Earned Sick Time Act Amended

After much anticipation, the Michigan Legislature amended the Earned Sick Time Act (ESTA) just hours before the original statute was scheduled to become effective. Signed into law by Governor Gretchen Whitmer on February 21, 2025, the amended statute modifies the ESTA to provide more flexibility for businesses while preserving various protections for workers.

The following are among the key provisions of the amended ESTA:

Adjusted Accrual Rates and Caps

For employers with 11 or more employees: Employees accrue one hour of paid sick leave for every 30 hours worked, up to a maximum of 72 hours annually.

For employers with 10 or fewer employees: Employees accrue leave at the same rate but can only accumulate up to 40 hours of paid sick leave per year.

Compliance Deadlines for Small Businesses

The amendments afford small businesses (10 or fewer employees) until October 1, 2025, to comply. Newly established businesses are afforded a three-year period from their formation date to comply.

All employers must update posters and notify employees about ESTA requirements within 30 days of February 21, 2025.

Frontloading Option

Employers now have the option to provide the full annual allotment of sick leave at the beginning of the year rather than tracking accrual over time. This simplifies record-keeping and ensures that employees have immediate access to their sick leave. Additionally, the amended law clarifies that an employer satisfies its obligations under the ESTA by providing Paid Time Off in an amount that is at least equal to ESTA requirements, and that can be used for any purpose. By frontloading, employers avoid both accrual and carryover obligations.

Carryover Policies for Unused Sick Leave

Employers that do not frontload must allow carryover of unused time at year end. Employees of businesses with 11 or more employees can carry over up to 72 hours of unused sick leave per year; employees of small businesses (10 or fewer employees) can carry over up to 40 hours.

Revised Employee Eligibility and Usage Rules

Employees begin accruing sick time immediately upon hire; however, employers may impose a waiting period of up to 120 days before new employees can utilize their accrued leave.

Documentation Requirements for Extended Leave

The amendments permit employers to request reasonable documentation for absences exceeding three consecutive days. This provision is designed to prevent misuse of sick leave while helping to ensure that employees who genuinely need time off can access it without undue burden. The amendments also permit reasonable notice requirements for unforeseen absences so long as those requirements are communicated in writing to the employee at the outset of employment and so long as the requirements allow for notice after the leave commences.

Employers are encouraged to review existing policies, update employee handbooks, and otherwise ensure compliance with the amended law before the operative deadlines.

The Michigan Department of Labor & Economic Opportunity recently posted answers to various Frequently Asked Questions. And a more detailed Wright Beamer summary is accessible here.

Do you have additional questions about ESTA compliance or require assistance with implementing a compliant policy? Call us today at 248.477.6300.