Earned Sick Time Act
On July 31, 2024, the Michigan Supreme Court issued an opinion which affects the amount of paid sick leave that employers, including local governments, must provide to their employees. Currently, the Paid Medical Leave Act (“PMLA”) governs when and how much paid sick leave employers must provide to employees. In 2018, the Michigan Legislature adopted a ballot initiative regarding paid leave (the Earned Sick Time Act (“ESTA”)) and amended its requirements to adopt the current PMLA. In its recent decision, the Michigan Supreme Court concluded the amendment was improper, and the requirements will revert to the ESTA. These changes will go into effect on February 21, 2025.
The ESTA will require more local governments to comply with paid sick leave requirements. Unlike the PMLA, which only applied to employers (including local governments) with over 50 employees, the ESTA applies to all employers that have at least one employee. The act defines “employee” as any individual who engages in service for the employer, including seasonal or temporary employees. Further, the ESTA applies to employees that are exempt from overtime requirements, as well as non-exempt employees.
As with the PMLA, employees must be allowed to use paid sick leave for several purposes, including but not limited to:
- The employee’s or the employee’s family member’s mental or physical illness, injury, or health condition;
- Medical diagnosis, care, or treatment of the employee’s mental or physical illness, injury or health condition;
- Medical care, psychosocial care, or counseling for domestic violence or sexual assault;
- To obtain legal services or participate in legal proceedings related to domestic violence or sexual assault;
- For meetings at a child’s school or place of care related to child’s health or disability; and
- A public health emergency.
The required amount of sick leave that must be provided by employers is based off an accrual system. Employers must allow employees to accrue one hour of paid sick leave for every 30 hours worked, including overtime hours. The ESTA states, however, that the amount of paid sick leave hours an employer must allow employees to use is based on whether the employer is a “small business” or not. Employers who maintain 10 or more employees on its payroll for at least 20 weeks a year are considered not to be a “small business” and must allow employees to use at least 72 hours of paid sick leave annually to the extent leave is accrued. Employers who maintain less than 10 employees on their payroll for 20 weeks out of the year must allow employees to use at least 40 hours of paid sick leave annually, plus an additional 32 hours of unpaid sick leave, to the extent leave is accrued. Under the ESTA, employers need to choose the consecutive 12-month period (calendar year, service year, or another 12-month period) they will use for tracking use of paid sick leave.
Although employers must allow these requisite minimum hours of paid sick leave, there is no limit to how many hours an employee can accrue. This means that a large employer may cap the use of paid sick leave at 72 hours (40 hours, for small employers), but must allow their employees to accrue more than the capped use if their worked hours result in more than 72 hours of accrued paid sick leave. Employers must allow employees to use accrued paid sick leave in an increment that is the lesser of the increment the employer’s payroll system uses to account for absences or use of other time or one hour. Meaning, if an employer’s payroll system tracks work time in 15-minute increments, for example, that employer must allow its employees to use paid sick leave in 15-minute increments.
Additionally, at the end of the year, employers must allow all accrued paid sick leave hours to carry over into the next year. This means that an employee’s accrual balance never resets. Thus, while large and small employers may cap the use of paid sick leave at 72 and 40 hours respectively, employees will hypothetically continue to grow the amount of sick leave hours in their accrual balance the longer they stay with the same employer. The act also states that employers shall retain records documenting hours worked and paid sick leave taken for not less than three years.
Employers may choose to frontload employees’ sick leave by providing employees with the expected number of paid sick leave hours an employee will accrue at the beginning of the year. However, if employees end up working more hours than expected, the employer must give those employees the additional paid sick leave hours. Employers who choose to frontload paid sick leave should, therefore, plan to audit their employees’ total work hours in the designated 12-month period periodically, to ensure that employees receive the correct amount of paid sick leave.
An employer can also comply with the sick leave requirements under the ESTA by providing an equivalent amount of other paid leave, such as paid time off (“PTO”), paid personal leave, or paid vacation, as long as that leave may be used for sick leave purposes under the ESTA and the paid leave policies meet the ESTA’s use requirements. For example, if an employer provides employees with at least one hour of PTO for every 30 hours worked, and allows the employees to use the paid sick leave under the same terms as the ESTA mandates, the employer will be compliant. Employers’ existing paid leave policies may already be in compliance with the ESTA’s accrual requirement, but should also be reviewed to confirm that the use requirements comply with the ESTA.
Regarding use of paid sick leave under the ESTA, employers may require employees to provide no more than 7 days notice prior to taking foreseeable sick leave. Employers must allow employees to take all unforeseeable sick leave without notice but can require employees to provide notice as soon as practicable. If an employee is absent for sick leave reasons for three consecutive days, an employer may request reasonable documentation concerning the employee’s reason for taking leave. If the employer chooses to request documentation, however, the employer must pay all out-of-pocket costs related to acquiring that documentation. The documentation requested must not include any descriptions of the illness or details of violence, and an employer may not delay the employee’s leave based on the failure to receive the documentation.
Employers are not required to reimburse the employee for accrued but unused sick leave upon termination, resignation, or retirement, unless the employer has a policy stating that it will pay employees for such sick leave upon termination. However, if an employee leaves an employer and returns to employment within six months, all accrued sick leave must be restored to that employee.
Local government officials are encouraged to contact one of our Municipal Law Practice Group or Employment Practice Group attorneys with any questions regarding ESTA or any other questions regarding paid time off for their employees.
