This study investigates the impact of Paid Sick Leave (PSL) mandates on hospital healthcare quality. Leveraging the staggered adoption of PSL mandates, we find that affected hospitals experience significant improvements in healthcare quality, as evidenced by lower mortality rates and higher patient satisfaction scores. Mechanism analysis suggests that PSL improves hospital financial conditions, lowers borrowing costs, and enables greater investment in both physical infrastructure and human capital, all of which contribute to enhanced care quality. The effects are more pronounced among hospitals with lower liquidity, less external financial support, weaker profit orientation, and stronger governance. Our findings highlight the broader spillover effects of labor market policies on hospital financial performance and healthcare outcomes.