Employer Disaster Relief Benefits

Employer Disaster Relief Benefits

Unexpected events, such as significant illness and natural disasters, can disrupt employees’ lives and company operations. Implementing employer-provided disaster benefits before an emergency arises can help employers attract and retain employees, maintain morale, and aid retention when crises occur.

Leave Sharing Programs

Leave sharing allows employees to donate their personal leave or vacation time to a leave sharing pool. Employees who need leave for a medical emergency or major disaster, natural or otherwise, may use donated leave to extend their paid time off.

Leave sharing programs are voluntary and when they are offered, there are two common problems to avoid. First, any paid leave required by law should not be eligible for leave sharing. Second, donors may not select the recipients of their donated leave. When properly documented with a written policy, donated leave is not taxed to the donor, making this a useful way for employees to support one another.

Qualified Disaster Payments

Employers may provide tax-free payments to employees affected by disasters to cover certain necessities, including home repairs, family and living expenses, funeral expenses, and replacement of necessary non-luxury items such as beds and kitchen appliances.

These tax-free payments may not be used to reimburse expenses already covered by the employee’s insurance. Employers can decide payment amounts, whether small or large, and can limit amounts by individual or for all employees, as long as the benefits are provided in a nondiscriminatory manner.

Retirement Plan and Qualified Disaster Withdrawals

Recent changes to retirement plan rules have created new options for employees impacted by federally declared disasters. Employers sponsoring 401(k), 403(b), or governmental 457(b) plans may allow plan participants to take “qualified disaster recovery withdrawals” from their plan accounts of up to $22,000. However, not all participants will qualify for the maximum amount.

These qualified disaster recovery withdrawals are exempt from the 10% early withdrawal penalty that typically applies to distributions before age 59 and a half. Participants may repay qualified disaster recovery withdrawals to the plan over the three years, restoring retirement savings after recovery, a rare feature for plan distributions.  

To offer qualified disaster withdrawals and repayments, the retirement plan must be amended. Many service providers are prepared to implement and administer these options as part of their plan services.

Non-Employer Provided Benefits

Employers affected by federally declared disasters may be eligible for government benefits at the local, state, and federal levels. Employers interested in sharing this information should consult with legal counsel or advisors to determine what programs are available and how to best communicate them. For employers in disaster-prone areas, connecting employees with service providers who can explain these resources can add meaningful support.

Before and during a disaster, employers have many options to help employees and maintain morale. If you have questions, want more information, or need help preparing the right documentation, contact a member of our Employee Benefits Practice Team who has experience and would be happy to assist with these benefit options.

This advisory was originally published on November 1, 2024, and updated October 30, 2025.

Proper Venue for Probate Litigation: The Margaritaville Case

Proper Venue for Probate Litigation: The Margaritaville Case

Varnum Viewpoints:

  • Venue in Multi-State Probate Cases Varies: Choosing the proper court depends on the trust’s administration location and the parties involved.
  • Michigan Probate Jurisdiction Requires Three-Part Analysis: Courts assess subject matter jurisdiction, personal jurisdiction, and objections if the trust is managed out-of-state.
  • Early Venue Decisions Save Costs: Resolving jurisdiction and venue issues early helps avoid costly, duplicative litigation in complex estate disputes.

Litigation Heats Up Over Jimmy Buffett’s $275 Million Estate

Jimmy Buffett, the famous singer and “Margaritaville” pioneer, died on September 1, 2023. The dispute between Richard Mozenter, the accountant and co-trustee of Buffett’s $275 million estate, and Buffett’s wife, Jane, has intensified.

Jane Buffett has publicly alleged that Mozenter failed to keep her informed about the administration of trust assets and investments, took unreasonable fees for himself at the expense of the trust, and otherwise failed to properly administer the trust.

In early June, Mozenter filed what appeared to be a preemptive petition in Palm Beach County, Florida, alleging various claims against Jane. The next day, she filed a petition in a Southern California court seeking the removal of Mozenter as co-trustee. By July 21, Jane filed a petition of her own in Palm Beach County, Florida, claiming Mozenter had breached his fiduciary duties as trustee, and voluntarily withdrew her California petition. Her attorney publicly acknowledged that she would not litigate in two courts at once, noting that consolidating litigation in Florida was a cost-saving measure.

