Michigan’s Earned Sick Time Act: Frequently Asked Questions (FAQ)

Michigan’s Earned Sick Time Act is set to go into effect on February 21, 2025. There are proposed legislative changes that could blunt the law’s impact. But right now, it’s one of the most employee-friendly sick leave laws in the nation.

Employers with Michigan employees have a lot to consider. As always, ensure your sick leave policy aligns with the State of Michigan’s ESTA poster because guidance and interpretations may evolve. Here is a list of answers to some of the most common questions business owners are asking as they weigh how to proceed under the new Earned Sick Time Act.

1.        What is Michigan’s Earned Sick Leave Act? Why does it matter?

Michigan’s Earned Sick Leave Act is a new law (effective February 21, 2025) that requires Michigan employers to award at least one hour of sick leave for every thirty hours of work. The new law is administratively difficult for many businesses to comply. For employers who have used a front load method where they give a lump sum of sick leave at the start of the year, or employers who have combined sick leave and vacation leave into one pool, life just got a lot more complicated. For a lot of mom-and-pop shops with limited human resource support, and limited amounts of funds to pay out sick leave, the ESTA presents a potentially major financial burden.

2.        My business is based outside of Michigan and I only have a few employees in Michigan, do I still have to follow this law?

Yes. Almost all Michigan employees are protected by this law.   

If you are a multi-state employer with Michigan employees, even if you have only one Michigan employee, you need to follow the ESTA for that employee. It probably makes sense to add a Michigan addendum to your policies/handbook. You’ll also need to make sure your Michigan employees receive appropriate notice on the new law (described below).

3.        My employees are currently unionized and subject to a collective bargaining agreement that extends past February 21, 2025. The agreement has agreed-upon terms for sick leave. Does the Earned Sick Time Act impact them? 

When the ESTA goes into effect, it will not preempt collective bargaining agreements (“CBA”) currently in effect. But be sure to calendar a reminder for the CBA expiration date. When the collective bargaining agreement expires, the ESTA goes into effect for even those unionized employees, even if there is a statement in the collective bargaining agreement that the union’s policies remain in force until a future date or a new collective bargaining agreement is reached. See MCL 408.972.

4.        My company currently front loads sick leave for employees rather than accruing it based on the number of hours worked. Is that still okay? 

Right now, this does not appear to comply with the ESTA. Many are pushing for a change. Until the law changes, however, a front-loading policy for sick leave is risky. The administrative burden, compliance risks, and a lack of statutory clarity favor moving away from a front-load method for sick leave.

5.        My company has a general leave bank for vacation, personal time, bereavement, and sick leave. Is this still ok?

There are ways to make this work. Under the ESTA (MCL 408.963(c)(5)), a general bank of leave may be acceptable provided 1) “any paid leave” is awarded in at least the same amounts as that provided under the ESTA, 2) it is accrued at a rate equal to or greater than required by the ESTA, and 3) (for small employers) the paid leave is used before the unpaid leave.

However, combining PTO with sick leave has risks. Because most paid vacation time is front-loaded, and because the ESTA only provides for the accrual method based on the formula of at least one hour for every thirty hours worked, separating PTO and sick leave will make more sense for many employers going forward. Further, under the ESTA, sick leave must carry over from year to year, but most employers don’t want this for vacation time. They want a "use it or lose it" policy to encourage employees to take time off.

In other words, there are compliance risks in combining all paid time off (including sick leave) into one policy until the regulatory agencies or courts weigh in, or the ESTA is amended, to make the ESTA more employer-friendly.  

Please keep in mind that with the distinction between sick leave and general paid time off, your business may need to adjust the amount of vacation available to employees to ensure the company is not financially stretched. Employers with uncapped PTO policies could have extra difficulty in complying with the law moving forward if they do not distinguish between PTO and sick leave because tracking compliance and accrual could be highly problematic. 

6.        My employees already accrue one hour of sick leave for every thirty hours per week. Am I set?

You are ahead of the game in many ways. But you also need to make sure other aspects of the law are followed on issues like carryover. You also need to make sure the sick leave is available for the many broad purposes allowed under the law and that employees receive proper notice, among other things. 

