Earned Sick Time Act (ESTA)

February 21, 2025 - Earned Sick Time Act and Minimum Wage Laws Amended

Thursday night just before the Earned Sick Time Act and Minimum Wage Act were to take effect, the Michigan Legislature amended the two laws. The Governor is expected to sign these amendments into law in short order.
 
The following are the amendments to these laws. 
 
Earned Sick Time-off Act (ESTA)
 The amendments to the Earned Sick Time Act (ESTA) are: 

• Maintains the definition of "small business" as one that employs fewer than 10 individuals.
• Excludes unpaid trainees or unpaid interns from the definition of employee. 
• Excludes non-profit agencies from coverage.  
• New businesses will have a three-year grace period after forming to comply with the ESTA, and small businesses – defined as those with less than 10 employees – will have until Oct. 1, 2025, to comply with the ESTA requirements. 
• If in writing, the amendments delay accrual by a small business of any paid time off for part time employees until 10/1/2025. Unless the accrual is provided by frontloading it. 
• An employer may combine PTO and ESTA banks if the employer meets either of the following conditions: (1) provides the employer’s employees with PTO not less than the same amounts of time off as provided under ESTA (72/40 hours) and (2) may be used for a purpose described under the act OR any other purpose.  
• The employer is not required to allow an employee to use PTO for a purpose described in ESTA in an amount that exceeds the amounts of time off provided under the act. 
• As an alternative to the accrual method, employers may choose to frontload 72 hours at the beginning of a benefit year (40 hours for small businesses); employers only need to track how many hours of paid leave time employees have used annually. No carryover is required. 
• Allows for front loading of paid time off for part time employees on a pro-rata basis. 
• Caps the amount of accrued sick time for a small employer that can be carried over to 40 hours per year and of all larger employers to 72 hours per year unless the employer pays off unused PTO by the end of the year. Carryover does not have to be made if an employer pays out the unused earned sick time at the end of the year. 
• Excludes from the calculation of an hourly rate overtime, bonuses, commissions, supplemental pay, piece-rate pay, tips, or gratuities. 
• Delays use of accrued earned sick time for employees hired after enactment to 120 days rather than the 90 days under the previous ESTA law. 
• Specifies that the Act would apply to an employer that was a member of a multi-employer collective bargaining agreement under certain circumstances. 
• Excludes employees in a CBA from the 120 day waiting period specified for non-union employees. 
• Provides that an employer that was a member of a multi-employer collective bargaining agreement could not require a qualifying employee to wait 90 days before using accrued sick time if the qualifying employee also were employed by another member of the multi-employer collective bargaining agreement. 
• States that in the event the absence is not foreseeable an employer’s written notice procedures can specify when an employee must provide notice of absence to the employer.  
• As soon as practicable 
• In accordance with the employer’s policy on requesting/using sick time or 
• On the date of hire or the effective date of the Act, whichever is latest, provides the employee with a written copy of the policy that includes the procedure for how the employee must provide notice and that the notice requirement allows the employee to provide notice after the employee is aware of the need for earned sick time. 
• Employers may take adverse action against an employee that fails to notify per the employer’s policy or misuses the benefit. 
• The employer may also take adverse action against an employee that uses earned sick time for a purpose other than a purpose described by the act or violates the notice requirements under the act. 
• Sets the smallest increment of earned sick time that can be used by an employee under this act at 1 hour. 
• Changes the medical documentation requirement from a providing it in “timely manner” to providing it to the employer not more than 15 days after the employer’s request. 
• Reduces the length of time an employee may maintain their earned sick time after separation from employment  from 6 months  down to just 2 months unless the employer pays out the unused earned sick time at the time of separation or transfer in which case no earned sick time may transfer. 
• Removes provisions about the rebuttable presumption of retaliation  if a) the adverse action was taken within 90 days of the filing of a complaint against the employer, b) informs any person about an employer’s violation, c) cooperates with the department (LEO) or another person in the investigation of prosecution of any violation or d) expresses opposition  to a policy, practice of act that is prohibited under this law or informs any person of his or her rights under the law. 
• Allows an employer to take adverse action against an employee that uses earned sick time for a purpose other than allowed by this law or violates the notice requirements under the law. 
• Allows an employee to bring a claim for breach of the act to Department of Labor and Economic Opportunity (LEO)  not later than 3 yrs after the violation. 
• Deletes a provision allowing an employee to bring a civil action against the employee's employer for appropriate relief due to a violation of the Act. 
• Modifies references to the Department of Licensing and Regulatory Affairs (LARA) to instead refer to the Department of Labor and Economic Opportunity (LEO). 
• Provides that if an employer failed to provide sick time to an employee as required, the employer would be subject to a civil fine of up to eight times the employee's normal hourly wage. 

As noted above, the law also expands the terms for employees under a collective bargaining agreement (CBA) to include provisions addressing multi-employer CBA’s. These new provisions extend ESTA benefits and protections to multi-employer bargaining agreements beginning on the date the agreement expired or was terminated, amended, extended or renewed if the agreement was in effect on the effective date of the act or if the agreement conflicts with the Acts’ provisions. Other qualifying provisions for multi-employer CBA’s apply.
 