Where Is the Proper Venue for Probate Litigation in Multi-State Estates?

This back and forth raises the essential question in large, complex estates involving property in multiple states: Where is the proper venue for probate litigation? The answer, as is often the case, depends.

Understanding Michigan Probate Jurisdiction

In Michigan, determining whether a probate court is the proper venue for a dispute involves analyzing both the venue and jurisdiction. There are three parts to the jurisdiction analysis:

  • Subject matter jurisdiction
  • Personal jurisdiction
  • The right of parties to object to proceedings in Michigan where the trust has a foreign principal place of administration                                                                                                                             

Subject Matter Jurisdiction Explained

Subject matter jurisdiction is a court’s power to hear and decide a particular type of case.  Regarding subject matter jurisdiction, “Michigan probate courts have statutory authority to handle trusts.” See MCL 700.21; MCL 700.805. Thus, in a trust dispute, a state probate court will have the power to resolve the dispute.

Personal Jurisdiction Explained

For personal jurisdiction, a litigant must establish that all parties have sufficient contacts with Michigan to meet either general or specific personal jurisdiction. 

General jurisdiction applies when a defendant’s contacts with the forum state are so extensive that the court may adjudicate claims even if they do not arise from those contacts.

Specific jurisdiction may also be based on a party’s specific acts or contacts within the forum state related to the trust or estate.

Before initiating probate litigation in Michigan, parties should evaluate the nature of each party’s contacts with the state and any trust or estate transactions that occurred there. 

Objections to Michigan Jurisdiction

When a trust from another state is involved, a party may object to the dispute being heard in Michigan. Under MCL 700.7205, if a party objects, the court shall not entertain a proceeding involving a trust registered or with a principal place of administration in another state unless:

  1. All appropriate parties could not be bound by litigation in the state where the trust is registered or administered, or
  2. The interests of justice would otherwise be seriously impaired.

When initiating probate litigation in Michigan, the likelihood that another party could successfully object under MCL 700.7205 must be considered.

Venue Based on Trust Registration

If Michigan jurisdiction is established, venue is appropriate “in any place where the trust properly could be registered.” MCL 700.7204. Registration is proper “at the principal of administration.” MCL 700.7209

The principal place of administration is the trustee’s usual place of business, where the trust records are kept, or the trustee’s residence if no such place of business exists, or the trust has not been registered.

Applicable Law for Trust Disputes

Under the Michigan Trust Code, the law of the jurisdiction designated in the trust’s terms applies unless applying that jurisdiction’s laws would violate a strong public policy of the jurisdiction with the most significant relationship to the matter at issue. MCL 700.7107. 

Why Venue and Jurisdiction Matter in Complex Estate Litigation

In cases like the Buffett estate, where property spans multiple states, early and thorough analysis of venue and jurisdiction is critical. Addressing these questions up front can yield significant cost savings and help prevent unnecessary litigation over procedural matters.

For questions about navigating estate and trust disputes, contact Varnum’s Probate Litigation Practice Team.

Estate Planning for Student Athletes in the NIL Era

For decades, college athletes have benefited from scholarship-funded education and stipends but were otherwise unable to share in the billions of dollars in annual revenue generated from athletic programs by the NCAA.

The 2021 landmark Supreme Court ruling in NCAA v. Alston changed that by holding that the NCAA could not restrict education-related benefits for athletes, effectively legalizing their ability to earn compensation from their name, image, and likeness (NIL).

This ruling opened the door for student athletes to earn a potentially significant amount of money during their college careers from marketing, appearances, and licensing deals, making personal estate and financial planning considerations even more important for student athletes.

From basic but crucial estate planning documents that every athlete should have to more sophisticated tax and financial planning tailored to those benefiting from NIL, the following are important considerations to address the unique needs and career trajectories of athletes to protect them and their earnings.

