Michigan Earned Sick Time Act: What Employers Need to Know

          The Michigan Earned Sick Time Act (ESTA) has been amended, bringing about changes that impact nearly every employer and employee in the state. It is crucial for businesses to understand these changes, especially small business owners. Failing to comply with the ESTA can result in fines and penalties, making it essential to become familiar with the updated requirements.  In this post, the Business Attorneys of Thompson Legal will provide an overview of updated ESTA, with a focus on its application to small and new businesses.

Please note that this post is not exhaustive, and every situation is unique. In the event that you have legal questions about working with employment laws and regulations, it's advisable to speak with a Michigan licensed attorney. Contact Thompson Legal to speak with a Michigan attorney today.  

Key Aspects of ESTA Update

      The Earned Sick Time Act (ESTA) update introduces several key changes that employers must be aware of.  The amendments to the act took effect on February 21, 2025. The ESTA has a broad application, covering virtually every employer, regardless of size, and includes any organization that employs one or more individuals, whether they are full-time, part-time, seasonal, or temporary employees.   Even non-profit entities are not exempt from compliance with the updated ESTA. 

Considerations for  Small Business

      Small businesses are treated differently under the updated ESTA. For the purpose of ESTA, a “small business” is defined as an employer which 10 or fewer individuals work for compensation during a given week. These businesses must provide up to 40 hours of earned sick time annually. It is important to note that for purposed of the ESTA, if the owner is typically paid or treated as an employee, they will be included in the threshold for small business consideration. However, small businesses have until October 1, 2025, to comply with ESTA requirements, providing them with a longer period to adjust to the new regulations.  

• Small Business Requirements:

  • Defined as employers with 10 or fewer employees.  

  • Must provide up to 40 hours of EST annually.  

  • Have until October 1, 2025, to comply with ESTA requirements.  

Accrual and Use of Sick Time

         Under the updated ESTA, employees accrue a minimum of 1 hour of paid earned sick time for every 30 hours worked. Employers with 11 or more employees must allow employees to use up to 72 hours of paid earned sick time in a year. Small businesses, on the other hand, can limit the use of earned sick time to 40 hours per year, unless the employer chooses to provide a higher limit. Employers also have the option to frontload paid earned sick time, which means providing employees with the required amount of sick time at the beginning of the year. If employers choose to frontload sick time, they can avoid tracking and carryover requirements.  

     Employees are entitled to use earned sick time in one-hour increments or the smallest increment that the organization uses to account for absences. For employers using the accrual method, carryover of time is required, but employers may cap the carryover at 40 hours for small businesses and 72 hours for other employers. Employers also have the option to pay out unused sick leave annually to avoid carryover requirements.  

Additional Employer Responsibilities

         Employers also have responsibilities regarding employee pay and providing notice. Employees using paid earned sick time must be paid at a rate equal to the greater of their normal hourly wage or the minimum wage. Employers can set written policies for notice requirements. For foreseeable events, employers can require up to 7 days' advance notice, while for unforeseeable events, employers may require notice as soon as practicable or in accordance with the employer's policy, if the employee was provided with the policy.

       It is crucial to emphasize that employers are prohibited from taking retaliatory personnel action against employees for requesting or using earned sick time. The Michigan Department of Labor & Economic Opportunity (LEO) is responsible for monitoring and enforcing earned sick time claims. In the event of any questions or concerns, Michigan’s Labor and Economic Opportunity office can be reached here. 

Updated ESTA for New Businesses

       New businesses also have specific considerations under the updated ESTA. If a small business did not employ an employee on or before February 21, 2022, it is not required to comply with ESTA until 3 years after the date it first employs an employee. For example, if a small business started in October 2024 and hired its first employees then, it would need to comply with ESTA by October 2027.   

Compliance for Employers

          To ensure compliance with the updated ESTA, employers have several ongoing obligations. Employers must provide written notice to each employee at the time of hiring or by March 23, 2025. This notice must include:  

• The amount of earned sick time provided under the act.  

• The employer's choice on how to calculate a "year."  

• The terms under which earned sick time may be used.  

• A statement that retaliatory personnel action against an employee for requesting or using earned sick time is prohibited.  

• The right of employees to file a complaint with the state for any violation of the act.  

      Employers are also required to display a poster containing compliance information at their place of business. Additionally, employers must retain records documenting the hours worked and earned sick time taken by employees for at least 3 years.  

Conclusion

     The Michigan Earned Sick Time Act brings forth important requirements for employers, including small and new businesses. It is essential for employers to understand these requirements to ensure compliance and avoid potential penalties. Employers must provide written notice to employees, display the required poster, and maintain accurate records. Small businesses have specific provisions that allow for a more gradual implementation of the act, while new businesses may have a delayed compliance requirement. For further guidance and legal assistance, it is recommended to seek professional counsel.

This article is for informational purposes only. It is not intended as legal advice. In the event you would like to speak with a Business Attorney, please Contact Thompson Legal at (734) 743-1646 to schedule a consultation.