On July 31, 2024, the Michigan Supreme Court established the Earned Sick Time Act (ESTA). It will replace the current Paid Medical Leave Act (PMLA) and is scheduled to go into effect February 21, 2025. This new ruling applies to all employers who have one or more employees, and all businesses—big and small—will feel the impact.
Whether you’re an employer or employee, it’s important to familiarize yourself with the upcoming implementations. Let’s talk about what we know so far.
How ESTA Expands PLMA’s Reach
Compared to PMLA, ESTA impacts a larger scope of workers. All employees working for a private enterprise can reap the benefits of earned sick time, including part-time, exempt and temporary workers. Employees working for the US Government are the only exception to the ESTA.
Accruing Sick Time
The new act brings new guidelines for accruing sick time. Under the ESTA, employees earn one hour of sick time for every 30 hours worked as opposed to the 1:35 ratio under PMLA. Additionally, even new employees will start accruing sick time immediately upon starting work. However, employees may be asked to refrain from using these hours until after the first 90 days of employment.
Under the ESTA, the limit for available sick time increases from 40 hours to 72. The state of Michigan has also expanded the list of accepted uses for earned sick time. Employees may use their accrued time for personal or family health needs regarding physical or mental health. This includes addressing typical illness and injury, preventative medical care, and navigating issues related to domestic violence or sexual assault. No matter the reason, employers cannot request documentation such as a doctor’s note until an employee is absent for three (3) consecutive days.
The new ruling also eliminates PMLA’s previous limit of employees carrying over 40 hours of sick time from one year to the next. ESTA will allow employees to carry over as many hours of sick leave as they’ve accrued. Employers are not required to offer a payout for any unused sick time at the end of employment.
Paying for Sick Leave
Whether or not a company pays its employees for all 72 hours of annual sick leave depends on the size of the company. Employers with under 10 employees are only required to pay for up to 40 hours, but they must still offer the remaining 32 hours of sick leave unpaid. When paying employees on sick leave, they must do so according to the smallest time measurement allowed in the payroll system. For example, if a company tracks work time by the half-hour, sick time should be awarded that way as well.
Michigan Minimum Wage
The new ESTA also will affect the State of Michigan’s minimum wage. Currently, the minimum wage stands at $10.33 an hour. As of February 21, this will likely rise above $12.00 an hour. There isn’t much information about this yet, but we will continue providing updates as we learn more in the coming months.
Understanding These Changes
As of February 21, all employers and employees will face the impacts of this ruling, some of which may be unpredictable. It may take some time for companies of all sizes to acclimate to the new ruling and all its implications. By familiarizing yourself with the changes now, you have plenty of time and knowledge to update company policies, handbooks and time systems accordingly.
Here is an overview of how the new ESTA compares to Michigan’s current PMLA:
| Paid Medical Leave Act | Earned Sick Time Act | |
|---|---|---|
| Employees Included | Many exceptions, including: exempt, public, those covered by a collective bargaining agreement, and those working 25 weeks or fewer per calendar year. | All employees are covered, including part-time, exempt, and temporary. The only exception is US Government employees. |
| Employers Impacted | Only covers employers with 50 or more employees. | Covers any employer with one or more employees. |
| Accrual | Employees earn 1 hour of sick time for every 35 hrs worked. | Employees earn 1 hour of sick time for every 30 hrs worked. |
| Use of Leave | All employers can limit usage to 40 hrs a year no matter the size of their team. | Companies with <10 employees can limit usage to 40 hrs of paid leave with an additional 32 hrs unpaid leave per year.Companies with 10+ employees can limit usage to 72 hrs per year. |
| Carry Over Limits | Employers can limit carry-over to 40 hrs of accrued time. | There is no limit to the amount of accrued time an employee may carry over. |
| Front Loading | Employers may front-load time into the bank. | It does not specifically address whether or not employers have the opportunity to front-load time into the bank. |
| Documentation | Employers maintain the right to request documentation at any point. | Employers can only require documentation after the employee is absent more than three (3) consecutive days. |
| Increments of Leave | Sick time is used in 1-hour increments unless there is a different increment established in the handbook. | Sick time is used in the smallest increment the payroll system allows. |
Potential Time-tracking Compliance Risk
Once ESTA goes into effect, any companies who require employees to track their time for payroll should be mindful about accuracy. Employees will only get access to their earned sick time if they properly record their time, and tracking the sick time employees have already used will be equally important.
There is still much we don’t know about Michigan’s new Earned Sick Time Act, but we will continue sharing what we know as new information becomes available. In the meantime, please feel free to reach out with questions.
This material has been prepared for informational purposes only and is not intended to provide and should not be relied on for legal advice. If you have any legal questions regarding this content or related issues, then you should consult with a labor attorney for advice.