7.        My company prohibits employees from accruing (i.e. carrying over) sick leave from year to year. Is this ok?

No. It’s not okay. Revise your policies and practices to permit carryover, even if you plan to limit the annual usage, as described below. MCL 408.963 (1) (c) states that a “year” is any 12-month period for purposes of the carryover. However, a calendar year will make the most sense for most employers from an administrative standpoint.

8.        How broad is the ESTA? Can my employees use it for just about anything? And how much can I ask about an employee's reasons for taking sick leave?

The ESTA is incredibly broad. Does your company’s sick leave policy provide the broad protections available under the ESTA? For example, can employees go on leave for their own mental or physical illness, injury, health condition, medical diagnosis, care, preventative care, or go on leave to help a family member deal with the same issues? What about going on leave to help someone who is a family "equivalent"? Who is a family equivalent? Well, that elastic term will have to get sorted out by the courts.  

What about using sick leave for victim services related to domestic violence and sexual assault? Does your sick leave apply if there is a closure due to a public health emergency, and can it be used for health-related school meetings and the other broad reasons articulated under the ESTA? If not to any of the above, then you need to revise your policies. 

In short, you need to make sure your policy applies broad protections. MCL 408.964(1). As an employer, you need to keep in mind that requiring disclosure related to sexual assault, domestic violence, or details of an employee’s or family member's medical condition is generally prohibited, and a doctor’s note of an employee, which can be required if the absence is beyond 3 consecutive days, creates risk and costs under the Act.

For example, employers are responsible for paying out-of-pocket expenses incurred by the employee for obtaining required documentation, including costs from health care providers and leave may not be delayed pending receipt of documentation. If you generally require a doctor’s note for sick leave, it likely makes sense to get rid of this practice except in rare circumstances. Employers also need to keep any confidential information they learn strictly protected.

9.        Is my company considered a small employer under the ESTA? If so, how does the law differ for my business?

If your business had 10 or more employees for 20 weeks or more per year in the current year or had 10 or more employees for 20 or more weeks per year during the preceding calendar year, then it is not a small business, and it must follow the law’s strictest requirements when it comes to usage of sick leave.

This means you must allow employees to use up to 72 hours of paid earned sick leave per year. If your company still wants a cap on annual sick leave usage, you may revise the policy to limit it to 72 hours of earned sick leave that an employee can use in a year. 

If you are a smaller company that does not meet the 10-employee threshold described above, you must still offer employees the ability to use at least 72 hours of earned sick leave per year. However, you may cap paid leave at 40 hours per year while allowing 32 hours of unpaid leave. If you are a small employer that wants a cap near the statutory limit, consider capping the annual usage of paid sick leave at 40 hours while allowing 32 hours of unpaid leave. In these situations, also consider a policy that employees must use the accrued paid sick leave first rather than the unpaid leave. This will help the company if it elects to use MCL 408.963(c)(5) now or in the future. In addition, each year, the company should regularly evaluate if it has crossed the ten-employee threshold.

Keep in mind that the above caps are on annual usage and not on the amount earned. Further, if there are to be annual usage caps, the employer needs to specify the 12-month period for usage. Typically, this should be the calendar year.

10.     What should I do in light of the strong anti-retaliation language in the ESTA?

Take the retaliation provisions very seriously. You probably need to add non-retaliation and non-interference language to the handbook, making it clear that any claims will be investigated and remediated. The ESTA creates a rebuttable presumption of retaliation if an employer takes adverse action against an employee within 90 days of an employee filing a complaint, cooperating in an investigation, or opposing a violation under the Act. As a result, employers need to consider the ESTA going forward and ensure there is no retaliation or appearance of retaliation. You don’t want to get stuck trying to prove a negative.

11.     My company does not want to allow new employees to have sick leave. Is that ok?

You can include a policy that usage of accrual may not begin until the 90th day of employment. MCL 408.963(2).  This is optional. If wanted, include this in the employee handbook and the new hire paperwork. Usage, of course, is different than accrual, and the employee would still accrue (i.e. earn) sick leave from day one. So the moment the employee hits day 90, he or she would be able to use the already-earned sick leave. 

