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A change to state law may soon mean that Michigan employers of all sizes (including townships!) will be required to provide paid sick time to employees. For many Michigan townships, this will be the first time that a state-mandated paid leave will apply to their operations. This E-Letter will discuss a recent Michigan Court of Claims decision that could require paid sick time and what it might mean for your Township if it goes into effect.

Background

In 2018, two employment-related ballot initiatives were set to appear on the 2018 general election ballot. One of them, the Improved Workforce Opportunity Wage Act (“IWOWA”), aimed to raise the minimum wage, among other things. The other, the Earned Sick Time Act (“ESTA”), sought to provide paid sick time to virtually all Michigan employees. In September of 2018, the Michigan Legislature adopted the ballot initiatives before they could be voted on in the General Election. Shortly after adopting the ballot initiatives, the Legislature significantly amended them, making both initiatives less burdensome on employers. When the Legislature amended the ESTA, they replaced it with the Paid Medical Leave Act (“PMLA”), which is the law currently in effect as of the date of this E-Letter.

On July 19, 2022, the Michigan Court of Claims held that the Legislature was not permitted to amend the ballot initiatives in the way they did. As a result, the Court held that both the IWOWA and ESTA must be reinstated to their pre-amended language, which would have been the language Michigan residents would have voted on. This means that, unless the Michigan Court of Appeals or Michigan Supreme Court reverses the decision, the more pro-employee versions of the IWOWA and ESTA will go into effect. The Court of Claims delayed the effective date of the change until February of 2023.

While there is still some chance that the Court of Claims decision will be reversed on appeal, the rest of this E-Letter will explain your township’s obligations if the ESTA and the IWOWA go into effect in February as currently planned.

What Does the ESTA Require?

The ESTA would require Michigan employers to provide paid sick time to their employees. Employees will be entitled to one (1) hour of paid sick time for every thirty (30) hours they work. For small employers (fewer than 10 employees), the number of hours of paid sick time can be capped at 40 hours, regardless of how much the employee works. An employee of a small employer can also accrue up to 32 hours of unpaid sick time if they exceed the 40-hour cap for paid sick time.

For larger employers (10 or more employees), the cap for paid sick hours is 72 hours. For overtime-exempt employees (salaried employees), the ESTA assumes that they will work 40 hours in a week, even though salaried employees often do not track their hours. When an employee uses paid sick time under the ESTA, they must be paid their normal hourly wage.

Importantly, the ESTA allows any paid leave to count towards the minimums. Paid leave that counts towards the minimums includes sick time, vacation, personal time, and general PTO. Therefore, an employer who provides an all-purpose paid time off (“PTO”) bank, need not create an entirely new sick leave system if the PTO accrual already meets the minimums set by the ESTA.

Any sick time not used in a calendar year must be allowed to be carried over into the next year, but a smaller employer does not need to permit more than 40 hours of paid sick time to be used and a large employer need not allow more than 72 hours in a single year.

If your township has employees covered by a union contract, the ESTA will not apply to those employees until their current union contract expires. In other words, your township does not need to bargain new sick-time language to meet the obligations of the ESTA immediately, but that will be necessary the next time your township sits down to negotiate with represented employees.

An employer can always choose to do more than the law allows. If the employer wants to allow more accumulation of paid sick time, it may. If the employer wants to permit employees to use more paid sick time in a single year than the ESTA requires, it may do that as well.

Employers must provide written notice to their employees of the following information:

• The amount of sick leave employees may receive under the ESTA
• How the employer intends to calculate a “year” (calendar year or a different 12-month period)
• The reasons an employee may use paid sick time
• Protections for retaliation
• Information about the right to bring civil lawsuits or file complaints with the Department of Licensing and Regulatory Affairs.

Who Cares?

The most notable feature of the ESTA is how broadly it applies. Unlike most other employment laws that only apply to employers of a certain size, the ESTA applies to all Michigan employers, regardless of how many employees they have. Even if your township has only a few part-time staff, the ESTA imposes paid sick time obligations on your operations. As noted in the previous section, “small” employers (employers with fewer than 10 employees) are required to provide less paid sick time than “larger” employers (employers with 10 or more employees).

In determining how many employees you have for ESTA purposes, we look to the ESTA’s definition of “employee.” ESTA defines “employee” as “an individual engaged in service to an employer in the business of the employer.” Given how broad that definition is, we consider all employees to count towards the employer’s total employee count. That means anyone on the township payroll counts to find out if you are a small or a large employer. Although the ESTA does not directly answer this question, we do not believe that elected or appointed officials will count as “employees” however. So, township board members, planning commissioners, members of the zoning board of appeals, etc. will not need to be counted. However, any other employees will need to be counted. That includes full-time, part-time, temporary, and seasonal employees, as well as paid-on-call or “volunteer” firefighters. Properly classified independent contractors will not count.

Who is Entitled to Benefits Under the ESTA?

Most employment laws impose some restrictions on who is entitled to benefit from the law. The ESTA, however, does not impose any such restrictions. The ESTA provides paid sick time for all employees. As mentioned in the prior section, the definition of “employee” is very broad. Therefore, anyone on the township payroll, except elected or appointed officials, will be entitled to benefits under the ESTA. In other words, all of your township’s part-time, seasonal, temporary, or paid-on-call personnel will be entitled to accrue and use paid sick time under the ESTA.

This will require that your Township carefully track the hours of each employee to determine the proper rates of accrual. Remember that employees accrue one (1) hour of paid sick time for every 30 hours worked. For example, even if a part-time employee only works 10 hours per week, your township will be required to provide the part-timer with at least one (1) hour of paid sick time every three weeks.

