Earned Sick Time Act Guidelines

Beginning February 21, 2025, the Michigan Earned Sick Time Act (“ESTA”) will go into effect. These new rules are mandatory for almost all businesses in the state, and it is important to make sure to bring your business into compliance with these new rules. This post will highlight the main points of the rule. It is important to consult an attorney if you have questions about how the ESTA will impact you as an employee or a business-owner.

Who does the law apply to?

The ESTA impacts employers and employees.
Employers are defined as “any person, firm, business, educational institution, nonprofit agency, corporation, limited liability company, government entity, or other entity that employs one or more individuals, except that employer does not include the United States government.”
Employees are defined as “an individual engaged in service to an employer in the business of the employer, except that employee does not include an individual employed by the United States government.”
The act applies to salaried (exempt and non-exempt) and full and part-time hourly workers.
It applies to work performed by employees who are physically located in the state of Michigan, regardless of where the employer is located.
Accrual of sick time begins on February 21, 2025, or at commencement of the employee’s employment, whichever comes later.

How does sick time accrue? What regulations are there on the use of accrued sick time?

Employees accrue a minimum of one hour of paid sick time for every 30 hours worked.
Employees shall not be entitled to use more than 72 hours of paid earned sick time per year, unless the employer selects a higher limit. Employers may allow employees to accrue more than 72 hours of earned sick leave in a year, and may also allow employees to use more than 72 hours of earned sick time in a year, but not less.
Employees who are exempt from overtime requirements under section 13(a)(1) of the Fair Labor Standards Act, 29 USC 213(a)(1) are assumed to work 40 hours each week for the purposes of sick time accrual. If the employee’s normal workweek is less than 40 hours, sick time accrues based on the normal work week.
Unused sick time is carried over from year to year. Employes may still limit employees to the use of 72 hours of earned sick time in a year.
Employers who limit the use of earned sick time to 72 hours or more per year may frontload by providing employees with the total amount of allowed hours at the start of the 12-month period. Because there is no cap on the amount of earned sick time that employees can accrue, employers who frontload should be sure to annually review each employees’ hours worked each year to make sure it corresponds to the correct number of accrued hours and carryover any balance.
ESTA states that earned sick time may be used in the smaller of (i) one-hour increments, or (ii) the smallest increment of time used by the employer’s payroll system for absences of use of other time.

What other rules must employers follow?

Earned sick time must be paid at a pay rate that is equal to the greater of the employee’s regular rate of pay OR Michigan’s minimum wage.
Employers must maintain record keeping for each employee that documents the hours worked and the earned sick time used by each employee for not less than three years.
Employers must provide written notice of an employee’s rights under the ESTA at the time of hiring or on February 21, 2025, whichever is later.
Employers must display the poster created by the Department of Labor and Economic Opportunity that explains the specific rights provided under the ESTA.

What can employees use earned sick time for?

For the purposes of the act, family members are defined as:
- A biological, adopted, or foster child, stepchild or legal ward, a child of a domestic partner, or a child to whom the employee stands in loco parentis
- A biological parent, foster parent, stepparent, or adoptive parent or a legal guardian of an employee or an employee’s spouse or domestic partner or a person who stood in loco parentis when the employee was a minor child
- A person to whom the employee is legally married under the laws of any state or a domestic partner
- A grandparent
- A grandchild
- A biological, foster, or adopted sibling
- Any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship
In the event of an employee’s or their family member’s mental or physical illness, injury, or health condition; medical diagnosis, care, or treatment of the employee’s or the employee’s family member’s mental or physical illness, injury, or health condition; or preventative medical care for the employee or the employee’s family member.
In the event the employee or the employee’s family member is a victim of domestic violence or sexual assault, for medical care or psychological or other counseling for physical or psychological injury or disability; to obtain services from a victim services organization; to relocate due to domestic violence or sexual assault; to obtain legal services; or to participate in any civil or criminal proceedings related to or resulting from the domestic violence or sexual assault.
For the purpose of attending meetings at a child’s school or place of care related to the child’s health or disability, or the effects of domestic violence or sexual assault on the child.
In the event of the closure of the employee’s place of business by order of a public official due to a public health emergency; for an employee’s need to care for a child whose school or place of care has been closed by order of a public official due to a public health emergency; or when it has been determined by the health authorities having jurisdiction or by a health care provider that the employee’s or employee’s family member’s presence in the community would jeopardize the health of others because of the employee’s or family member’s exposure to a communicable disease, regardless of whether the employee or family member has actually contracted the communicable disease.

Can employers require documentation related to the use of earned sick time?