12.     Does my company have to pay out earned sick time at the end of employment?

No. But if this will be your policy, clearly state so in the employee handbook and any other documentation provided to employees on sick leave. Michigan law does not require a payout at the end of employment. MCL 408.965(3).

13.     Do I have to put up any sort of poster?

Yes. Your company must put up the State of Michigan’s Earned Sick Time Poster in a conspicuous location. You can find it here.

Please do so by February 21, 2025, which is the law’s effective date. Make sure you post it in an obvious location.

14.     Do I have to provide any sort of notice to employees on the new law?

Yes. The law has very specific notice rules. You should make sure your company has prepared a written notice to be provided to all employees starting February 21, 2025, with the notification provided to new employees upon hire going forward thereafter.

The ESTA is unclear whether the required notice needs to be a separate notice or if signing an employee handbook acknowledgment when the handbook includes the applicable policies and notice language will suffice. MCL 408.968. As a result, employers appear to have a choice: 1) prepare a cover letter explaining the basics of the law and the policies of the company, including whether there is a 90-day waiting period, the accrual rate, and whether there is a payout at termination; and/or 2) provide each employee with an employee handbook, or updated employee handbook, which clearly provides the required ESTA notices while ensuring the company obtains a signed acknowledgment for the updated handbook. From a compliance perspective, the best practice would be to take both steps and ensure that the updated handbook is signed and acknowledged for any new employee going forward. Click here to find the required poster.

15.     How much do I need to pay employees while they are out on sick leave?

Employees are paid the greater of their normal hourly rate or minimum wage (this will come into play with tip credit employees). For those employees with variable rates of pay (e.g., flexible workweek, salaried employees, etc.), utilize the prior pay period to determine their regular rate. For exempt employees, there is generally a presumption that they work 40 hours in a work week. See MCL 408.963(4).

16.     What kind of recordkeeping requirements does the ESTA have?

You need to keep records for at least three years to show you have complied with the law. Please revise your policies and practices to ensure appropriate records are retained. See MCL 408.970.

17.     I rehired an employee. Do I have to reinstate sick leave hours from when they worked at my business before?

When an employee is rehired within 6 months (e.g., seasonal employees) or transferred to a different part of the company, the employee gets sick leave hours reinstated. In other words, the employee picks up where he or she left off.

If your policies don’t do this, please revise policies and practices so the employee gets back their earned sick leave. MCL 408.965(1).  This will most often come into play with seasonal employees.

18.     I want employees to provide some notice if they miss some work for being sick. Is this ok under the Earned Sick Time Act?

You can impose requirements for notice where employees have to let you know if they take ESTA. These requirements should be in writing in your handbook. If an employee needs to use sick leave, and the use of leave is foreseeable, it is acceptable for a company to require that an employee provide notice not exceeding seven days. If the employee’s need to use sick leave is not foreseeable, a company can provide that the employee must provide notice as soon as practicable. What does that mean? I suspect it will be for the courts to answer that question. It may also help create a defense against the three-day no-call, no-show, automatic resignation policy that many employers have in place. But that remains to be seen.

19.     I’ve heard the law is employee-friendly and makes it easy to get sued. Is that true?

The law is very employee-friendly. There is a three-year statute of limitations, which increases legal risks. MCL 408.967(1). There is now a rebuttable presumption of a violation of the ESTA if a company takes adverse action (e.g. demotion, pay reduction, termination, etc.) against an employee who, within 90 days of the adverse action, filed a complaint, cooperated in an investigation, or opposed a violation under the Act. There is the possibility of both an administrative and civil claim, which includes forcing an employer to rehire the employee, pay lost wages, return benefits, and pay liquidated damages, costs, and reasonable attorney fees. MCL 408.967 (1)- (2).

Conclusion

The ETSA is complex and presents employers with all kinds of new obligations. If the law remains as is, employers will need to be prepared to move swiftly to ensure that by February 21, 2025: 1) sick leave policies and practices are updated; 2) proper notice to employees is provided; and 3) the correct poster goes into a conspicuous location at the business.

As always, employers should consult their attorneys to ensure compliance and closely monitor legal updates and statutory changes.