Michigan Earned Sick Time Act: What Is It and What Should Businesses Know?

Employers in Michigan need to prepare for several changes that are scheduled to take effect Feb. 21, 2025, following a state Supreme Court ruling impacting minimum wage and sick leave laws. The laws impacted are the Improved Workforce Opportunity Wage Act and the Paid Medical Leave Act.

The higher court’s decision now sets in motion upcoming minimum wage increases, the reinstatement of the Earned Sick Time Act, and the phasing out of the tip credit.

In response, the state legislature is considering bills to scale back minimum wage increases and preserve the tip credit, as well as amendments to the ESTA.

What Is the Michigan Earned Sick Time Act?

Although the Earned Sick Time Act in Michigan expands employee eligibility and replaces the Michigan Paid Medical Leave Act (PMLA), it does not make an all-out overhaul of the law. The biggest change is that all employers in the state, except the U.S. government, with at least one employee must comply with the requirements of the Michigan sick time law.

Read this article for additional context on the PMLA.

What Are Other Key Differences Between ESTA and PMLA?

In addition to the expansion of coverage to include all employers (except the U.S. government), some of the other differences between Michigan’s Earned Sick Time Act and the Paid Medical Leave Act are employee eligibility, accrual of hours, and carryover hours. Under PMLA, employees are eligible for leave if they work for a business that employs 50 or more individuals and work five more hours than they will under the ESTA to accrue the same increment of sick time.

Is Leave Time Capped Under ESTA?

Yes, the amount of leave time an employee may take per year is capped under the law and it is based on the size of the business. Whether a business is determined to be a small business also impacts how much leave time is paid and unpaid under Michigan’s Earned Sick Time Act. A small business is an entity that employs fewer than 10 employees in any given week during any 20 or more weeks of the current or prior calendar year.

• 1-9 employees: Eligible employees can take up to 40 hours of paid leave and 32 hours of unpaid leave per year. Employees of small businesses also are entitled to use their paid earned sick time before using earned unpaid sick time.
• 10 or more employees: Eligible employees can take up to 72 hours of paid leave per year.

Employers can frontload hours, but employees continue to accrue time under the Michigan Earned Sick Time Act.

How Is Time Accrued Under the Earned Sick Time Act?

Employees accrue sick leave time at a rate of one (1) hour for every 30 hours worked, which begins upon hire. Also, new employees may be required to wait until the 90^th calendar day after starting employment before being permitted to use accrued hours. Employees re-employed within a six-month period are considered to have continuous employment for the purposes of ESTA and might not be subject to the 90-day waiting period.

Is Carryover Allowed?

An employee can carry over all earned but unused sick time hours and the Earned Sick Time Act does not include a cap on the hours that may be carried or the hours in an employee’s sick time bank. Employees may use earned sick time incrementally in the smaller of one hour or the smallest increment of time a business’ payroll system uses to account for absences or use of other time.

Does the ESTA Require Payout of Earned but Unused Sick Time?

The Michigan ESTA does not require employers to pay out earned but unused sick time at the end of the year nor at termination or separation from the business, except where company policy dictates otherwise. However, if there is separation, whether voluntary or involuntary, an individual will have any balance restored if re-employment occurs within six months.

Employers should review their own written policies related to time-off payments upon termination to determine if they do have obligations.

What Are Qualified Reasons for Using Earned Sick Time?

Eligible employees in Michigan will be able to use earned sick time under the Earned Sick Time Act for the following reasons:

• To care for or seek treatment for one’s own physical or mental illness, health condition, or injury
• To provide care or seek treatment for a family member’s physical and mental illness, injury, or health condition
• To attend meetings at a child’s school to address a child’s health, disability, or effects of domestic violence or sexual assault on the child
• To address the closure of your workplace due to a public health emergency or to care for a child whose school is closed because of a public health emergency
• To address issues arising from acts of violence, assault, or sexual assault for yourself or a family member, which includes seeking counseling, legal services, medical or psychological care, attending court, or relocating

Michigan’s Earned Sick Time Act expands the definition of “family member” to include domestic partner, committed relationship, and individuals related by blood or affinity whose relationship with the employee is equivalent of a family one. These are added to the following definitions, which are subject to change:

• A biological, adopted, or foster child
• A stepchild
• A grandparent or grandchild
• A spouse
• A biological, foster, or adopted sibling
• An individual who stood in place for a parent when the eligible employee was a minor

What Are Posting and Recordkeeping Requirements Under ESTA?

Employers must place the required poster available from the state in a conspicuous place at work. The poster is available in English, Spanish, and Arabic. Employers also are required to provide each employee a written notice provided by the state of their rights under the law, including how earned sick time is accrued, and do so in English, Spanish, and any other language that is as the primary language of at least 10 percent of the workforce if the department has translated the notice into such language.

Employers also are required to keep records for at least three years of hours worked and earned sick time taken by employees.

What Are the Notification Requirements Under ESTA?

Employees might be required to provide advance notice not to exceed seven days prior to using earned sick time for foreseeable events. If not foreseeable, an employee might have to give notification as soon as practicable. Employees using more than three consecutive days of accrued earned sick time might be required to provide reasonable documentation for the purpose of use in a timely manner, but the employer who requires it is responsible for paying any out-of-pocket expenses the employee incurs getting the documentation.

There are penalties for noncompliance, including a $1,000 administrative fine for employers who fail to provide earned sick time. An employer who willingly violates the posting requirements is subject to a $100 administrative fine for each separate violation.

Looking Forward

Paychex will continue to monitor legislation related to proposed changes to the Earned Sick Time Act and Michigan minimum wage.