As we previously reported, Michigan’s Earned Sick Time Act (ESTA) will replace the current Paid Medical Leave Act (PMLA) on February 21, 2025. The ESTA was initially enacted by voter initiative in 2018 but was later subject to litigation. On July 31, 2024, the Michigan Supreme Court invalidated the PMLA and reinstated the ESTA.
The ESTA requires all employers to provide paid sick leave to employees who perform work in Michigan, whereas PMLA currently applies to employers with 50 or more employees. ESTA will require:
- Large Employers (10 or more employees): To provide up to 72 hours of paid sick leave.
- Small Employers (fewer than 10 employees): To provide a combination of 40 hours of paid sick leave and 32 hours of unpaid leave.
To assist employers with compliance, Michigan’s Department of Labor and Economic Opportunity (LEO) has created a website offering resources such as frequently asked questions (FAQs), a brochure, a required poster (available in English and Spanish), and a link to the full text of the law. Key highlights from the FAQs are:
- Determining Employer Size: An employer qualifies as a “small business” if it employs nine (9) or fewer employees or has 10 or more employees for no more than 19 workweeks (not necessarily consecutive) in the current or prior calendar year.
- Full-time, part-time, and temporary employees are included in this count.
- Employers reaching 10 or more employees for 20 or more workweeks lose their “small business” status until they meet the original criteria again.
- Eligibility Requirements: Eligible employees are individuals providing service to an employer, except those employed by the U.S. government.
- The economic reality test determines employee status.
- Publicly elected officials, appointed board members, and similar officeholders are generally excluded unless classified as employees by the governing entity.
- Payout Instead of Carryover: The ESTA does not permit employers to pay out unused sick leave instead of carryover.
- All accrued and unused sick leave must carry over annually.
- If an employee is rehired within six months of separation, any unused balance must be reinstated.
- Recoupment of Advanced Leave: Employers may recover the value of advanced leave used beyond an employee’s accrued balance at separation, provided:
- The deduction does not reduce the final paycheck below minimum wage.
- The employer obtained a prior written, voluntary agreement authorizing the deduction.
Next Steps
Employers should thoroughly review the ESTA guidance to ensure proper implementation of the leave requirements.
Employers should ensure that the required poster is displayed in a conspicuous place that is accessible to eligible employees. Employers must ensure that they provide written notice of an employee’s rights under the ESTA at hire or on the law’s effective date, whichever is later.
Employers should review and revise leave policies and procedures to align with ESTA requirements. Employers who plan to frontload time should include provisions for frontloading leave and obtaining written agreements for deductions related to advanced leave.
Ensure supervisors and managers are trained in the new regulations to prevent compliance issues and ensure consistent application.
For additional details on the law refer to this prior post from HR Works.
