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A new mandatory paid sick time law will go into effect for all Michigan employers soon. After a lengthy legal battle, the Michigan Supreme Court held in July that the Earned Sick Time Act (“ESTA”) will take effect February 21, 2025, replacing the Paid Medical Leave Act. As enacted, ESTA was a broad, employee-friendly law that significantly departs from prior sick time laws in several crucial ways. In a last-minute legislative compromise, the House and Senate passed amendments to the ESTA in the late hours of February 20, 2025 with less than an hour to spare before the effective date.  While the amended ESTA keeps much of the originally enacted law intact, there are significant changes. The law, as now amended, is explained below.

I.          Who is Required to Provide Sick Time?

Unlike many other employment laws, the ESTA requires all Michigan employers  to provide paid sick time to their employees. 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 organization has only a few part-time staff, the ESTA will apply: it will require your organization to grant accrual and permission to use paid sick time for those employees.

II.        Who Can Accrue and Use Paid Sick Time?

The ESTA requires that all employees, regardless of full-time, part-time, or temporary status will be entitled to accrue and use paid sick time. The only employees exempt from the ESTA are (1) those who work in accordance with a policy that allows the individual to schedule his/her own hours and has a policy that prohibits the employer from taking adverse personnel action if the individual does not schedule a minimum number of working hours; (2) unpaid trainees or unpaid interns; or (3) minors working under work permits as required by the Youth Employment Standards Act.

Properly classified independent contractors are not considered employees and, therefore, not entitled to accrue and use paid sick time. Aside from those limited exceptions, you should assume every single employee is eligible to accrue and use sick time under the ESTA. That means temporary employees, those with irregular schedules, and any other person for whom your organization withholds payroll taxes should accrue sick time.

As for seasonal staff, there is no total carveout; however, employers can prohibit use of sick time until after 120 days of employment. For many seasonal workers, they will be finished for the season by the time they hit their 120th day. Additionally, employers are not required to restore or maintain a sick bank for any employee who has been separated for 2 or more months. So, even if that employee is rehired more than 2 months later, their sick bank can be reset to zero and the employee must wait another 120-day period to use sick time.

III.      How Does Accrual and Use of Sick Time Work Under the ESTA?

Employees will be entitled to accrue one (1) hour of paid sick time for every thirty (30) hours worked. It does not matter how long it takes an employee to work those 30 hours. For example, if a part-time employee only works ten hours per week, they will accrue a single hour of paid sick time every three weeks. For properly classified salaried, exempt employees, the ESTA assumes they will work 40 hours per week unless their ordinary workweek is shorter than 40 hours.

Employers cannot limit how much paid sick time an employee accrues, but you can cap the use of sick time. How much is dependent on how many employees your organization has.

• 10 or fewer employees? You are considered a “small employer” and you may cap annual use at 40 or more hours of paid sick time.
• More than 10 employees? You may cap annual use of sick time to 72 or more hours of paid sick time.

At the beginning of a year, IN LIEU OF tracking accruals, small employers may frontload at least 40 hours of paid sick time and all other employers may frontload at least 72 hours of sick time. If an employer elects to frontload time, they are not required to track accruals at all, are not required to permit a carryover from year to year, and may (but do not have to) pay out unused time at the end of a year.

Employers may prorate the frontloaded amount for part-time employees based on an estimate of how many hours those part-timers will work in a year, and require additional accrual if those part-timers work more than anticipated.

Additionally, employers may pay out accrued but unused ESTA time in excess of the 40 or 72 hours at the end of the year for accruing employees and may pay out any amount (or not at all) for frontloaded employees. If an employer chooses the accrual method, small employers must allow at least 40 hours of carryover and all other employers must allow carryover of at least 72 hours.

Finally, when an employee uses paid sick time under the ESTA, they must be paid their normal hourly wage. In other words, sick time is paid out at the employee’s base wage – without factoring in additional forms of compensation like tips, bonuses, commissions, overtime, and other supplemental pay.  In no case can that be less than the State’s minimum wage.

IV.       For What Purposes Can an Employee Take Sick Time?

• Personal or family member 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.
• Time off for medical or psychological care, to obtain victim services, to relocate, to obtain legal services, or to participate in legal proceedings if the employee or a family member is the victim of sexual assault or domestic violence.
• 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 their child’s school or place of care, due to a public health emergency.

Employers may require employees to provide 7 days’ notice for foreseeable sick leave-related absences. The ESTA also allows an employer to adopt a written policy that details call in procedures to manage unforeseeable sick time; the key is that employees are never required to give notice before they become aware they need the leave. In other words, employers can require reasonable notice of sudden sick time, but cannot require it before a shift unless the employee knew they would need it before the shift started.

Be prepared that the ESTA drastically limits an employer’s ability to request a doctor’s note or other documentation to substantiate the use of sick time. An employer can only request documentation if an employee has missed more than three consecutive workdays. After that, the employer can request documentation but will be required to cover the entire out-of-pocket cost for the employee to obtain that documentation. Upon your request for documentation, the employee must provide the documentation not more than 15 days after your request.

V.        How Will the ESTA Impact Union Contracts?

Any collective-bargaining agreement in effect as of February 21, 2025 will not be impacted. Collective-bargaining agreements do not need to comply with the ESTA’s requirements until the first time they expire and are re-negotiated after February 21, 2025.

VI.       What Should My Organization be Doing Now that the ESTA is in Effect?

• First, assess whether you’re a small (fewer than 10 employees) or large employer (10 or more employees). Not only do small employers have lesser ESTA obligations, but small employers have until October 1, 2025 to comply with the ESTA requirements.
• If you decide to move forward with the accrual method, ensure that you have a plan to track accrual and use of paid sick time for all employees that are not exempt from the ESTA. If your current policies only permit paid sick time for certain employees, those likely need to be greatly expanded. Your payroll processing company may be able to assist here.
• Familiarize your decision makers with the permitted reasons to take paid sick time. Some of the permitted reasons go beyond what your organization may have traditionally considered permitted use of sick time.

VII.     Crafting an Effective and Lawful Sick Time Policy

We recommend that all employers draft a sick time policy in consultation with your labor and employment attorney. As you prepare to discuss policy drafting, consider the following:

• Do you already provide paid leave to employees?

If you do, do you provide enough paid leave to satisfy the ESTA’s minimum requirements?

• Will you frontload the paid sick time or accrue throughout the year?
• Will your organization meet the minimums established by the ESTA or will you permit employees to accrue and/or use more sick time than is required by law?
• Will your organization lump sick time into an all-purpose paid-time-off (“PTO”) bank or will you create a separate bank for sick time?

An all-purpose PTO bank is convenient but, if sick time comes from a PTO bank, all leave time in the PTO bank must adhere to all the requirements of the ESTA.

This information about the Earned Sick Time Act is current as of the publication date. We will continue to monitor developments in this area and provide updates as warranted. We are also prepared to assist you in updating policies, training your management teams, and preparing you and your employees for all these upcoming changes. If you have further questions, contact one of the labor and employment law experts at Fahey Schultz Burzych Rhodes PLC.