Michigan's Earned Sick Time Act (ESTA) to Become Effective Friday, February 21, 2025

Important update for employers with employees who work in Michigan:

Michigan's Earned Sick Time Act (ESTA) was originally a ballot initiative adopted by the Michigan Legislature in 2018. Under Michigan law, once an initiative petition receives enough signatures (as this proposed ballot had), the Legislature can either adopt the proposals as written or send the initiative to the ballot.

In the case of the ESTA, the Michigan legislature adopted the proposed initiative but then amended it to create a more limited paid leave program called the Paid Medical Leave Act (PMLA). In July 2024, the Michigan Supreme Court ruled that the scope of the legislature’s amendment was improper, effectively reinstating the original ESTA provisions that are now set to take effect on February 21, 2025.

The implementation of the ESTA will bring about significant changes for employers, including mandatory paid sick time, an increase in minimum wage, and a phase out of the tipped wage credit.

As of this date, while there are several proposed amendments pending, including one passed by the Michigan House on January 23, 2025, it is becoming less likely that the ESTA will be modified or amended before its February 21, 2025 implementation date.

Michigan employers should be aware of the impending changes to the law and prepare their employment policies for compliance. If the legislature acts prior to the effective date, we will send out a follow up alert. The following is a summary of the key features of the ESTA:

1. ALL Employers Must Provide Mandatory Paid Sick Time

Michigan employers with one to nine employees must provide up to 40 hours of paid sick time per year and up to 32 hours of unpaid sick leave.

Employers with 10 or more employees must offer one hour of paid sick time to all employees for every 30 hours worked and allow the use of up to 72 hours per year.

These mandates apply to all employees physically performing their jobs in Michigan: full-time, part-time, hourly, salary, temporary, seasonal, and independent contractors.

For salaried employees exempt from overtime requirements, the law states they are assumed to work 40 hours in each work week unless the employee's normal work week is less than 40 hours, in which case earned sick time accrues based upon that normal work week.

Accrual begins on February 21, 2025, or upon commencement of the employee's employment, whichever is later.

2. ALL Employers Must Track Accrued Sick Time

Employers are required to track the accrual of paid sick time based on hours worked.

The Michigan Department of Labor and Economic Opportunity (LEO) has issued guidance stating that employers are allowed to front load the sick leave and allow employees to start using it at the beginning of a calendar year. However, employers must still track the accrued time based on hours worked to ensure they are awarding the employee the correct amount of time each year.

All unused earned sick time carries over from year-to-year; however, an employer is not required to permit an employee to use more than the annual allowed maximum time (paid or unpaid) in a 12-month period.

Employees separated from employment for six months or less maintain all accrued, earned sick time prior to the separation, begin accruing additional hours upon reemployment, and may use any accrued hours.

Employees transferred to another classification or location with the same employer maintain all accrued hours and continue accruing hours.

Employees separated from employment with the same employer for more than six months lose all accrued, unused earned sick time, unless the employer’s policy allows these hours to be maintained.

3. Allowable Reasons for Leave:

• Reasons relating to the employee or family member’s mental or physical illness, injury, or health condition to include care for diagnostic and preventative purposes;

• Reasons related to the employee or the employee’s family member being a victim of domestic violence or sexual assault;

• For meetings at a child’s school or place of care relating to the child’s health or disability or effects of domestic violence or sexual assault; and

• Work or school closures related to public health orders.
  

4. Limited Ability to Require Notice and Documentation from Employees

Employees who seek to use accrued paid sick leave are only required to provide “advanced notice of the request when the need is foreseeable." If the need is not foreseeable, the employee is only required to notify the employer "as soon as practicable."

LEO guidance has suggested that employees should provide sufficient information for the employer to determine whether the leave meets the eligible uses under the ESTA. If an employer is unsure, it may ask additional questions about the nature of the leave to determine if the leave meets the eligible uses.

However, employers are not permitted to request documentation to substantiate the absence unless and until the employee has been out for more than three consecutive days.

The ESTA prohibits that employers from retaliating against an employee for taking advantage of ESTA time and affords a private right of action for employees who believed they’ve been subjected to retaliation. The law creates a private right of action and a rebuttable presumption that an employer violates the act if it takes any adverse personnel action against an employee within 90 days after taking ESTA protected sick leave.

5. Incremental Use and Concurrence with FMLA

The ESTA provides that employees “may” be allowed to take accrued sick time in the smallest increment of time the employer’s payroll/timekeeping system tracks, not to exceed one hour increments. This means that if an employer’s time clock tracks employee attendance by the .1 of an hour (six minutes), employees will be allowed to use sick leave in that same increment.

LEO has issued guidance that ESTA time may run concurrently with FMLA approved leave, provided that the leave meets the requirements of FMLA. However, if ESTA leave is being used, requirements on advance notice, unforeseeable leave, documentation requirements, will be applied under the ESTA provisions. Once ESTA leave is exhausted, the FMLA provisions apply.

6. Notice Requirements

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. Required notice contents can be found at www.michigan.gov/wagehour.

Employers are also required to display a poster at the place of business containing specific rights listed in the ESTA. The poster can also be found at www.michigan.gov/wagehour.

The Michigan ESTA will likely require changes to your Employee Handbooks and at the very least you will need to implement a sick leave tracking process. For assistance with these issues or for any questions you have regarding ESTA compliance, please contact Kimberly Conklin or Amy Luck at RCO Law, 419-249-7900.

This article was written by Kimberly Conklin.