Employees begin accruing paid sick time immediately when they begin their employment. However, for brand-new employees, an employer can require that they wait up to 90 days before they are permitted to use any paid sick time.

When May an Employee Use Paid Sick Time Under the ESTA?

The ESTA permits paid sick time to be used in any of the following situations:

• The employee’s own mental or physical illness, injury, or health condition. This includes time off for the illness/injury as well as time for diagnosis, treatment, or preventative care.
• The mental or physical illness, injury, or health condition of the employee’s family member[1] including time off the illness/injury as well as time for diagnosis, treatment, or preventative care.
• If the employee or a family member is the victim of sexual assault or domestic violence including time off for medical or psychological care, to obtain victim services, to relocate, to obtain legal services, or to participate in legal proceedings.
• School meetings needed as the result of the employee’s child’s disability or effects of domestic violence or sexual assault.
• Closure of the employee’s place of business (or the closure of a child’s school or place of care) due to a public health emergency.

What Can my Township Require of Someone Who Uses Paid Sick Time?

An employer can require advanced notice of the need for paid sick time if the need for the time off is foreseeable (e.g., for a pre-scheduled doctor’s appointment). Employers cannot require notice more than seven (7) days prior to the need for leave. If the need for leave is not foreseeable (e.g., the employee wakes up not feeling well), the employer can require notice “as soon as practicable.” In practice, this means that an employee should notify the employer as soon as they are reasonably able to do so.

Employers may only request documentation for paid sick time if the sick time is for more than three (3) consecutive days of work. Upon request, employees must provide documentation “in a timely manner.” Employers cannot deny the use of paid sick time pending proper documentation. Any documentation signed by a health care professional (e.g., doctor, nurse, physician’s assistant, nurse practitioner) stating that the use of paid sick time is necessary is sufficient.

How is this Different from the PMLA?

The PMLA was the Legislature’s replacement for the ESTA. It has been in effect since March 2019. Unless the Court of Claim’s July 2022 decision is reserved, the ESTA will replace the PMLA.

The ESTA departs from the PMLA in a number of important ways.

• The PMLA only applied to employers with 50 or more employees, which is why many townships have had no paid sick time obligations up until now. The ESTA applies to all employers.
• The PMLA did not allow all employees to accrue and use paid sick time. The ESTA allows all employees, regardless of how many hours they work, to accrue and use paid sick time.
• The PMLA capped accrual at 40 hours. The ESTA caps paid leave accrual at 40 hours for smaller employers but allows up to 32 hours of unpaid leave for small employers. For larger employers, the cap is 72 hours of paid sick time.
• Under the PMLA, employers were permitted to follow their normal procedures to request documentation from absent employees. Under the ESTA, employers can only request documentation if the absences are to be more than three consecutive days.

What Should My Township Do?

Be aware that the ESTA is not yet the law and it is possible that the ESTA will not ever become the law depending on the outcome of appeals pending in front of Michigan’s appellate courts. However, your township should prepare itself for the possibility that the ESTA will go into effect as soon as February 2023.

• First, assess how many employees your township has including everyone on the payroll except for elected and appointed officials. If your township employs 10 or fewer employees, you may follow the “small” employer rules. If your township employs 10 or more, you will be considered a “large” employer under the ESTA.
• Next, determine how much paid leave your township currently offers its employees. If you do not already meet the hourly thresholds described above (at least 40 hours for small employers; at least 72 hours for larger employers), then you must plan to increase your paid leave allowances.
• Ensure that you have a plan to track accrual and use of paid sick time for all employees. If your current policies only permit paid sick time for certain employees, those will need to be greatly expanded to cover all employees.
• Determine whether you will offer a separate paid sick time bank or an all-purpose leave such as PTO.
• Decide if you wish to provide paid sick time in a lump sum or to provide it as it accrues. If you provide it in a lump sum, your township will need to provide at least the required amounts up front to ensure that no employee works more than expected and ends up with less leave than the ESTA requires. Providing paid sick time as it accrues is the safest option and allows you to provide less sick time if an employee works less than you expect.
• Familiarize your decision makers with the permitted reasons to take paid sick time. Some of the permitted reasons go beyond what was traditionally allowed for sick time.

A Note About the IWOWA

In addition to reinstating the ESTA, the Court of Claims also reinstated the ballot version of the IWOWA. The IWOWA may have a large impact, but its effects will mostly be felt by private-sector employers. Relevant to townships, the only change will be an increase in the state minimum wage. If you have employees who are paid at or near the current minimum wage, be aware that the minimum wage will change if the IWOWA goes into effect. The minimum wage for Michigan employees will immediately jump to $12/hour if the IWOWA goes into effect in 2023.

Conclusion

For many township employers, the requirement to provide paid sick time will be brand new. For others who already have sick-time policies, it may represent only a minor change to operations. Whichever group your township belongs to, keeping a close eye on developments in this area of law will be critical to remain compliant. The Labor and Employment law experts at Fahey Schultz Burzych Rhodes will update this information once more is known about if and when the ESTA will go into effect.

[1] “Family members” include children, parents, spouses, non-married domestic partners, grandparents, grandchildren, siblings, or any other non-related person “whose close association with the employee is the equivalent of a family relationship. All relationships include biological, adopted, foster, and step-, relationships.

By: Attorney Chad Karsten

This publication is intended for educational purposes only. This communication highlights specific areas of law and is not legal advice. The reader should consult an attorney to determine how the information applies to any specific situation.