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

With a flurry of last-second amendments, Michigan’s Earned Sick Time Act is set to be signed by Governor Whitmer later today. Employers and employees have many questions. Some of those questions have been answered by the amendments to the law. Some have not.

Assuming Governor Whitmer, or her proxy, signs the amended version of the law later today, here is a list of answers to some of the most common questions business owners are asking as they weigh how to proceed. Remember that these answers are subject to change as new guidance is issued and that this article is no substitute for your own legal counsel based on your particular circumstance.

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

Michigan’s Earned Sick Leave Act is a new law that requires Michigan employers to award employees sick leave. Under the accrual method, employees are to receive at least one hour of sick leave for every thirty hours of work. Initially, the ESTA made it difficult for employers to front-load hours at the beginning of the year. But thanks to the last-second amendments, that has changed. Employers now have flexibility and can use a frontload method, as long as they follow the law’s particular requirements.

2.              I heard there will be a delay to the law. Do I still have to comply by February 21, 2025?

The law is still effective February 21, 2025. But employers have thirty days to provide written notice to each employee on how sick leave will be awarded, allowed, and protected at the company (see Section 8 of the ESTA for more details). The amendment also provides that small employers (defined below) do not have to allow an employee to accrue paid earned sick time until October 1, 2025. That means that small employers have some breathing room.

3.              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-based 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 must follow the ESTA for that employee. Adding a Michigan addendum to your policies/handbook probably makes sense if you employ remote employees based in Michigan. You’ll also need to ensure your Michigan employees receive appropriate notice on the new law (described below).

4.              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.

5.              My company currently front loads sick leave for employees rather than having employees accrue it based on the number of hours worked. Is this okay?

As mentioned above, the last-second changes made specific allowances for employers to front-load leave. To do this, you need: 1) a clear written policy provided to your employees; 2) clarity that the hours can be used for any purposes allowed under section 4 of the ESTA; and 3) double-check to make sure that the hours awarded equal or exceed those required under the ESTA. For small employers, this means at least 40 hours. For large employers, this means at least 72 hours. One thing that seems unclear under the frontloading method is whether pro-rating hours would be allowed for the first year of employment. Pro rata sick leave hours are allowed for part-time employees. Would employees hired part-time through the year be considered part-time for purposes of the ESTA so that they are awarded a proportional amount of sick leave? It’s unclear.  

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

The amendments to the ESTA appear to make this possible. This is good news for employers. But you need to ensure that the hours can be used for any purpose covered by the ESTA “or any other purpose.” Is there still some complexity in combining general paid time off and sick leave? Yes. But it can be done.

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

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

It depends. Under the prior version of the law, this was generally unacceptable, and businesses needed to allow carryover. But now, a “use it or lose it” policy where sick leave is front-loaded appears to make it acceptable. In other words, if you front-load, you do not have to allow “an employee to carry over any unused earned sick time from 1 [sic] year to the next year.”

9.              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. 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.

10.          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 that almost all employees will have the right to earn 72 hours of paid earned sick leave per year (there are some pro-rata exemptions for part-time employees).You company can cap annual sick leave usage at 72 hours even if the employee earns more than 72 hours.

If you are a smaller company that does not meet the 10-employee threshold described above, you may cap paid leave at 40 hours per year. Under the new amendments, small employers are no longer to provide an additional 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. Small employers also have until October 1, 2025, to start the accrual process.

Keep in mind that the above caps are for annual usage and not for 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.

11.          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. Originally, the ESTA created 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. That was bad news for employers. But the amendments softened this language. Now, it is unclear whether a private right of action even exists. But the Department of Labor and Economic Opportunity will investigate employers for alleged violations and seek to force employers to correct issues and repay employees where appropriate. The Department may issue civil penalties, too.

12.          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 120th day of employment.  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 120, he or she can use the already-earned sick leave.

13.          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. But you don’t want to be in a debate at the end of employment on who said what.

14.          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. Because the new law was so recently amended, I expect the new poster to be available in the next week.

15.          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 within 30 days of 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 separate or if signing an employee handbook acknowledgment when the handbook includes the applicable policies and notice language will be enough. 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; and/or 2) provide each employee with an employee handbook, or updated employee handbook, which 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. The exact issues that need to be covered in the notice are identified in Section 8 of the ESTA.

16.          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. For those employees with variable rates of pay (e.g., flexible workweek, salaried employees, etc.), use 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. Last-second amendments to the law make it clear that the regular rate does not include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay, tips, or gratuities in the calculation of the “normal hourly wage or base wage.”

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

The statute of limitations for filing an administrative complaint is three years. So, you need to keep records for at least three years to show you have complied with the law. Otherwise, you’ll have nothing to stand on if the State starts an investigation.

18.          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 2 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. But there is no reinstatement of sick leave hours if you pay out the hours at the end of employment. Remember, though, that payout is not required (just be sure to put this in writing if you choose not to pay out).

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

If the need for use of leave is foreseeable, you can require advance notice of up to 7 days. These requirements should be in writing in your handbook.

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 in accordance with the company’s policy if: 1) your company provides a written copy of the policy on the date the ESTA takes effect or the date the policy is updated, whichever is later, with the policy providing a description of procedures on how to provide notice; and 2) the notice requirement allows the employee to provide notice after the employee is aware of the need to sick leave.  

If that feels confusing, I get it. The bottom line is this: you need to have clearly articulated policies on how notice will be provided when leave is taken. Work with your attorney to ensure you put the correct language in place.

20.          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 are three years for an employee to file a claim. But thanks to some of the final amendments, some of the ESTA’s more punitive measures are gone. There is no longer 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. 

The right to a private cause of action is no longer as straightforward or as incentivized. In my view, whether there is a private cause of action with a private attorney is up for debate (I tend to think a private right of action is not precluded by the statute’s terms, but others seem to disagree). Either way, the requirement to pay liquidated damages (i.e., double what is owed) and requiring the payment of the employee’s reasonable attorney fees is gone. Courts, of course, always retain discretion and inherent powers to award attorney fees and costs. So expect private litigants to push this issue. No matter what, employers will be under scrutiny from the Department of Labor and Economic Opportunity.

Conclusion

The ETSA is complex and presents employers with all kinds of new obligations. But the last-second amendments offered some significant concessions to employers.

Employers must move swiftly to update their policies and procedures. Under the law, Employers have just 30 days before they must provide employees with very particular written notices.

Employers should consult with employment counsel to promptly ensure compliance.