Penalties for violation of the Act such as retaliation or failing to provide earned sick time are $1000 per violation or the employer could be subjected to a civil fine of up to eight times (8x) the employees normal hourly wage.
 
Employers must still provide written notice as specified by the current ESTA law at the time of hiring or to current employees not later than 30 days after the effective date of this act’s enactment. In addition to the previous law’s provisions for notice the definition of the employer’s “year” must be included.
 
Employers must have new posters up within 30 days and provide employees with written notice about the amount of earned sick time required to be
provided.

February 12, 2025 - Whitmer recommends delay in paid leave, minimum wage

Today Governor Whitmer recommended a July 1 extension on tipped wage and sick time law changes. The governor called Speaker Hall and Senate Majority Leader Brinks and encouraged them to keep working toward a bipartisan deal. In that same conversation, she also encouraged them to pass a short-term extension through July 1 if they are unable to reach an agreement by the end of the week.

Currently, although the House has passed their versions of the bills, the Senate Regulatory Affairs Committee is hearing testimony. Any action or reconciliation would likely be completed after the February 21st implementation deadline, leaving employers with uncertainty, especially if changes occur. 

The House Republicans offered proposals for reconciling the two bills:

• As to the Earned Sick Time Act (ESTA), employers with 1 to 10 workers would be exempted from the law, and those with 11-50 employees would be required to offer 40 hours of paid sick time. 
• Employers with more than 50 employees would have to offer 72 hours, but if they currently have a more generous plan, they will be able to keep it. 
• The proposal would still allow employees to carry over 72 hours, but employers could also frontload the hours with a use it or lose it approach. 
• Employees would earn, same as the current law, one hour of sick time for every 30 hours worked.  

Seasonal workers and non-profit workers would be exempt under the House Republican's proposal, and overtime and commissions would not be included in the calculation of wages. That change would ensure that companies who pay commissions or bonuses are not hurt on a technicality or timing of leave.  

In addition, the House Republicans would support a $15 minimum wage with tipped workers brought up to 50% of the regular minimum. That would be phased in over several years.

However, as of right now, no action has been taken to extend the implementation deadline or to confirm whether the Senate will approve these proposals. MGIA will keep you informed as we receive updates. We urge all of our members to attend the session "ALL THINGS ESTA" on March 4th at 1pm at the MGIA Trade Show & Convention. For more information or to attend, please visit https://www.landscape.org/tradeshow.

Earned Sick Time Act - Effective Date February 21, 2025 - ACT NOW!

ATTENTION MGIA MEMBERS:

With limited session days remaining before Feb. 21, the day the sweeping new minimum wage and earned sick time (ESTA) changes are slated to take effect, the Michigan Senate has yet to take any action — although conversations are still happening behind the scenes.

Why it matters: It’s been a couple of weeks now since a bipartisan group of lawmakers in the House came together in support of common sense changes to the onerous ESTA and minimum wage law. The fate of these issues now rests in the Senate’s hands. Without action and changes to the laws as written, the decisions ahead for organizations are difficult, which is why its critical lawmakers step in to soften the impact.

Options available to the Senate: The Senate can consider the bills as written or revise (amend) them. They can also consider and support the proposed fix: House Bill 4002. Regardless, swift action is needed to avoid a situation where organizations have to make two disruptive changes to their employee benefits in 2025.

It remains possible, but not guaranteed, that lawmakers could push the effective date of these laws out beyond Feb. 21. MGIA Members should continue to prepare for these laws to take effect as written on Feb. 21 but continue to monitor whether statutory changes are agreed upon and enacted.

We are urging members to call or write their senators to let them know how ESTA could effect your business.

MAKE YOUR VOICE HEARD!

Please call your Senator and consider writing to your Senator with the sample text below:

As the Feb. 21 effective date of the new Earned Sick Time Act (ESTA) nears, I am writing to urge you to act with urgency to pass changes to the law to make it more workable for employers and employees alike.  

Some of the provisions in the ESTA that cause severe challenges include: 

• Will force businesses of all sizes and types to rethink their approach to paid time off (PTO). Even if businesses offer 72 hours or more of leave to employees today, ESTA requires a change of benefits.

• There are no exemptions – even for small businesses – and all employees must be covered: full-time, part-time, seasonal, temps, independent contractors, etc

• The 72 hours of mandatory leave can be used intermittently and without advanced notification to the business, which will exacerbate staffing shortages.

• All unused sick leave at the end of a year must roll over to the next year, with no cap on the number of hours that can be rolled over.

• It gives employees a free pass to be three days no call, no show and severely limits the ability of employers to deal with abuses by specifying "an employer's absence control policy shall not treat earned sick time taken under this act as an absence that may lead to or result in retaliatory personnel action."

• It’s a litigation nightmare, allowing employees to sue businesses and automatically assuming the employee’s side for unfavorable personnel actions (via a rebuttable presumption). This puts employers in the position of having to defend their HR decisions in court. No other state has a rebuttable presumption, creating a disincentive to hiring and entrepreneurship in Michigan.

I am asking for your help to make these requirements more reasonable! Without a legislative fix and passage of House Bill 4002, my business – and so many others across your district and our state – will be forced to make drastic and costly changes. I am worried about the impact this will have on employees, workplace culture and more. 

I hope I can count on your support for finding a better alternative! Please support a fix to ESTA!