By Robert G. Brody and Fintan S. Lalor
On February 21, 2025, all employers in Michigan will be required to provide employees with up to 72 hours of paid sick leave each year. The reason is quite unique. In July 2024, the Michigan Supreme Court found the then current Paid Medical Leave Act (“PMLA”), that has been in place for five years, was unlawfully enacted. As a result, the court determined Michigan’s Earned Sick Time Act (“ESTA”) was binding, creating a significant expansion of the number of employees covered under the law. The employee friendly ESTA also includes faster accrual rates for paid time off, an elimination of the accrual cap and carry-over restrictions, a requirement to carry-over unused hours, expanded reasons to use sick leave, an increase in the amount of paid sick leave hours to which employees are entitled, and more. Michigan employers need to get up to speed on the ESTA.
Who is/will be Covered by the Act?
While the PMLA only applied to employers with 50 or more employees, the ESTA applies to all employers with at least 1 employee. Additionally, while the PMLA excluded certain types of employees from coverage, such as temporary, part-time, and exempt, ESTA applies to all employees in the state, except those employed by the federal government. Certain paid sick leave obligations under ESTA vary depending on whether an employer qualifies as a “small business.” An employer is deemed a small business if it employs 9 or fewer employees (including part-time and temporary employees) and employed 10 or more employees in less than 20 workweeks in the current or previous calendar year.
How much Sick Leave can Employees Take?
Under ESTA, employers may restrict the amount of earned sick leave employees can take. Small businesses may limit their employees paid sick leave to 40 hours per year, and an additional 32 hours of unpaid earned sick time. The employees must be allowed to use their 40 hours of paid sick leave before using the unpaid leave. All other employers must allow employees to use up to 72 hours of accrued paid sick time per year. ESTA allows employees to use earned sick leave incrementally, in either hourly increments or the smallest increment the employer’s payroll system uses for similar types of absences, whichever is smaller. Additionally, ESTA allows employers to require new hires to wait 90 days to start using their paid sick leave.
Covered Reasons for Using Earned Sick Time
Authorized reasons for using sick time remain substantially the same. However, ESTA includes absences for meetings at a child’s school or place of care related to the child’s health or disability, or the effects of domestic violence or sexual assault. Moreover, ESTA expanded the definition of family members to include domestic partners and individuals related by blood or affinity whose association with the employee is equivalent to a family relationship.
Notice, Posting, and Recordkeeping Requirements
If the need for leave is foreseeable, ESTA allows employers to require up to 7 days of advance notice. If it is not foreseeable, employers may require notice as soon as practicable. For sick leave absences of more than 3 consecutive workdays, employers may require “reasonable documentation” to show the paid sick leave was used for a covered reason. Significantly, the documentation should not include a description of the illness, or if used due to reasons related to domestic violence/sexual assault, should not include details of the violence. If an employer requires such documentation, they are responsible for paying all out-of-pocket expenses the employee incurs in acquiring the documentation.
Beyond all this, employers are required to provide written notice to their employees of their rights under ESTA at the time of hiring or on February 21, 2025, whichever is later. Employers must also display the ESTA poster in a conspicuous place accessible to all employees. The poster can be found here. The notice and the poster should be displayed/provided in English, Spanish, and any other language that is the first language spoken by at least 10% of an employer’s workforce. Additionally, employers are required to keep records detailing hours worked and earned sick time used by their employees for at least 3 years.
Accrual and Carry-Over Requirements
ESTA accrual rates are quicker than those of PMLA. Under ESTA, eligible employees accrue paid sick leave at a rate of 1 hour for every 30 hours worked. Significantly, while PMLA allows for an accrual cap, ESTA has no accrual cap. Additionally, all accrued unused paid sick time must be carried over from year to year. Accrual begins on February 21, 2025, or upon commencement of the individual’s employment, whichever is later.
Employer takeaways
While there is no federally mandated paid sick leave, more than 20 states have now implemented their own paid sick leave laws. To stay compliant, employers should proactively update their sick leave policies to align with the expanding landscape of state-mandated paid sick leave laws. While this article discusses the primary changes under Michigan’s ESTA, the law implements additional employee protections and employer requirements. If your business is not yet in compliance, you should work with counsel to develop a plan that meets state requirements while aligning with your company’s operational needs.
Brody and Associates regularly advises management on complying with the latest local, state and federal employment laws. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.
