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Legal Update

Feb 21, 2025

If Pain, Yes Gain – Part 129: Michigan Earned Sick Time Act in Effect TODAY, Including With Last Night’s Midnight Amendments

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What You Need to Know:

  • In July 2024, the Michigan Supreme Court’s Mothering Justice et al. v. Attorney General et al. decision reinstated the State’s Earned Sick Time Act of 2018 (ESTA), effective today, February 21, 2025. This replaces the Michigan Paid Medical Leave Act (PMLA), which had been in effect since March 2019.
  • The ESTA went into effect today for most employers.[1] However, not in the exact form that employers have been planning for in recent months due to amendments that were passed late in the evening on February 20, 2025 by the Michigan legislature.
  • House Bill No. 4002 (HB 4002), which amends the ESTA in a number of ways, was signed into law by Governor Gretchen Whitmer earlier this morning. As noted above, it takes effect immediately for most employers, namely for employers that employ more than 10 employees. For smaller employers, the ESTA goes into effect on October 1, 2025.[2]
  • Even with the enactment of HB 4002, the ESTA remains a significantly more pro-employee mandate than Michigan’s previous earned sick time standards under the PMLA, and will still provide more generous earned sick time rights than many other states.
  • Highlights of HB 4002’s amendments to ESTA include: (a) a defined cap on year-end carryover of earned, unused sick time; (b) the ability for employers to frontload a sufficient amount of earned sick time and correspondingly avoid year-end carryover / payout and accrual tracking obligations; (c) establishes procedures for prorating earned sick time for part-time employees; (d) permits a longer new hire usage waiting period; and (e) establishes an individual employee notice requirement for both current employees and new hires.

Overview of the HB 4002 Amendments to Michigan ESTA:

Here is an overview of many of the key substantive changes made to the Michigan ESTA following today’s enactment of HB 4002:[3]

  • Employee Eligibility:
    • ESTA (original): ESTA contains a much broader definition of “employee” than does the PMLA. Specifically, “employee” means an individual engaged in service to an employer in the business of the employer, with the only carveout being an individual employed by the United States government.
    • ESTA (HB 4002 amendments): The ESTA amendments narrow the definition of “employee” further. Specifically, “employee” means individual engaged in service to an employer in the business of the employer, with carveouts for (i) an individual employed by the United States government, (ii) an individual who works in accordance with a policy of an employer if both of the following conditions are met: (a) the policy allows the individual to schedule the individual's own working hours and (b) the policy prohibits the employer from taking adverse personnel action against the individual if the individual does not schedule a minimum number of working hours, (iii) an unpaid trainee or intern, and (iv) an individual who is employed in accordance with the Michigan youth employment standards.
  • Employer Coverage:
    • ESTA (original): ESTA contains a much broader scope of employer coverage than the PMLA. Specifically, “employer” means a person, firm, business, etc. that employs one or more individuals. While ESTA does allow for reduced paid sick leave obligations for “small employers” (see below), the threshold to qualify is having fewer than 10 individuals work for compensation during a given week, and even then certain paid sick leave standards still apply.
    • ESTA (HB 4002 amendments): The ESTA amendments keep the broad scope of employer coverage. An “employer” means any person, firm, business, educational institution, corporation, limited liability company, government entity, or other entity that employs one or more individuals, with a carveout for the United States government. The amendments also still allow for reduced paid sick leave obligations for a “small business” (see below), the threshold to qualify is having 10 or fewer individuals work for compensation during a given week, and even then certain paid sick leave standards still apply. However, if an employer maintained more than 10 employees on its payroll during any 20 or more calendar workweeks in either the current or immediately preceding calendar year, that employer is not a small employer and must comply with the more stringent requirements for larger employers.
  • Accrual Rate:
    • ESTA (original): Employees accrue earned sick time at the rate of one hour for every 30 hours worked.
    • ESTA (HB 4002 amendments): Same
  • Accrual Cap:
    • ESTA (original): No express cap on how much earned sick time eligible employees can accrue in a benefit year.
    • ESTA (HB 4002 amendments): Same
  • Annual Usage Cap:[4]
    • ESTA (original): 72 hours per year. Reduced paid leave for “small businesses.”[5]
    • ESTA (HB 4002 amendments): 72 hours of earned sick time per year, unless employer is a “small business.” For a “small business,” 40 hours of earned sick time per year.
  • Year-End Carryover:
    • ESTA (original): No express cap. Law states “earned sick time shall carry over from year to year.”
    • ESTA (HB 4002 amendments): An employer can set a 72-hour cap (40-hour cap for a “small employer”) on year-end carryover.
  • Frontloading:
    • ESTA (same): No express provision.
    • ESTA (HB 4002 amendments):
      • An employer can provide an upfront grant of 72 hours (or 40 hours if a “small business”) of earned sick time at the start of each benefit year. If an employer provides a sufficient upfront grant of earned sick time, the employer does not have to: (a) allow year-end carryover of earned, unused sick time; (b) track an employee’s earned sick time accrual; or (c) cash out the earned, unused sick time at year-end.
      • The HB 4002 amendments also include provisions on permissible prorated frontloaded grants of earned sick time for part-time employees. The provisions include certain criteria that employers must follow for the proration to comply with ESTA.
    • Covered Reasons for Use and Family Members: Generally unchanged.
    • Use of PTO (or Other Paid Time Off) for Compliance:
      • ESTA (original): In order to use a non-sick paid leave or paid time off policy for compliance, the employer must provide other paid leave in at least the same amounts, that may be used for the same purposes and under the same conditions as those called for under the ESTA, and that is accrued at a rate equal to or greater than the rate under the ESTA.
      • ESTA (HB 4002 amendments): In order to use a non-sick paid leave or paid time off policy for compliance, the employer must provide the other paid leave in at least the same amounts, that may be used for the same purposes, and if an employee uses this paid time off for covered ESTA purposes, the ESTA applies to the use of that paid time off. An employer does not need to allow an employee to use paid time off for ESTA-covered purposes in an amount that exceeds the amounts of time off provided under the ESTA.
    • New Hire Usage Waiting Period:
      • ESTA (original): An employer may require a newly hired employee to wait until the 90th calendar day after commencing employment before using accrued earned sick time.
      • ESTA (HB 4002 amendments): Increased the permissible new hire usage waiting period to 120 calendar days after commencement of employment.
    • Increments of Use:
      • ESTA (original): Earned sick time may be used in the smaller of hourly increments or the smallest increment that the employer’s payroll system uses to account for absences or use of other time.
      • ESTA (HB 4002 amendments): Generally same.
    • Employee Notice to Employer:
      • ESTA (original):
        • Foreseeable: If the employee's need to use earned sick time is foreseeable, an employer may require advance notice, not to exceed 7 days prior to the date the sick leave is to begin, of the intention to use the sick leave.
        • Unforeseeable: If the employee's need for the earned sick time is not foreseeable, an employer may require the employee to give notice of the intention as soon as practicable.
      • ESTA (HB 4002 amendments):
        • Foreseeable: Same.
        • Unforeseeable: If the employee's need for the earned sick time is not foreseeable, an employer may require the employee to give notice of the intention to use earned sick time either:
          • As soon as practicable; or
          • In accordance with the employer's policy related to requesting or using sick time or leave if two conditions are met: (a) on the later of February 21, 2025, the employee’s hire date, or the date the employer’s policy goes into effect, provide the employee with a written copy of the policy that includes procedures for how the employee must provide notice, and (b) the notice standard allows the employee to provide notice after the employee is aware of the need for the earned sick time.
        • Documentation:
          • ESTA (begins 2/21/2025): An employer must wait for an employee to be absent for more than three consecutive days before it can require the employee to provide reasonable documentation justifying that earned sick time was used for a proper reason. Upon the employer’s request, the employee must provide the documentation to the employer in a timely manner.
          • ESTA (HB 4002 amendments): Same “more than three consecutive days” standard. However, upon the employer's request, the employee must provide the documentation to the employer not more than 15 days after the employer's request.
        • Notice and Posting:
          • ESTA (HB 4002 amendments):
            • Notice: A covered employer must provide written notice to each employee at the time of hiring or not later than 30 days after February 21, 2025, i.e., by no later than March 23, 2025. The written notice must include certain substantive ESTA content (which is expected to be included in a forthcoming sample from the State) and be in English, Spanish, and any language that is the first language spoken by at least 10% of the employer's workforce, if Michigan has translated the notice into that language.
            • Posting: A covered employer also must display a poster at their place of business, in a conspicuous place that is accessible to employees. Same language requirements apply as noted in the preceding “Notice” bullet point.

