Michigan’s Earned Sick Time Act (ESTA) took effect for most employers on February 21, 2025. However, small businesses (10 or fewer employees) have until October 1, 2025, to comply. With that date approaching, small employers should act now to update policies and prepare for implementation.
Key Requirements for Small Businesses
- Accrual: Employees earn 1 hour of sick time for every 30 hours worked.
- Annual Use Cap: Employers must allow employees to use up to 40 hours of paid earned sick time each year.
- Start Date: Employees begin accruing on October 1, 2025, or upon hire, whichever is later.
- Waiting Period: Employers may impose up to a 120-day waiting period for new employees before sick time can be used.
- Carryover: Employers using accrual must allow carryover of up to 40 hours into the next year. Employers who frontload are not required to allow carryover.
Permitted Uses
Employees may use earned sick time for:
- Their own or a family member’s illness, medical care, or preventive treatment.
- Needs related to domestic violence or sexual assault.
- Child-related health or disability meetings at school or daycare.
- Public health emergencies, including closures of schools or workplaces.
Compliance Checklist for Small Businesses
- Review Policies: Ensure PTO or vacation policies meet or exceed ESTA requirements.
- Choose a Method: Decide whether to use accrual or frontloading.
- Update Employee Handbook: Add written policies that explain rights and procedures.
- Provide Notice: Give employees a written notice of their rights and display the required state poster.
- Recordkeeping: Track hours worked and sick time taken for at least three years.
Failure to comply may result in the filing of complaints with the Department of Labor and Economic Opportunity (there is no private cause of action), penalties up to $1,000 per violation, and possible civil damages. Retaliation against employees who exercise ESTA rights is prohibited.
Next Steps
Small businesses should update policies, train managers, and post required notices before October 1, 2025. Varnum’s labor and employment attorneys are available to help with compliance strategies and policy reviews.
