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The Earned Sick Time Act (“ESTA”) was set to go into effect at midnight, February 21. In a last-minute legislative compromise, the House and Senate passed amendments to the ESTA with less than an hour to spare before the effective date.

The amended ESTA keeps much of the originally enacted law intact:

• It still technically applies to all employers and virtually all employees.
• There are still posting and notice obligations to be met.
• Employees are still entitled to at least one hour of paid sick time for every 30 hours worked and the permitted purposes for taking leave have not changed.
• A small employer is still an employer with 10 or fewer employees, and large employers are those with more than 10 employees. **BUT small employers have until October to comply

But there are major changes:

• Frontloading Definitely Permissible – And It Comes With Some Perks

As originally drafted, the ESTA did not obviously allow employers to frontload time to employees at the beginning of a year (even though the enforcing agency was approving of it). The amended ESTA provides that 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. The amendments clarify that 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.

• No More Unlimited Carryover of Time Year to Year

In contrast to the original ESTA, the amendments allow for limits on annual carryover of hours. Employers that choose to use the accrual method rather than frontloading can cap annual carryover at the 40 or 72 (or more) hours mark. For employers who frontload, there is no requirement to permit or limit/prohibit annual carryover.

• Door (Slightly) Opened to Permit Employers to Payout (and Paydown) Leave Banks

Frequently seen as a benefit to employees who appreciate the extra pay at the end of the year, the original ESTA did not permit any payout or buying back of unused sick time at the end of a year. The amendments imply that an employer 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.

• Seasonal Employees Are Likely Out of Luck When it Comes to Earning and Using Sick Time

Although there is no total carveout for seasonal employees, the amended ESTA makes two major changes that will functionally eliminate ESTA benefits for many seasonal employees.

1. 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 120^th
2. 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.

• Employees Who Schedule Their Own Hours (And Are Not Subject To Discipline For How Many Hours They Schedule) Are Not Eligible For Sick Time Under ESTA

The amended ESTA does not apply to employees who set their own schedule and who cannot be punished for failing to work a certain number of hours. The amendments say that these facts must be established in a written policy in order to exclude the employees in question.

• Clarified Rate of Pay for Using Sick Time

Although ambiguously implied in the original ESTA, the amendments clarify that 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.

• Common Sense Notice (and Policy) Requirements

One of the major frustrations under the original ESTA was the inability to have reasonable call-in procedures for use of sick time. Under the amendments, foreseeable absences stay at the 7 days’ notice seen previously. However, the amendments allow 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.

• Time Limit for Employee to Provide Documentation Now Exists!

The amended ESTA unfortunately does not change the restriction of waiting more than three consecutive missed shifts before requesting documentation to legitimize the use of sick time. However, it does now set a time limit of 15 days for an employee to provide an employer with properly requested documentation. Keep in mind, though, documentation is still entirely at the employer’s expense!

• Amendments Reduce Litigation Risk

The amended ESTA removes the automatic presumption that the employer must be retaliating against employees who were disciplined or terminated within 90 days of exercising certain ESTA rights. That automatic presumption no longer applies, and the State is no longer expected to take a “guilty until proven innocent” approach to complaints. Importantly, the amended ESTA also removes an employee’s right to take an ESTA complaint directly to court. Instead, employees must file complaints with the State, and only the State can go to court on behalf of the employee.

Although the amended ESTA does not address all areas of concern for Michigan employers, it takes meaningful steps to allow employers to craft sick time policies that fit their operations and their employees. The amended ESTA technically went into effect at 12:02AM on February 21. As of this writing, the amended ESTA is already the law! The employment law experts at Fahey Schultz Burzych Rhodes PLC are at the ready to assist with any policy changes brought on by the last-minute amendments to the Earned Sick Time Act.

If you’d like to assess your organization’s ESTA compliance obligations, contact the labor and employment experts at Fahey Schultz Burzych Rhodes PLC – Lizzie Mills – hmills@fsbrlaw.com & Chad Karsten – ckarsten@fsbrlaw.com.