Employer Takeaways:

As noted above, given the amendments made to ESTA by HB 4002 over the last 24 hours and the Act’s effective date remaining February 21, 2025 for most businesses, employers should consider taking the following steps to comply with the ESTA as soon as possible:

  • Review existing policies, practices, procedures, and systems to ensure compliance with ESTA, including the HB 4002 amendments.
  • Train supervisory and managerial employees, as well as HR, on the new requirements.
  • Monitor the Michigan Department of Labor and Economic Opportunity’s website for updates, including but not limited to, potential rulemaking, FAQs, and model notices.

We will continue to monitor and provide updates on Michigan earned sick time developments. With the paid leave landscape continuing to expand and grow in complexity, companies should reach out to their Seyfarth attorney for solutions and recommendations on addressing compliance with nationwide paid leave requirements. To stay up-to-date on paid leave developments in Michigan and beyond, click here to sign up for Seyfarth’s Earned sick time mailing list. Companies interested in Seyfarth’s earned sick time laws survey should reach out to paidleave@seyfarth.com. 

 

[1] Seyfarth has been tracking the evolution of Michigan paid sick leave for the last six years as part of our “If Pain, Yes Gain” dedicated paid sick leave and paid time off law article series. Our prior Legal Updates on Michigan are available: here, here, here, here, here, here, here, and here.

[2] An exception exists to the October 1, 2025 effective date for any employer that is a “small business” (see definition in “employer coverage” section) if the employer did not employ an employee on or before February 21, 2022. In these instances, the ESTA will not apply to the employer until 3 years after the date that the employer first employs an employee.

[3] For a comparison of the ESTA requirements pre-HB 4002 amendments against PMLA requirements, see Part 123 of Seyfarth’s “If Pain, Yes Gain” series.

[4] Earned sick time under ESTA must be paid at a rate equal to the greater of either the normal hourly wage or base wage for that employee or the minimum wage.

[5] For “small businesses,” ESTA sets a 40 hour annual usage cap for paid sick leave. However, if an employee of a small business accrues more than 40 hours of paid sick leave in a year, the employee is entitled to use an additional 32 hours of unpaid sick leave in that year.