In a recent ruling, the Michigan Supreme Court elected to reinstate a ballot initiative previously adopted by the state legislature and subsequently watered down. This ruling marks a significant shift for Michigan employers and reinstates the 2018 voter-initiated version of the Earned Sick Time Act (ESTA), which generally provides more paid sick leave and requires compliance from smaller employers who were previously exempt. The ESTA will replace Michigan’s Paid Medical Leave Act (PMLA). The ESTA is set to become the broadest paid leave law in Michigan’s history, given its extensive coverage and complex usage guidelines. Effective Feb. 21, 2025, all covered employers must either amend their existing paid leave policies or implement new ones to comply with the ESTA.

Employer Considerations

In considering whether an employer’s leave policies for Michigan employees are compliant with the ESTA, employers need to consider whether they are now considered a covered employer, how sick leave accrues, employee eligibility for earned sick time and an employee’s use of earned sick time. Below are the major changes coming in 2025.

• Applies to all employers, regardless of their size, with the exception of federal employers.
• Includes all employee categories, such as salaried (both exempt and non-exempt) and full- and part-time hourly workers, and expands the permitted uses of sick time.
• Grants employees the right to pursue legal action if an employer interferes with or retaliates against their use of ESTA benefits.
• Employers must now accrue sick time at a rate of one hour for every 30 hours worked, eliminating the option to “front load” sick time.
• Businesses with 10 or more employees must provide up to 72 hours of paid sick time per year, an increase from the previous limit of 40 hours.
• Smaller businesses with fewer than 10 employees must provide up to 40 hours of paid sick time annually, plus an additional 32 hours of unpaid sick time.
• Unused sick time can be carried over, but employees may use no more than 72 hours of earned sick time within any given year.

Industry groups across the state have already indicated they intend to work with the Legislature and Governor’s office to amend these statutes before they go into effect. If these efforts are unsuccessful, every Michigan employer will need to review their policies to ensure they are providing the minimum amount of earned sick time under the ESTA. Michigan’s Labor and Economic Opportunity (LEO) created a frequently asked questions page to provide more clarity on the ESTA.

Here to Help

By preparing for these changes and considering their implications carefully, businesses can better navigate the transition and continue to thrive in a changing regulatory landscape. If you need further clarification on the legislation or have questions on how this may impact your business, our payroll advisors stand ready to assist you. Contact us today to get started.