Necessary Planning for All Student Athletes

Patient Advocate Designation and Living Will

While every young adult should have a Patient Advocate Designation and Living Will, athletes are at increased risk of serious injury.

  • A Patient Advocate Designation allows the athlete to name an individual to act on their behalf with respect to medical decisions.
  • A Living Will details what type of care they would like to receive under certain circumstances, including end-of-life wishes surrounding end-of-life care.

Without this document, a guardian would need to be formally appointed by the probate court to make these decisions, adding stress and wasting time during an already difficult situation. A Patient Advocate Designation and Living Will are the bare minimum that every athlete should have once they turn 18 years old.

Durable Power of Attorney

The Durable Power of Attorney is a document that allows someone else (the “agent”) to make legal and financial decisions on the athlete’s behalf. These documents can be structured so they are effective immediately upon signing or only upon incapacity. As most student athletes will be over age 18, they are legally adults and must transact on their own (e.g., signing insurance documents, endorsement deals, etc.). Great care must be given to selecting an agent, particularly if the athlete has significant assets or fame, as the agent will have the same authority as the athlete over their assets.

Similar to the Patient Advocate Designation, in the event of incapacity, a conservator would need to be appointed by the probate court to make these decisions for the athlete if a Durable Power of Attorney is not in place. Also note that the athlete’s agent under Durable Power of Attorney is distinguishable from the athlete’s “Agent” who represents the athlete in contract negotiations for their employment and other endorsement or sponsorship opportunities. However, the athlete could choose the same person to fulfill both roles, if appropriate under the circumstances.

Income Taxes

Athletes compete all over the country and, in some cases, the world. From an income tax perspective, athletes need to be aware of earning income in multiple states (or countries) and carefully track this, as additional tax filings may be required (and additional taxes may be owed). 

Additional Considerations for Athletes Benefitting from NIL

Few student athletes will make it to the professional ranks, and NIL earnings may be the financial pinnacle of their athletic careers. For those who do end up playing at the professional level, the odds are stacked against long-term financial success: most professional careers end in under five years, and many of these athletes face serious financial issues or bankruptcy shortly after they stop playing.

Developing a strategy with a team of trusted advisors (attorney, accountant, agent, financial advisor) is the key to success for athletes who have limited time to spare outside of training and who experience unique needs, including risk of a career-ending injury, a few peak years for earning that must last for decades, and greater risk of being targeted for their wealth. This strategy should include additional estate planning documents, financial and tax planning advice, and a discussion of asset protection and privacy concerns.

Revocable Trusts

The use of revocable trust planning is a great place to start for younger athletes, especially those in the wealth accumulation phase of their lives. Trusts can provide an additional layer of security against any third parties who may try to take advantage of the athlete, especially when using a professional or other reliable individual as trustee. Trusts can also provide terms that would allow the athlete to grow with their wealth and learn to manage it in a responsible way by limiting distributions to things that are necessary, like medical, health, or housing expenses. Privacy is another advantage, as a trust does not have to carry the name of the person who created it. Thus, a trust can house assets without being tied back to an individual. In the event of the athlete’s death, the assets would pass outside of probate court, further preserving privacy, to whomever the athlete has named as beneficiary.

Estate and Gift Tax Planning

When coming into wealth, it is tempting to gift money or items (e.g., homes, cars, watches, etc.) to those people who supported the athlete while they were up-and-coming. However, athletes should be mindful of not only the constraint on their assets but also the tax impact of making these gifts, especially larger ones.

Currently, any person can gift up to $19,000 to any other individual without filing a gift tax return. Anything with a greater value than that amount will require filing a gift tax return, though tax may not be due. Further, anything reported on the gift tax return reduces an individual’s lifetime exemption for estate tax purposes.

If the athlete has wealth that would support large gifting, utilizing irrevocable trusts to receive those assets could be a good planning option. While there is generally a filing requirement for gift tax purposes (and an exemption used), once the assets are in the trust, they are inherently more protected and could be structured to last for several generations. Assets could also be invested to provide additional growth for beneficiaries, and future appreciation on the assets of the irrevocable trust would occur outside of the athlete’s gross estate for estate tax purposes, representing additional estate tax savings.

