Michigan Legislature Passes Changes to Earned Sick Time Act

Prior to the February 21, 2025, midnight deadline, the Michigan Legislature passed amendments to the Earned Sick Time Act via HB 4002 (“the Amendments”).  It is expected that Governor Whitmer will sign the Amendments into law (along with a companion bill altering the tipped wage credit provisions in the Improved Workforce Opportunity Act).  The Amendments made numerous changes to the Earned Sick Time Act (ESTA).  Some of the larger changes include the following:

• Covered Employers. ESTA would apply to all persons, firms, businesses, educational institutions, corporations, limited liability companies, government entities or other entities that employ 1 or more individuals.  Notably, non-profit corporations are not included in this definition.
• Covered Employees. ESTA would cover an individual engaged in service to an employer.  However, the Amendments expressly exempt unpaid interns/trainees, an individual employed in accordance with the Youth Employment Standards Act, and persons who—according to the employer’s policy—may schedule their own working hours and are not required to work a minimum number of hours.
• Accrual. Employees would still have to accrue 1 hour of paid sick leave for every 30 hours worked and allow non-small employers to cap use of accrued time to 72 hours a year.  A small business, however, would be able to cap the use of accrued time to 40 hours in a given year and would not have to provide the additional 32 hours of unpaid leave ESTA previously mandated in certain circumstances.  The Amendments also change the definition of a small businesses to include employers with 10 or fewer employees (instead of less than 10 employees).  Small businesses would not be required to comply with accrual requirements until October 1, 2025.
• Frontloading. The Amendments expressly permit employers to frontload 72 hours at the beginning of the year as an alternative to accrual (or 40 hours for small businesses).  If an employer frontloads earned sick time, no end-of-year rollover would be required.  Further, an employer who frontloads earned sick time would not have to otherwise track accrual. The Amendments also allow employers to frontload pro-rated time to part-time employees if certain conditions are met.
• Rollover. Rather than requiring unlimited rollover, the Amendments would permit rollover to be capped at 72 hours, or 40 hours for small businesses.  Again, the Amendments also eliminate the rollover requirement for employers who frontload the required amount of leave.
• Prohibition on Use for 120 days. Under the Amendments, employers could prohibit use of earned sick time during the first 120 days of the employee’s employment (rather than the 90-day period stated in prior versions of the statute).
• Rate of Pay. When an employee takes earned sick time, employers are required to pay them the greater of 1) the normal hourly wage or base wage for that employee or 2) the minimum wage.  The Amendments specify that normal hourly wage/base wage does not include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay, tips, or gratuities.
• Advanced Notice. Under the ESTA, employers can only require 7 days of advance notice if the reason for leave is foreseeable and if the need to use earned sick time is not foreseeable, employers may require notice from the employee as soon as practicable.  Under the Amendments, employers can require employees to provide notice in accordance with the employer’s policy if that policy is i) in writing, ii) details procedures for how the employee must provide notice, and iii) those procedures permit the employee to provide notice after the employee is aware of the need to use earned sick time.
• Documentation. The Amendments would still only allow employers to request documentation if the use of earned sick time is more than 3 consecutive days.  However, the Amendments added a provision stating that employers may require this documentation to be received within 15 days of the request.
• Increments. Per the Amendments, employers would be permitted to allow employees to use leave in 1 hour increments or the smallest increment used by the employer to account for absences.
• Private Right of Action, Rebuttable Presumption, and Penalties. The Amendments would remove the ability of employees to directly sue employers for a violation of the ESTA.  They also removed the presumption of wrongdoing if an employer took adverse action within 90 days of the employee exercising their rights under the ESTA.  Rather, an affected employee would have to file a departmental complaint within three years of the violation.  Employers are subject to a fine of not more than 8 times the employee’s normal hourly wage for violations of the ESTA.  However, the Amendments state that an employer may take adverse personnel action against an employee if they misuse their sick time benefit or fail to follow notice procedures.
• Notice.  The Amendments state that the deadline for employers to provide the notice to employees required under ESTA shall be delayed by 30 days from the date the Amendments are passed into law.

The amendments to the Earned Sick Time Act take effect immediately upon the Governor’s signature.  While large employers would need to comply with the amended ESTA immediately, small businesses will not be required to provide earned sick time until October 1, 2025.  The changes to the Earned Sick Time Act are cumbersome, and only some of the changes are described above. Employers with questions about the revisions to the Earned Sick Time Act or their personnel policies should contact Nikole L. Canute, Nathaniel R. Wolf, Scott E. Dwyer, Dominic T. Clolinger, or Kathryn Z. Stegink.