ESTA

Just past 11:00 pm on February 20, 2025 the Michigan House and Senate agreed on Amendments to the Earned Sick Time Act and presented the amendments to Governor Whitmer for her signature at 1:30 AM on February 21, 2025. In addition, the Michigan House and Senate had previously sent amendments related to the tipped and minimum wages to the governor’s desk last week, and Governor Whitmer signed both amendments into law on February 21, 2025.

Regarding wages, the change retains the $12.48 increase established by the Michigan Supreme Court, effective today, with an increase to $15 per hour by 2027, rather than 2028. The tip credit also remains at 38% of minimum wage, effective today, with the credit gradually increasing to 50% of the minimum wage by 2031.

The changes to sick time accrual and use might be impactful depending on the size of the business and the current policies in place.

• The requirement that paid sick time must accrue at a rate of 1 hour per 30 hours worked has not changed.
• The new law does explicitly allow for frontloading of sick time in lieu of accrual, in the amounts of 40 hours for Small Employers and 72 hours for Large Employers. Note there are special provisions for front-loading sick time for part time employees.
• The determination of a “small employer” for purposes of the legislation remains at 10 or fewer employees. Any business employing 11 or more persons is considered a “large employer” under the act.
  • Importantly, the amendments did not materially alter who an employer must count to determine if they are a small employer or large employer. Persons who are factored into the count for 10 “employees” includes full-time, part-time, temporary, and individuals made available to your company through a staffing agency.
• Employers with 10 or fewer employees have been granted an extension until at least October 1, 2025, to implement their sick time policies.
  • If you are a small employer with 10 or fewer employees, and you first employed someone after February 21, 2022, you have 3 years from that date, or October 1, 2025 to comply, whichever is later. If you are a small employer that employed someone prior to February 21, 2022, you have until October 1, 2025 to comply.
  • Although the 40-hour accrual of paid sick time does not change, the requirement that small employers further allow employees to an additional 32 hours of unpaid sick leave has been rescinded.
• Large employers must still, effective immediately, implement a policy allowing employees to accrue and use up to 72 hours of paid sick leave per year.
• An employer is required to pay for the employee’s costs of obtaining documentation should the employee be absent for 4 or more consecutive days and the employer requests documentation from the employee.
• An employer who provides the same or a greater amount of paid leave in the form of vacation or other paid time off benefits is generally in compliance with the new act, provided that the employer allows use of the paid leave as sick leave according to the notice provisions and permissible use requirements under the act. In other words, employers may, but are not required to offer paid sick leave in addition to vacation accruals under the same policy, so long as the employer complies with the other provisions of the sick time act. Having one “bucket” of time off may still not be advisable, dependent on your particular situation.
• The amendments increase the probationary period for new employees from 90 days to 120 days. Employees must still accrue sick time during this period, however, an employer can prevent employees from using paid sick time during this 120 day probationary period.
• Employees are still required to provide a 7-day notice before taking foreseeable time off, such as for a scheduled medical appointment, and notice “as soon as practicable” for unforeseeable absences.
  • The amendments are addressing some concerns related to the “no-call, no-show” effect of the act. The amendments provide for some additional controls around “unforeseeable absences” allowing for employers to make written policies and procedures for how employees must provide notice. It is highly recommended that these policies are crafted with the assistance of legal counsel to ensure compliance with the ESTA.
• Commissioned and tipped employees will receive paid sick leave based on the minimum wage or their base wage rate, whichever is higher, without considering overtime, commissions, tips, gratuities, or bonuses.
• Employees currently under an employment contract (not including an employee handbook or policy acknowledgment) that was in place prior to December 31, 2024, may be exempted from this act if a number of conditions are met. This should be handled on a case by case basis.
• Penalties
  • Importantly, they have removed the rebuttable presumption of a violation of this act and also removed the private right of action. This makes enforcement of this act more equitable between employers and employees.
  • Penalties for violations to provide paid sick leave subject the employer to up to 8 times the wage of the affected employee.
  • Penalties for retaliation against an employee for utilizing sick time carries a fine of $1,000.
  • These penalties are in addition to any other civil remedies an employee can win, including back pay, reinstatement, and additional damages incurred.

Additional amendments may arise over time as the act is actually implemented.

Companies generally now have until March 23, 2025 to get their written policies drafted and correct posters posted to comply with this act. As was true under the former act, there is no one-size fits all plan for employers and each employer will need to tailor their policies to conform with their working environment.

If you need assistance revising your policies, please reach out to Conlin, McKenney & Philbrick’s employment law attorneys if you would like assistance in drafting your policies.

Albert Balewski balewski@cmplaw.com

Randy Barker barker@cmplaw.com

Neil Juliar juliar@cmplaw.com