Changes to ESTA on February 21, 2025

In the late hours of Thursday, February 20, 2025, the Michigan legislature passed two bills that will amend the Earned Sick Time Act (scheduled to be effective Friday, February 21). Some of the more challenging issues for employers related to the law were addressed by these changes, such as the requirement to carry over unused sick time each year (see more below).

Per the bills, these changes (unless specifically indicated in the details below) take effective immediately (February 21).

The following are the changes that will take place regarding the minimum wage and tipped minimum wage:

	Prior to 2/21/2025	Effective 2/21/2025
Minimum Wage	$10.33/hr	$12.48/hr. Will increase annually through 2027.
Tipped Minimum Wage	$3.93/hr	Tipped wage will be 38% of minimum wage and will increase annually to a maximum of 50% of the minimum wage by January 1, 2031

In addition to the minimum wage changes, the following changes will occur with the Michigan Paid Sick Leave law:

	Earned Sick Time Act (ESTA)	Changes to ESTA
Employers Required to provide paid sick leave	All Employers except the federal government	No Change. NOTE: New businesses have three years to comply with ESTA.
Definition of “small employer”	Less than 10 employees (including owners, if on payroll)	10 employees or less (including owners if on payroll)
Employees excluded from paid sick leave requirement	No employees excluded except: + Those employed by the federal government + Employees not working in a Michigan location	+ Employees of the federal government + Employees not working in a Michigan location + Workers who schedule their own hours and are not required to work a minimum number of hours (“gig workers”) + Unpaid interns or unpaid trainees + Workers subject to Youth Employment Standards Act (i.e. minors)
Special Rules for New Hires	New hires must accrue earned sick time from hire but can be restricted from using time until 90 days of employment.	New hires still must accrue sick time from hire but can be restricted from using time until 120 days of employment (with some very limited exceptions).
Accrual	1 hour paid sick leave for every 30 hours worked	No tracking of accruals required if the employer front loads at least 72 hours of time per leave year (or prorated equivalent if employee is working less than 40 hours/week) Employers who are not front loading time must still follow the law’s accrual requirements and track accruals.
Frontloading time	Was not mentioned in the law. State officials indicated that employers may frontload time.	Law now explicitly permits front loading of time and lessens accrual tracking and carryover requirements for employers who front load time. If an employer front loads time for a part-time employee, they must provide a document at hire stating the number of hours the employee is expected to work in a year, the amount of sick time to be frontloaded, and a statement that if the employee works additional hours, the employer will provide additional sick time hours.
Cap on Paid Sick Leave Use	Employers with 10 or more employees must allow employees to use up to 72 hrs of paid sick leave per year. Employers with less than 10 employees must accrue up to 40 hours of paid sick leave and and 32 unpaid hours of unpaid sick leave.	No changes for employers with more than 10 employees. Effective October 1, 2025, employers with 10 or less employees must accrue up to 40 hours of paid sick leave per year. The 32 hours of unpaid sick leave are no longer required.
Carry-Over of Paid Sick Leave	Employees must be allowed to carry over any unused paid sick leave from prior years	+ Employers who front load time do not have to carry over unused ESTA time to the following year. ESTA time can be “use it or lose it.” (This may also allow employers to pay out unused sick time at the end of the year if desired) + Employers who accrue time at 1 hour/30 hours worked must carry over unused time to the next leave year. Carryover can now be capped at 72 hours (or 40 hours for small employers). For part-time workers, the maximum amount of carry-over is equal to the amount they accrue in a year (based on hours worked)
Minimum Leave Increments	Employees must be allowed to carry over any unused paid sick leave from prior years Employers must allow employees to take leave in a minimum of 1-hour increments or the smallest amount of time tracked by the employer’s payroll system.	Employers must allow employees to take leave in a minimum of 1-hour increments or the smallest amount of time tracked for attendance by the employer, if less.
Family Members Covered for Whom Employees Can Use Paid Sick Leave	Spouse, Child, Parents, Grandparents, Grandchildren, Siblings, and anyone who acted as a parent (in loco parentis) when employee was a minor. Also includes domestic partners or others who are related by blood or “affinity” in a way equivalent to being a family member.	No Change
Reasons for taking Paid Medical Leave	+ Illness of employee or employee’s family member + Medical diagnosis, care, or treatment of the employee or employee’s family member (including preventive care visits) + Absences related to domestic violence or sexual assault related to the employee or employee’s family member + Closure of employee’s workplace due to public health emergency + Care for child whose school or daycare has been closed due to public health emergency + Determination by a government agency that the employee or employee’s family member’s presence in public constitutes a threat to public health + To attend school appointments related to a child’s health condition, disability or effects of domestic violence or sexual assault on the child.	No Change
Documentation	Employer may only request documentation if the employee uses earned sick time for more than three consecutive days. Employer must pay for any out-of-pocket expenses incurred to obtain the documentation.	The documentation rules remain; however, an employer can now require the employee to produce documentation with 15 calendar days of request.
Termination & Rehires	Employers not required to pay out unused ESTA time upon termination. If an employee is rehired within 6 months of termination, their unused ESTA time at termination must be reinstated and be available for use immediately upon hire – even if the employer paid the employee for unused ESTA time.	Employers are still not required to pay out unused ESTA time upon termination. If an employee is rehired within 2 months of termination, their unused ESTA time at termination must be reinstated unless the employer paid out the unused time upon termination.
Retaliation	Retaliation against employee for exercising their rights under this law is prohibited. Allows for civil action for violations of the Act.	Retaliation provisions remain. However: + Employees may not file lawsuits in civil court for violations of the act. They must file a complaint with the State of Michigan Dept of Labor and Economic Opportunity (LEO) + Employers are not automatically assumed to have violated the law if they take an adverse action against an employee within 90 days of an employee exercising their rights under ESTA + Employers are permitted to discipline an employee for using ESTA for reasons not permitted under the Act and may discipline an employee for failing to follow the employer’s written call-in (notice) policies + Employers must provide employers with a written call-in (notification) policy for reporting earned sick time absences that cannot be pre-planned (if wishing to enforce their call-in policy)
Required Postings or Notices	Poster required and written notice at hire.	Poster required and written notice at hire. The written notice requirement has been postponed to March 23, 2025.
Record Retention	3 years. If employers fail to maintain adequate records, the DOL will assume that employer violated the Act.	No Change
Unionized Employees	Employees under collective bargaining agreement are exempt from ESTA until the collective agreement expires unless the agreement does not address paid sick time (even if the agreement indicates no sick time will be provided, that is considered to be addressing the sick time issue).	No Change
Combining ESTA & PTO into one bank	Not addressed specifically in the law. State of Michigan indicated in their ESTA presentation that all time could be in a combined PTO bank as long as the minimum of 72 hours was provided to full-time employees.	The new law directly states that as long as employers provide 72 hours or more of paid time per year (or equivalent for part-time hours) that can be used for ESTA purposes, they do not have to make those hours ONLY for ESTA purposes. If an employee uses the 72 hours for vacation and then becomes ill, the employer is not required to provide additional time under the law.