Please see below for our updated blog. We apologize, the original blog erroneously indicated that a small employer would have to allow employees to use 32 hours of unpaid sick leave. This requirement was removed from the final legislation.
There were last minute changes to the Michigan Earned Sick Time Act (ESTA) which went into effect February 21st, 2025. This bill requires employees’ sick time to be accrued at the rate of one hour for every thirty hours worked. Businesses with 10 employees or less must allow their employees to utilize at least 40 hours of paid sick leave each year. Businesses with more than 11 employees or more must allow the use of up to 72 hours of paid sick leave each year. The new law also allows small employers until October 1, 2025 to comply with these new rules. For a more detailed summary of the law as originally written, see our previous blog post here: AHP Jan 10 Blog Post – ESTA
The updates to this bill provide additional guidance as to who must comply with the new provisions. Employees who schedule their own hours and are not required to work a minimum number of hours, unpaid trainees or interns, or individuals employed in accordance with the Youth Employment Standards Act are not covered by ESTA. Additionally, small businesses with no employees on or before February 21, 2025 are not required to comply until three years after the date their first employee is hired. There is currently conjecture as to whether nonprofit entities are exempt from compliance. The bill as written states that an employer includes any “person, firm, business, educational institution, corporation, limited liability company, government entity, or other entity that employs one or more individuals”. Verbiage at the Earned Sick Time Act FAQs posted on the State of Michigan’s website states that “All Michigan Employers that have one or more employee(s)” are covered by this act. Although not specifically stated as an employer, nonprofits are not specifically noted as being excluded from the definition and the law could be interpreted for nonprofit organizations to fall under an “other entity” to which the law does apply. There are currently agencies seeking clarification from the government regarding this matter.
Another ambiguous facet of the bill pertains to the combination of different PTO categories. Employers who already provide employees with a combined pool of PTO, vacation, and sick time are not required to provide more time off. This could lead to situations where employers already provide time off that could be used for EST that meet the minimal accrual requirements and would not be required to add more EST from this law. However, it is unclear whether pre-existing vacation time could be considered EST for purposes of the ESTA.
Carryover time is capped at a maximum of 72 hours, unless it is paid out at the end of each year. However, employers can choose to frontload the 72 hours of paid sick leave, and therefore would not be required to track accruals. If paid sick leave is frontloaded, then time is considered “use-it-or-lose it”, and is not required to be carried over (or paid out) each year. Small employers can choose to frontload the 40 hours of paid sick leave under the same conditions as a large employer. The maximum carryover required for a small employer is 40 hours.
For sick time of more than three consecutive days, an employer may require reasonable documentation that earned sick time has been used for a reasonable purpose. This includes, but is not limited to, mental or physical illness, injury, health condition, diagnosis, care, or treatment for either the employee or family member. If the employee’s need to use earned sick time is foreseeable, advance notice may be required, not to exceed seven days before the dated earned sick time is to begin. Otherwise, an employer may require notice as soon as practical, or in accordance with a policy both provided to employees and allowing an opportunity to provide notice after becoming aware of the need for earned sick time.
As impacts of the new law can vary by situation, and AHP is not in the practice of law, you are advised to consult with your employment attorney to determine your specific business obligation regarding accrued and paid sick time and to ensure that your policies comply with the new law that has taken effect.