Asset Protection

In several states, including Michigan, there are Domestic Asset Protection Trusts (DAPTs) that can be set up for maximum creditor protection. These trusts offer strong creditor protection while allowing the grantor to receive discretionary distributions, direct investments, and set terms for the trust’s ultimate disposition. There are also downsides to DAPTs, mostly that the assets are not easily accessible, the grantor is giving up control over assets to a trustee, and the trust is irrevocable and not readily changeable. DAPTs are often utilized by people with substantially risky careers who are exposed to liability.

Protecting NIL Wealth for a Lifetime 

Athletes now earn at a high level during their college years. These income streams could last well past college and even leave a lasting legacy. Student athletes need a trusted team of advisors to help ensure they are doing everything they can to earn, protect, grow, and be tax-efficient with their assets. Having that structure in place will help the wealth last through the athlete’s life and protect it for future generations. 

Varnum continually monitors NIL activity at the federal, state, and institutional levels and helps students protect their interests. Contact a member of our NIL Practice Team or our Estate Planning Practice Team for assistance with NIL questions or estate planning for athletes with NIL arrangements.

This advisory was originally published on September 8, 2022, and updated on October 24, 2025.

Securing Your Pet’s Future with Estate Planning

Securing Your Pet’s Future with Estate Planning

Have you considered what would happen to your pet if you passed away or became incapacitated? Although most people outlive their beloved animal companions, pets still need consideration in estate planning. It is especially important for animals with longer life expectancies or higher costs of care, such as dogs, cats, horses, parrots, turtles, and animals with special needs.

Risks of Not Planning for Pets

Without clear provisions in your estate plan, the risks for your pet are significant. In the short term, your pet could be left alone without food and water in an emergency and could feel panicked, distressed, or abandoned. In the long term, your pet might be placed with someone you would not have chosen, taken to a shelter, or even euthanized.

Contrary to popular belief, informal arrangements with family or friends are generally not legally enforceable, and simply adding your pet to your will often isn’t enough. Your pet’s care cannot wait until your will is probated, and wills do not provide ongoing control or oversight of the caregiver, your pet, or the funds left for their benefit.

Planning for Your Pet’s Needs

The good news is you can take steps to protect your pets. By including the documents below in your estate plan, you can authorize someone to care for your pets in an emergency and designate who will ultimately care for them if you cannot. These documents also give you control over how pets are cared for and how any funds set aside for them will be managed.

Pet Trust

A pet trust is the most reliable way to ensure your pet is cared for if you die or become incapacitated.  A pet trust may be a part of your existing trust or created as a separate document. It allows you to:

  • Name a caretaker for your pet(s) and create a legal, fiduciary obligation for them to provide care according to your instructions.
  • Set aside money for your pet’s expenses. The trustee will distribute these funds to the caretaker or directly to service providers such as veterinarians.
  • Appoint a trustee to oversee the caretaker and ensure funds are used solely for your pet’s benefit in accordance with the trust’s terms.

A well-drafted pet trust allows you to name backup caretakers, ensuring your pet’s long-term stability and protection if your preferred caretaker becomes unable to serve.

Durable Power of Attorney for Pet Care

A durable power of attorney (DPA) for pet care authorizes someone else to seek medical care and make related decisions for your pet. It specifies the extent to which that agent may act on your behalf. This document can also be used by a pet caretaker while you are away on business or vacation.

Alternatively, provisions for your pet can be added to your own DPA, if it is “effective immediately” rather than “effective upon incapacity”, sometimes called a “springing” DPA.

Pet Care Instructions

Pet care instructions provide detailed guidance for your pet’s daily needs. The instructions will be a separate document that is incorporated into your pet trust by reference. This allows you to update your pet care instructions, as your pet’s needs and preferences change, without having to amend the trust. These instructions should include:

  • Food preferences and dietary restrictions
  • Medical history and current medications
  • Behavioral traits, quirks, likes and dislikes, and fears
  • Emergency contacts
  • Anything else you want a caretaker to know

Like the DPA for pet care, this document can be left with someone caring for your pet while you are away. It can also guide adoption decisions and reduce your pet’s stress if they must be rehomed. For example, noting that a pet is fearful of young children can help prevent an unsuitable adoption. Keeping these instructions updated ensures your pet receives consistent, informed, and compassionate care.

