On February 21, 2025, as Michigan employers were preparing to comply with the provisions of the Earned Sick Time Act (the “Original ESTA”) taking effect that day, Governor Gretchen Whitmer signed a last-minute bill (the “Amended ESTA”) that had immediate effect.

Since then, the Michigan Department of Labor and Economic Opportunity (LEO) has updated its Earned Sick Time Act: Frequently Asked Questions (FAQ) and published the slides from a live webinar it held in February to field questions from covered employers.

While much of the substance of the Original ESTA remains in place, the Amended ESTA makes several key changes that employers should consider before implementing their Michigan sick time policies.

Scope and Coverage

Although most Michigan employees remain eligible for paid sick time, the Amended ESTA now excludes certain workers from the definition of a “covered employee,” including:

• U.S. government employees;
• unpaid trainees or unpaid interns;
• minors employed pursuant to the Youth Employment Standards Act; and
• individuals who work according to an employer policy, so long as (1) the policy allows the individual to schedule the individual’s own working hours and (2) 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.

The Amended ESTA continues to apply to all employers with one or more Michigan employees. It does, however, change the threshold at which an employer qualifies as a “small business.” The change expands the small business threshold for businesses to exactly 10 employees, amending the definition from “fewer than 10 individuals” to “10 or fewer individuals.” Note that the small business threshold takes account of all workers employed in the United States or its territories (and not just Michigan-based workers). This includes part-time and temporary employees, even if the employer hires them through a temporary service, staffing agency, or similar entity. Once a business employs 11 or more employees for 20 or more workweeks in the current or prior calendar year, it will not qualify as a “small business” and cannot again until it has not employed more than 10 employees in the current or prior calendar year.  

Delayed Effective Date for Small Businesses

Most employers became subject to the revised sick time requirements immediately on February 21, 2025. However, the Amended ESTA permits small businesses to postpone accrual and use of sick time until October 1, 2025. In addition, new small businesses (meaning those that did not employ anyone prior to February 21, 2025) need not comply with the requirements under the Amended ESTA until three years after the business has its first employee. New employers, however, should note that neither the law nor the available guidance addresses whether an employer must immediately comply with the ESTA if it grows to more than 10 employees before the three-year period is up.

Accrual and Usage

The Amended ESTA continues to require that employees accrue at least one hour of sick time for every 30 hours worked beginning on February 21, 2025 (October 1, 2025, for small businesses), or upon hire, whichever is later. Most employers may cap usage at 72 hours per year, though small businesses may cap usage at 40 hours per year. In a notable change, under the Amended ESTA, small businesses no longer need to provide 32 hours of unpaid sick time in addition to the 40 hours of paid leave. Employers may still use their existing paid time off (PTO) policy to comply with Michigan’s sick time law if that policy provides at least the same benefits as the Amended ESTA. In other words, the employee must accrue at least 72 hours (40 hours for small businesses) of PTO, at least at the same rate as provided in the ESTA, and they must be permitted to use the PTO for the same reasons and under the same terms as described in the Amended ESTA.

The Amended ESTA also extends the permissible waiting period for new employees to use sick time from 90 to 120 calendar days after commencing employment. Both the protected uses and minimum increments of sick time an employee may use remain unchanged from the Original ESTA.

Carryover and Frontloading

While the Original ESTA required that employers allow employees to carry over all accrued, unused earned sick time, the Amended ESTA now allows employers to cap the amount of earned sick time that employees may carry over from one benefit year to the next at 72 hours, or at 40 hours for a small business. Employers can define their “benefit year” as any regular, consecutive 12-month period.

Further, while the Original ESTA did not explicitly address the frontloading of an employee’s earned sick time, the Amended ESTA clarifies that employers may provide all 72 hours of earned sick time (40 hours for small businesses) to full-time employees at the start of each benefit year or a prorated amount if they become eligible for sick leave during the benefit year. Additionally, employers who frontload sick time are exempt from the law’s carryover and accrual tracking requirements. The Amended ESTA also allows employers to frontload earned sick time for part-time employees if they meet the following three requirements:

1. The employer provides the part-time employee with written notice at the time of hire stating how many hours the employer expects the part-time employee to work for the following year.
2. The amount of leave provided to the part-time employee at the beginning of the year is, at a minimum, proportional to the earned sick time that the part-time employee would accrue if the part-time employee worked all the hours expected as provided for in the written notice.
3. If the part-time employee works more hours than what the employer expects, as provided in the written notice, the employer must provide the part-time employee with additional earned sick time in accordance with the accrual requirements under the Amended ESTA’s frontloading provisions.

