A Practical Guide for Time-Off Compliance

Time away from work is an important part of caring for employees, helping them stay healthy, maintain balance, and sustain the energy they bring to their roles. For faith-based organizations, offering time off isn’t just a legal question—it’s a reflection of ministry values and care. But vacation and sick leave policies can be confusing, especially because requirements vary significantly from state to state and even city to city.

This short guide is designed to help ministry leaders, church administrators, board members, and HR managers navigate the landscape of vacation and sick leave policies and think through their own practices with clarity.  It also offers ministries and faith-based nonprofits a foundational understanding of these policies, enabling organizations to remain legally compliant while caring for employees in a manner that fosters a supportive and responsible workplace.

No Federal Requirement for Paid Vacation or Sick Leave

At the federal level, there is no law that requires private employers, including ministries and faith-based nonprofits, to offer paid vacation or sick time. The Fair Labor Standards Act (FLSA), which governs wages, hours, and overtime, doesn’t mandate paid time off. As a result, most faith-based organizations establish their own leave policies unless state or local laws impose additional requirements.

This means:

• Employers are not federally required to provide paid vacation or sick leave.
• When paid leave is offered, it is governed by the employer’s own written policies or state regulations. 

State and Local Laws: A Patchwork of Rules

In recent years, many states and cities have passed their own laws requiring paid sick leave, and these rules apply to nonprofits and religious employers. 

Paid Sick Leave

As of 2025, more than a dozen states and several major cities require employers to provide paid sick leave. In addition, some cities and counties (such as San Francisco, Los Angeles, and New York City) have their own paid sick leave ordinances that may impose stricter standards than state law.

Key elements of these laws typically include:

• Accrual method (such as 1 hour of sick leave for every 30 hours worked)
• Minimum requirements (such as 24 or 40 hours per year)
• Permitted uses (such as personal illness, caring for a family member, or preventive care)

Paid Vacation 

Some jurisdictions require that unused sick time be carried over into the next year, while others allow employers to front-load a set number of hours annually.

Far fewer states require paid vacation. However, in many states, once vacation is offered, accrued time is considered earned wages and wages owed, which creates specific legal obligations.

Examples:

• In California, accrued or earned vacation is considered earned wages and wages owed; “use-it-or-lose-it” policies are not permitted. A use it or lose it policy is a policy that states you get a certain amount of vacation hours to be used by a certain date. If the hours are not used, they are forfeited. Employers must allow unused vacation time to carry over from year to year. A reasonable accrual cap is permitted (typically 1.5 to 2 times the employee’s annual accrual rate). Once that cap is reached, no additional vacation will accrue until some is used. In addition, any accrued but unused vacation must be paid out to the employee upon separation from employment.
• In Illinois, the Illinois Paid Leave for All Workers Act, which took effect January 1, 2024, requires employers to provide employees with up to 40 hours of paid leave per year that can be used for any reason. 

PTO vs. Separate Sick and Vacation Banks: What’s Best for Ministries?

Keeping separate banks for vacation and sick leave is highly recommended. Here’s why: 

• Vacation time is often considered earned wages, and many states require payout upon termination.
• Sick leave is usually not required to be paid out unless it’s combined with vacation in a single PTO policy.
• By maintaining clearly documented and separate sick leave banks, ministries can avoid unintended payout obligations and comply with state-specific requirements.

Faith-Based and Nonprofit Considerations: Common Scenarios and Lessons Learned

For ministries and religious nonprofits, offering thoughtful, well-structured leave policies is not just about compliance; it’s an expression of ministry care and organizational culture. Common approaches include a fixed vacation accrual model based on length of service.

Even when a ministry is exempt from certain legal requirements, having clear written policies and applying them consistently is critical. Clear policies help prevent misunderstandings, ensure fair treatment across roles and departments, and support a culture of trust among staff and leadership.

The following scenarios illustrate how unclear or inconsistent vacation or leave sick practices can create problems:

• Scenario 1: PTO Policy Lacks Protected Sick Leave
  A ministry combines vacation and sick leave into a general PTO bank but fails to ensure that the California-mandated sick leave portion remains protected and properly tracked. As a result, employee requests for sick leave are denied or made subject to discretionary manager approval. This exposes the ministry to legal claims and penalties for noncompliance, even though the total PTO offering appears generous on paper.
• Scenario 2: Inconsistent Approval of Time Off
  A supervisor regularly approves same-day vacation requests for certain employees in high-profile ministry roles while requiring other employees to give two weeks’ notice for any time off. This inconsistent approach breeds resentment among employees, creates perceptions of favoritism, and increases HR risk if a complaint arises. It also undermines the ministry’s written leave policies, making them difficult to enforce.
• Scenario 3: No Written Leave Policy
  A small church operates without a written leave policy, relying on informal rules like “just check with the pastor.” Without documentation, the church is vulnerable to confusion, favoritism claims, and legal risk if disputes arise.

Best Practices for Church and Ministry Leave Policies

When reviewing or creating time-off policies, ministry leaders, hr teams, and boards should consider the following:

• Stay up to date with state and local laws. Sometimes, local (city or county) laws may impose additional or stricter requirements than state law.
• Clearly document your policy. Define how leave is earned and used, who is eligible, carryover limits, and any waiting periods.
• Avoid “use-it-or-lose-it” policies where prohibited. For example, California does not allow them. Don’t combine sick and vacation into one PTO policy.
• Separate vacation and sick leave banks to avoid unintended financial liability.
• Train supervisors to handle leave requests fairly and consistently.
• Communicate policies clearly and often. Include time-off policies in your employee handbook and onboarding process. Avoid having undocumented rules or inconsistent practices.
• Refrain from using undocumented practices or ad hoc manager discretion.

Putting It Into Practice: Action Steps for Ministry Leaders

Vacation and sick leave policies in the U.S. are shaped more by state and local laws and organizational choice than by federal rules. For ministries and faith-based organizations, this creates both a challenge and an opportunity to care well for staff.

It’s a challenge to stay current on ever-changing legal requirements. The opportunity is to care for your employees in a way that reflects your mission, values, and commitment to wise stewardship.

Whether your goal is legal compliance, employee well-being, or wise stewardship, clear and consistent leave policies contribute to a healthy, sustainable workplace, and that benefits everyone.

Next steps to consider:

• Review your current leave policies to ensure they reflect both your organizational values and legal obligations.
• Check for compliance with state and local laws, which may impose additional requirements beyond federal guidelines.
• Update your employee handbook to clearly communicate how vacation and sick leave benefits are earned, tracked, and used.

For churches, ministries, and faith-based organizations, managing vacation and sick leave policies requires both legal awareness and intentional care for staff. By understanding applicable laws, avoiding common pitfalls, and adopting best practices, ministries can create time-off policies that reflect both compliance and compassion. To take the next step, explore our Employee Handbook Services for Ministries, consider an HR Audit to assess risk and consistency, or learn about our HR Subscription Services for ongoing support tailored to ministry needs.