Wallet Card

A wallet card is a simple but vital safeguard for pet owners. If you are found incapacitated or deceased away from home, the card alerts responders that you have pets and provides contact information for someone who can step in to care for them. Similar to adding “in case of emergency” contacts to your phone, it ensures your pets are not left alone for days without food, water, or attention.

Protect Your Pets with Estate Planning

When we take in a family member with fur, feathers, or otherwise, we become responsible for their care not only for our lifetimes, but for theirs as well. Creating these documents provides a comprehensive plan that ensures your companions are never left vulnerable, giving you peace of mind.

To learn more about securing your pet’s future, contact your Varnum estate planning attorney or a member of Varnum’s Estate Planning Practice Team.

This advisory was originally published on August 12, 2019, and updated on October 20, 2025.

USCIS Clarifies $100,000 H-1B Fee: U.S.-Based Graduates and Workers Exempt

U.S. Citizenship and Immigration Services (USCIS) has issued new guidance clarifying the scope of the recently announced $100,000 H-1B petition fee introduced under a September 19, 2025, White House proclamation. The clarification provides important relief for U.S.-based employers and foreign nationals already in the United States.

USCIS confirmed the $100,000 fee will not apply to H-1B petitions filed for individuals already in the U.S. This includes:

  • Recent international college graduates on F-1 status changing to H-1B,
  • Current H-1B employees seeking amendments, extensions, or changes of status, and
  • Existing H-1B holders traveling internationally and returning to the U.S.

The fee will apply only to new H-1B petitions for workers outside the U.S. or for individuals who must leave the country before their petition is decided, including those who previously held H-1B status.

Employers may request a case-by-case exception if a worker’s presence is in the national interest and no qualified U.S. worker is available.

Varnum’s Immigration Practice Team is closely monitoring developments and will continue to provide updates as guidance evolves. Employers with pending or upcoming H-1B petitions should review their case strategy to determine whether any filings may trigger the new fee. Contact Varnum’s Immigration Practice Team with any questions.

Estate Planning Essentials for New Parents: Protect Your Child’s Future

Estate Planning Essentials for New Parents

Welcoming a child is one of life’s greatest joys and greatest responsibilities. Amid the sleepless nights and endless demands on your time, estate planning may not be at the top of your immediate to-do list after bringing home a baby. However, taking the time to put a plan in place is an essential step to ensure your child is protected and cared for, no matter what the future holds.

Key Documents Every Parent Should Have

  1. Will and/or Trust: Regardless of how wealthy you are, a Will is needed to:
    • Nominate a legal guardian and a conservator for your minor children.
    • Specify who will receive your assets rather than leaving distribution up to state law.
    • Name a personal representative to settle your affairs.

      In addition to a will, many parents choose to create trusts, even when their assets are not complex, to better control how and when distributions are made to their children in the future.

      While an 18-year-old is legally an adult, most parents prefer that their children be older and more mature before inheriting significant funds without oversight. Holding assets in a trust allows children to access the funds for meaningful needs such as education, starting a business, or purchasing a home. At the same time, a trustee oversees investments and distributions. This structure prevents a child from quickly exhausting an inheritance and helps ensure that trust assets are managed wisely and used for long-term benefit.

  2. Beneficiary Designations: Retirement accounts, life insurance policies, and some bank accounts pass directly to the individuals named as beneficiaries and are not governed by your will. Keeping these designations current is a simple but critical planning step.

  3. Financial Power of Attorney: Authorizes a person you trust to pay your bills and handle financial matters if you cannot. Often, spouses serve as each other’s agents under a financial power of attorney, and each names an additional person to act as a successor agent if both are incapacitated or unable to act.

