The Michigan Department of Labor and Economic Opportunity released guidance, in the form of FAQs regarding the impending implementation of the state’s Earned Sick Time Act (ESTA), as well as a new model notice poster. ESTA, which provides generous paid sick leave (PSL) benefits to Michigan employees, will take effect on February 21, 2025 as a result of a Michigan Supreme Court decision that reinstated it in place of the Michigan Paid Medical Leave Act (PMLA). A previous alert on ESTA and PMLA is included below for reference.

• Coverage, Accrual, and Use
  • ESTA’s reduced sick leave requirement (40 hours of PSL per year) applies to “small businesses,” or employers with fewer than ten employees. The qualification for small businesses includes the following provisions:
    • An employer is not a small business if it has employed at least ten individuals in at least 20 workweeks of the current or previous year
    • The 20 workweeks do not need to be consecutive
    • Employers must count full-time, part-time, and temporary employees (including those provided through an outside agency) as employees for the purpose of determining whether the employer qualifies as a small business
    • Only employees engaged in service to the employer, and from whom the employer must withhold federal income tax, are eligible to earn and use PSL
  • Accrual of PSL will begin, using ESTA’s more generous accrual rate of one hour of PSL per 30 hours worked, on February 21, 2025 (or upon subsequent commencement of employment).
  • While there is no limit to the amount of PSL that employees may accrue, employers may limit employees’ PSL use to 72 hours per year (or 40 hours’ PSL, 30 hours’ unpaid sick leave for small business employers). Employees of small businesses must be allowed to use their PSL before using unpaid leave.
  • The FAQs provide guidance on frontloading, which ESTA does not address. An employer may frontload PSL, but will not avoid the requirement to track accrual and use or allow carryover of unused leave by doing so.
  • Per the FAQs, employees must be paid the greater of their regular rate of pay or the Michigan minimum wage. It is unclear whether the phrase “regular rate of pay” used in the FAQs differs in meaning from the phrase “normal hourly wage” used in the text of ESTA.
  • The guidance includes no information on how employers should transition accrued PSL under PMLA when ESTA becomes effective.
• Employee and Employer Notice/Recordkeeping Requirements
  • Employees may be required to give up to seven days’ notice when the need for leave is foreseeable, or to provide notice as soon as practicable if the need for leave is not foreseeable.
  • Employers must retain records of hours worked and PSL used for at least three years, and make them available to the state Wage and Hour Division if requested.
  • A model notice poster has been provided for employers to display in a conspicuous location in the workplace. The poster must be displayed in English, Spanish, and any language spoken as a first language by at least 10% of the employer’s workforce. NOTE: the poster has not yet been provided in any language other than English and Spanish.
  • Notice of employees’ rights under ESTA must be provided to new employees upon hire; the FAQs also imply that it must be given to current employees by February 21, 2025.
• MI Earned Sick Time Act Updates (originally sent August 2024)
  • Michigan’s Supreme Court has reinstated a previous version of the state’s Earned Sick Time Act (ESTA). The decision was based on the court’s finding that the state legislature had acted improperly when it adopted the 2018 voter-initiated version of ESTA and then amended it within the same legislative session. The resulting amended legislation, the Michigan Paid Medical Leave Act (PMLA), has been in effect since March 2019. The court’s ruling reinstates the original version of ESTA, which was broader than the PMLA in its scope of coverage as well as more generous in terms of the paid leave benefits it provided to employees. As a result, significant changes to Michigan’s paid leave program will impact employers beginning February 1, 2025.
  • Any Michigan employer with one or more employees must provide their employees with paid sick leave (PSL).
  • Sick leave may not be front-loaded, but must instead be allowed to accrue at the rate of one hour of PSL per 30 hours worked
  • Employers with fewer than 10 employees must allow their employees to accrue up to 40 hours of PSL per year, with an additional 32 hours of unpaid sick time allowed; employers with 10 or more employees must provide up to 72 hours of PSL per year.
  • The definition of “family member” is expanded to include anyone related to the employee by “affinity”; however, ESTA does not define “affinity”.
  • Employees may use their PSL for the following reasons:
    • Employee’s or family member’s illness or injury
    • Sexual assault or domestic violence impacting the employee or employee’s family member
    • Certain business or school closures
  • Employers may not require employees to provide documentation to substantiate their leave requests unless an employee is taking three or more sick days consecutively. If the employee incurs out-of-pocket costs for obtaining the documentation required by the employer, the employer must provide reimbursement.
  • The ruling also impacted Michigan’s Improved Workforce Opportunity Wage Act; as a result, Michigan’s minimum wage will increase to $10 per hour, plus an inflation adjustment as determined by the state treasurer, on February 1, 2025. The minimum wage will increase each year thereafter until it reaches $12 per hour, adjusted for inflation, on February 21, 2028.