Employer Notice Requirements

The Original ESTA required employers to provide written notice to employees of their rights under the ESTA by February 21, 2025. However, the amendment delayed the compliance deadline from February 21 to March 23, 2025. As a reminder, the notice of rights must include:

1. the amount of earned sick time that the employee is required to be provided with under the Amended ESTA;
2. the employer’s choice of how to calculate a “year” (e.g., calendar or fiscal);
3. the terms under which an employee may use earned sick time;
4. a statement that an employer is prohibited from taking retaliatory personnel action against an employee for requesting or using earned sick time for which the employee is eligible is prohibited; and
5. a statement concerning the employee’s right to file a complaint with the department for any violation of the Amended ESTA.

Employers can satisfy the notice requirement using the LEO’s model poster, which is currently available in English, Spanish, and Arabic.

Note that neither the statute nor the available guidance appears to provide a small business exception to this notice requirement. Therefore, even though employers with 10 or fewer employees do not need to permit their Michigan employees to accrue or use sick time until October 1, 2025 (or later for new businesses), they should still download, distribute, and post the required notice/poster by the compliance deadline.

Impact on Unionized Employees

The Amended ESTA also clarifies how the state’s paid sick time requirements apply to employees subject to a collective bargaining agreement (CBA). When employees are subject to a CBA that is completely silent with respect to sick time benefits, the ESTA covers the employees, and they must immediately begin accruing sick time benefits as of February 21, 2025 (October 1, 2025, for small businesses). If, however, the CBA explicitly excludes sick time benefits or provides sick time, PTO for sick time, or a similar time-off benefit that is less than what is required by the Amended ESTA, the CBA’s terms will apply until the agreement expires.

Employee Notice and Documentation

Like the Original ESTA, the Amended ESTA allows employers to require up to seven days advance notice for foreseeable uses of earned sick time. The Amended ESTA, however, provides additional provisions surrounding the unforeseeable use of earned sick time. When an employee takes earned sick time that is not foreseeable, the employee must provide notice (a) as soon as practicable or (b) in accordance with the employer’s policy related to requesting or using sick time if the employer provides a written copy of the policy to the employee that (i) describes how the employee must provide notice and (ii) allows the employee to provide notice after they are aware of the need for sick time.

The Amended ESTA also provides that even where an employer requires notice for using earned sick time that is not foreseeable, an employer may not deny an employee’s use of earned sick time that is not foreseeable if either (a) the employer did not provide a written policy to the employee as required above or (b) the employer subsequently made a change to the written policy and failed to provide notice of the change to the employee within five days after making such change.

The Amended ESTA remains mostly unchanged as it relates to its documentation provisions. Like the Original ESTA, the Amended ESTA allows employers to request reasonable documentation when an employee has taken more than three consecutive days of earned sick time. Whereas the Original ESTA required that an employee provide the documentation to an employer “in a timely manner,” the Amended ESTA requires that employees provide this requested documentation to an employer “not more than 15 days after the employer’s request.”  

Anti-Retaliation and Enforcement

Although the Amended ESTA continues to prohibit employers from retaliating against employees who take paid sick time, it eliminates the rebuttable presumption that would have existed if an employer took an adverse personnel action against an employee within 90 days of that employee’s exercise of their rights under the law. Additionally, the Amended ESTA explicitly permits employers to take adverse personnel action against an employee who uses earned sick time for a non-covered purpose or who violates the notice requirements, as discussed above.

In addition to providing civil remedies provided to affected employees, the Amended ESTA also clarifies that employers who retaliate against an employee for exercising their rights under the law will be subject to civil penalties of up to $1,000 per violation, and those who fail to provide an employee with earned sick time in accordance the Amended ESTA will be subject to a civil fine of up to eight times the employee’s normally hourly wage. However, the Amended ESTA no longer provides employees with a private right of action—all enforcement will run through LEO.

What Should Michigan Employers Do?

With the Amended ESTA already in effect, time is of the essence for most Michigan employers. Unless an employer has fewer than 11 employees nationwide, we recommend moving swiftly on the following action items:

1. Review the company’s sick time and PTO policies and procedures for its Michigan employees to ensure compliance with the Amended ESTA’s requirements.
2. Ensure that human resources personnel understand the rights and protections afforded to employees under the Amended ESTA, including administration of all leave policies, notice and posting requirements, and recordkeeping obligations.
3. For employers with employees subject to a CBA, calendar the expiration date of such CBA and prepare for negotiating its provisions to comply with the Amended ESTA.
4. Train managers to avoid retaliating against an employee because the employee has exercised a right protected under the Amended ESTA.

Additionally, all employers should download, display, and distribute the required workplace poster by March 23, 2025.