yes, PTO and Sick Leave policies can be set up for all employees without a current PTO or Sick Leave policy, and for all future employees, from your Payroll Settings.

Do all of my employees need to have the same PTO and Sick Leave policy?

No, you can set up unique PTO and Sick Leave policies for each of your employees.

Can I set up multiple PTO and Sick Leave policies for one employee?

No, you are currently limited to one PTO and one Sick Leave policy per employee.

What happens if I have an employee who uses more PTO than they have accrued or have left?

It is your choice to allow an employee to use more PTO or Sick Leave hours than they have in their current balance. If you choose to allow your employee to do this, you will be notified when processing payroll that the amount to be paid exceeds their current balance.

Do overtime and double time hours count towards PTO and Sick Leave accrual?

Yes, overtime and double time hours do count towards PTO and Sick Leave accrual on a 1:1 basis (they do not count 1.5x or 2x).

I have a salaried employee I pay through the additional field who I need to pay for PTO and Sick Leave. How do I do this?

You can do this by calculating your employee’s hourly rate and entering the amount into the rate field. The PTO and Sick Leave hours added will then be paid out at that rate.

Where can I get more information on California’s Paid Sick Leave Law?

Check out Square Payroll’s article on the California Paid Sick Leave Law.

You can also find additional information on how to set your PTO policy to be compliant with California’s Paid Sick Leave Law in our Town Square blog.

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