The Michigan Earned Sick Time Act (ESTA) went into effect on February 21, 2025. However, the law did not go into effect without some last-minute changes from Michigan lawmakers.
- Frontloading Method
- Employers are permitted to frontload 72 hours (or more, if they so choose) of paid sick time each year, for immediate use, for full-time employees. Employers that frontload do not have to (1) permit employees to carry over unused sick time year to year, (2) calculate and track sick time accrual throughout the year for full-time employees.
- Employers may also frontload for part-time employees. Employers who take this route can frontload a prorated amount but are still required to follow the other provisions, including tracking sick time accrual throughout the year.
- Accrual Method
- For employers who do not frontload, employees now earn 1 hour of paid earned sick time for every 30 hours they work. Employers are permitted to cap paid earned sick time usage at 72 hours per year.
- Employers are required to allow employees to carry over accrued, but unused, paid earned sick time from one year to the next (this does not have to exceed the minimum required 72 hours unless the employer increases that amount).
- Employers are permitted to use a single “bank” of paid time off to satisfy ESTA and can combine earned sick time with other types of paid time off so long as the amount of paid leave meets or exceeds what is required under ESTA.
- Employers may pick between one-hour increments, or the smallest increment used to track absences, as the minimum increment for the use of earned sick time.
- Employers using the accrual method may require new employees to wait until the 120th day of employment to use any earned sick time, but employees still accrue earned sick time during this waiting period.
- It appears that employers who frontload may not require new employees to wait to use their time, and the time is available for immediate use. This is based on an interpretation by the Department of the legislative intent surrounding this passage.
- For the purposes of ESTA, an employee’s hourly rate is their normal hourly age or base rate. This excludes overtime, holiday pay, bonuses, commissions, tips, etc.
- This applies to an employee’s work hours in Michigan, even if an employee is sent to Michigan on business from out of state.
- If a Michigan employer sends their employee out of state for business, they do not accrue time under ESTA while working outside of Michigan.
Exemptions
- There are now several categories of employees who are exempt from the law, including, (1) those who work under a policy that allows them to schedule their own hours and prohibits the employer from taking adverse action if the employee does not schedule a minimum number of hours, (2) unpaid trainee’s and/or unpaid interns, (3) employees who fall under the Youth Employment Standards Act MCL 409.101-.124, and others. View the full list of exemptions at: https://legislature.mi.gov/Laws/MCL?objectName=MCL-ACT-338-OF-2018
- These individuals still count towards the determination of the number of employees employed by a business, i.e. does the business fall under the small business category.
- ESTA does not apply to employees of the United States government.
- Railway workers and employers that fall under the Railroad Unemployment Insurance Act are preempted from ESTA coverage.
- Employees working under a collective bargaining agreement that is in conflict with ESTA have a postponed effective date, which is the expiration of the current bargaining agreement.
- For employers that have student employees who take a summer off between school years, it appears that so long as the employee is still listed on the businesses records as an employee, the break is likely not considered a break in service.
Documentation and Notification
- For unforeseeable uses of earned sick time, employers are permitted to establish a written policy on how employees have to notify the employer of the use of earned sick time, so long as it is provided to the employee in writing. Employees must be provided with any changes in the employer’s written policy at least 5 days in advance of the application of the written policy.
- It allows the employee to notify the employer as soon as they become aware of the need for the leave.
- The employee is to give notice of the intent to use earned sick time as soon as practicable, a determination that is unique to each circumstance.
- Employers may require advance notice, not to exceed 7 days, for foreseeable uses of earned sick time.
- If the use is not foreseeable, but the employee uses 3 or more consecutive days, the employer may require documentation. Documentation constitutes a document signed by a healthcare professional, a police report, court documents, a signed statement from witness/victim advocate, and others. A request for documentation must be satisfied in not more than 15 days after the employer’s request.
- If documentation is requested, employers may not require that the documentation explain either the illness or details of the violence.
- The employer is responsible for all out-of-pocket costs incurred by the employee to obtain the documentation. If the employee is without health insurance, the employer is responsible for all costs charged to the employee by the health care provider for the documentation. It is unclear at this time whether that includes milage, childcare costs, etc.
Small Businesses
- Small businesses are still defined as employers with 10 or fewer individuals working for compensation during a given week.
- Small businesses are required to allow employees to use 40 hours of paid earned sick time in 1 year.
- Small businesses do not need to begin allowing employees to accrue time, provide earned sick time, or calculate and track earned time until October 1, 2025.
- For small businesses that did not employ an employee on or before February 21, 2022, that small business is not required to comply with this act until 3 years after the date that the first employee was employed.
Employee Complaints
- Employees must file a complaint with the state within 3 years of the violation.
- Employers who fail to comply with ESTA are liable for a civil fine of not more than 8 times the employee’s normal hourly wage.
- Michigan’s Department of Labor and Economic Opportunity is responsible for the enforcement of ESTA.
- For businesses using the calendar year, the Department cannot look back beyond February 21, 2025 when examining any complaints. Employers may prorate for the first year.
What do employers need to do?
- Ensure their PTO and sick time policies are in full compliance with ESTA.
- Employers must provide written notice to employees including specific details and information of ESTA, as outlined in the Act.
- Employers need to post Department posters by March 23, 2025. These can be found online, or most payroll companies provide them (https://www.michigan.gov/leo/bureaus-agencies/ber/wage-and-hour/paid-medical-leave-act).
- The notice required needs to be in English, Spanish, and any language that is the first language that is spoken by 10% of the employers workforce.
- New businesses will have a 3 year grace period after formation to comply with ESTA.
- Employers with an existing PTO policy that is either equal to or more generous than ESTA can maintain their policy, but still need to make sure they are still in compliance with the other provisions of ESTA.
Find the full text of the ESTA here: https://legislature.mi.gov/Laws/MCL?objectName=MCL-ACT-338-OF-2018
State of Michigan Presentation: https://www.michigan.gov/leo/-/media/Project/Websites/leo/Documents/WAGE-HOUR/LEO-Sick-Time-Act-FINAL.pdf
It is important that all businesses are in compliance with this Act and the new regulations. If you have questions, please reach out to Melissa Demorest LeDuc at melissa@demolaw.com.