If the circumstances necessitating the use of the earned sick time is one that is foreseeable than an employer may require advance notice of the use, but not exceeding seven days prior to the date the earned sick time is to begin.
If the circumstances necessitating the use of the earned sick time is not one that is foreseeable, then the employer may require notice from the employee of the intent to use earned sick time as soon as practically possible.
If an employee uses earned sick time for more than three consecutive days, an employer may require reasonable documentation that the use of the earned sick time fell under a use permitted by the ESTA. Requests for documentation must be satisfied in a timely manner, but is guided by the following rules:
- The documentation should not include a description of the illness or details of the violence
- The employer is reasonable for all out-of-pocket costs that the employee incurs in obtaining the requested documentation
- An employer cannot prevent an employee from taking leave based on a failure to receive documentation
If an employer asks questions about the use of earned sick time, the employee should answer with sufficient details to determine whether the leave meets the permissible uses under the ESTA.
Any information provided to the employer regarding the circumstances necessitating the use of the earned sick time must be kept strictly confidential and never disclosed to others without the employees permission.

What are the special considerations for “small businesses”?

A “small business” is defined as an employer that employs nine or fewer employees and employed 10 or more employees in 19 or fewer workers in the current or previous calendar year. The workweeks with 10 or more employees do not have to be consecutive, and it includes full-time, part-time, and temporary employees.
If an employer employs 10 or more employees for 20 or more workweeks in the current or prior calendar year, the employer cannot be a “small business” again until it meets the requirements above
Employees under this group accrue at minimum one hour of earn sick time for every 30 hours worked. They are not entitled to use more than 40 hours of paid earned sick time in a calendar year unless the employer selects a higher limit.
If an employee accrues more than 40 hours of earned sick time in a calendar year than they shall be entitled to use an additional 32 hours of unpaid earned sick time that year, unless the employer selects a higher limit.
By law employees are entitled to use paid sick time before using any unpaid sick time.
Employers may require employees to wait until the 90^th calendar day after commencement of their employment to being using accrued earned sick time.

What if an employee leaves their job? Or transfers to another job within the same company?

Employees that are separate from employment for a period of 6 months or less maintain all of their accrued earned sick time prior to the separation. The employee will begin to re-accrued hours when they are reemployed, and then may use any hours they have accrued.
Employees that are transferred within the same employer to either another classification or location maintain all hours they have accrued and continue accruing hours.
Employees whose employment has been terminated for a period of 6 months or more lose all accrued and unused earned sick time, unless the employer has an internal policy that allows the employee to maintain those hours.
Employers are not required to pay out unused earned sick time upon termination under the ESTA, but it may be required under the employer’s written policy of contract under the Payment of Wages and Fringe Benefit Act.

How are violations of the ESTA reported and handled?

Employers must be careful not to interfere with the exercise of rights protected under the ESTA.
Employers are forbidden from taking any retaliatory action against an employee because an employee has exercised a right protected under the ESTA.
Employees may file claims with the Wage and Hour division within three years of the date of the alleged violation. This will trigger an investigation and may result in mediation. If the Department determines there is a violation, they are entitled to award all appropriate relief, including, but not limited to the payment of all earned sick time that was improperly withheld, damages incurred as a result of the violation, aback pay, and possible reinstatement.
Employers who violate the ESTA by failing to provide earned sick time is subject to a $1,000 administrative fine.
Employers who violate the posting requirement are subject to a $100 administrative fine for each separate violation.
Employees have the right to pursue action against an employer if an employer interferes with, or retaliates against, their use of ESTA benefits. This includes through private action.

Practical Guidance

Employers don’t have to add 72 hours of sick time if they currently provide 72 hours or more of paid time off per year.
Employers can keep separate hour banks for vacation and sick time, or combine them into one.
Under the ESTA, unused hours roll over year to year, and do not get paid out on termination and/or separation.
Employees can choose to frontload leave hours annually, but still need to track hours the employee actually worked to ensure employees haven’t accrued more than the frontloaded amount. If employees do accrue more than the frontloaded amount and it exceeds the employers use limit, than the employer must allow the employee to carry those extra hours over.

This does not represent a complete discussion of all of the rules and regulations of the ESTA. If you have questions about the impact of the ESTA on you as an employee or a business owner, an attorney at Demorest Law Firm may be able to help you.

The Department of Labor and Economic Opportunity has a website on the ESTA here: https://www.michigan.gov/leo/bureaus-agencies/ber/wage-and-hour/paid-medical-leave-act

The full text of the ESTA can be found here: https://legislature.mi.gov/Laws/MCL?objectName=MCL-ACT-338-OF-2018