Michigan employers must now comply with significant changes to sick leave requirements and minimum wage standards following the implementation of the Earned Sick Time Act (ESTA) on February 21, 2025. This development follows the 2019 ballot initiative and subsequent Michigan Supreme Court ruling in Mothering Justice v. Attorney General.
Implementation Timeline
The revised ESTA applies immediately to businesses with more than ten employees operating in Michigan. Smaller employers (ten or fewer employees) must implement the new minimum wage standards immediately but have until October 1, 2025, to comply with paid sick leave accrual, tracking, and carryover requirements. Companies with unionized workforces must implement these changes once their current collective bargaining agreements expire.
Sick Leave Accrual and Usage
Employees earn one hour of paid sick time for every 30 hours worked. Employers may set annual usage caps at 72 hours and calculate leave in one-hour increments or the smallest time unit used for tracking other forms of leave.
When employees use accrued sick time, they must receive their standard hourly wage, excluding overtime pay, holiday premiums, bonuses, commissions, supplemental compensation, piece-rate earnings, or gratuities.
Employers may implement a 120-day waiting period before new hires can use their accrued sick time. If an employee leaves and returns within two months, employers must reinstate any previously unused sick time unless it was paid out upon termination.
The law requires that employees be allowed to carry over at least 72 hours of unused sick time into the following year. Employers who choose to “frontload” the full 72 hours at the beginning of the year are exempt from tracking accruals and carryover requirements.
Qualifying Reasons for Sick Leave
Employees may take paid sick time for:
- Their own health conditions, including illness, injury, medical appointments, and preventative care
- Care for a family member’s health condition, medical appointments, or preventative care
- Addressing needs related to domestic violence or sexual assault affecting the employee or a family member, including medical care, counseling, relocation, legal proceedings, or victim services
- Attending meetings at a child’s school regarding the child’s health, disability, or domestic violence/sexual assault impacts
- Business closures due to public health emergencies, caring for a child whose school/daycare closed due to public health orders, or isolation/quarantine situations involving communicable diseases
Employee Notice Requirements
For foreseeable absences, employers may require up to seven days’ advance notice. For unexpected needs, employees must provide notice as soon as practical. Employers must provide written notification policies to employees and allow notice after an employee becomes aware of the need for leave.
When sick leave extends beyond three consecutive days, employers may request documentation confirming the absence falls within permitted uses. Employees must provide documentation within 15 days, with employers covering any related out-of-pocket expenses.
Protection Against Retaliation
The law prohibits retaliation against employees for using their sick leave benefits. Employees cannot file private lawsuits for violations but may submit administrative complaints within a three-year statute of limitations.
Employer Notice and Documentation Requirements
Within 30 days of ESTA’s effective date (or upon hiring new employees), employers must provide written notice detailing:
- The amount of sick time provided
- The employer’s method of calculating the year
- Permissible uses for sick time
- Anti-retaliation protections
- The employee’s right to file administrative complaints
Employers must also display informational posters in English, Spanish, and any language spoken by at least 10% of their workforce.
Special Provisions for Small Businesses
For employers with ten or fewer employees:
- Compliance with paid sick leave provisions (accrual, tracking, and carryover) begins October 1, 2025
- Annual paid sick time usage limited to 40 hours
- Frontloading requirements reduced to 40 hours
- Carryover requirements capped at 40 hours
Minimum Wage Increases
The February 21, 2025 signing of Senate Bill 8, amending ESTA also amended the Improved Workforce Opportunity Wage Act (IWOWA), both of which became effective immediately. The amendments gradually increase Michigan’s minimum wage:
- February 21, 2025: $12.48 per hour
- January 1, 2026: $13.73 per hour
- January 1, 2027: $15.00 per hour
After 2027, Michigan’s State Treasurer will publish annual adjustments based on inflation by November 1st each year.
Tipped employees’ minimum wage increases are as follows:
- February 21, 2025: $4.74 per hour (38% of standard minimum wage)
- January 1, 2026: 40%
- January 1, 2027: 42%
- January 1, 2028: 44%
- January 1, 2029: 46%
- January 1, 2030: 48%
- January 1, 2031: 50%
Employers must maintain wage compliance records for at least three years following an employee’s final pay period.
Next Steps
Employers must now ensure compliance with all ESTA and IWOWA requirements, including sick leave provisions, minimum wage standards, and notification obligations. Smaller employers must meet the new minimum wage immediately and prepare to comply fully with paid sick leave requirements by October 1, 2025.
For questions or implementation assistance, please contact Zana Tomich.