  4. Patient Advocate Designation and Living Will: Allows you to appoint someone to make medical decisions on your behalf if needed. As with the financial power of attorney, spouses often serve as each other’s patient advocate and name a successor in case both are unable to act. The living will also states your preferences regarding end-of-life care, alleviating uncertainty and emotional burden for your loved ones.

  5. HIPAA Medical Authorization: Gives healthcare providers permission to share medical information with the person you have designated to make medical decisions for you when you cannot.

Naming a Guardian and a Conservator in Your Will

One of the most important and difficult decisions you will make is choosing who would care for your child if neither parent could. There are two roles to consider:

  • Guardian: The person who has physical custody of your child and makes day-to-day parenting and care decisions.
  • Conservator: The person who manages money and property for your child until they are old enough to handle it independently.

Consider naming separate individuals for these roles. Doing so can take advantage of their respective strengths and create a system of checks and balances. It can also keep both sides of the family involved. For example, a caregiver might come from one parent’s family, and someone with strong financial skills might come from the other.

Choosing the Right People to Care for Your Child

When choosing a guardian and conservator, ask yourself:

  • Who shares your values and parenting style and has the emotional maturity to raise your child?
  • Who is healthy, financially stable, and likely to live until your child reaches adulthood?
  • Who has the lifestyle and capacity to care for your child?
  • How significant would a move or lifestyle change be for your child?
  • Who is financially responsible and capable of managing funds wisely?
  • Will your chosen guardian and conservator work well together?
  • Is there anyone you would not want to raise your child under any circumstances?

Keep in mind that your choice of guardian before your child’s birth may differ from your choice after. To avoid awkward conversations, you can name your preferred guardian in your will but wait to ask them to serve until after your child’s birth. If you change your mind or your first choice declines, you can easily amend your will.

Keeping Your Planning Documents Updated

Review and update your planning documents every three to five years, or after significant life changes for you or your named guardian or conservator. Revisit your guardian choice as your child grows.

Creating Your Estate Plan

For new parents, having a clear estate plan in place provides peace of mind and is one of the greatest gifts you can give your family. Contact your Varnum estate planning attorney or a member of our Estate Planning Practice Team to discuss your plans and put them into action. 

Student Loans and Educational Benefits: Here to Stay

Employer Student Loan Repayment and Education Benefits

Educational benefits are a cost-effective and tax-friendly way to attract, retain, and motivate employees. Recent legal changes have expanded employer-provided, tax-advantaged educational benefits to cover student loan repayment. These tax benefits are now permanent, increasing interest in the programs. 

Tax-Favored Student Loan Repayments

Employers can provide up to $5,250 per employee, tax-free, for repayment of eligible student loans. This amount will increase over time with annual cost-of-living adjustments. The benefit can be limited to employees who are actively making loan payments (effectively a “match”) and can be made subject to repayment if an employee leaves within a set period.

As a tax-advantaged benefit, student loan repayment assistance must be properly documented in a written plan and must be offered to a nondiscriminatory class of employees. Any amount over $5,250 will be subject to ordinary income taxes.

Other Student Loan Repayment Benefits

Employers may also provide taxable student loan repayment benefits, generally to a select group of employees as an executive benefit. Although less tax-efficient, this type of benefit can help attract and retain talent in high-demand positions and can be subject to repayment if the employee leaves.

These benefits are not tax-advantaged and are not subject to the legal restrictions that apply to tax-favored student loan repayments. While a written plan is not required, careful documentation can protect the company from claims and clarify expectations. Unlike the tax-favored benefits, this option can be extended to more senior employees who may have children with student loans. 

Educational Assistance Benefits

Employers may pay up to $5,250 per year, tax-free, for employees’ tuition, fees, school supplies, and similar payments. This is not a new benefit, but the rise of tax-favored student loan repayment has renewed interest.

These benefits must be offered on a nondiscriminatory basis to similarly situated employees, although employers can set reasonable educational standards, for example, accredited programs related to the employee’s job, and can require repayment if certain conditions are not met, such as leaving employment within a set period or not completing the course. These restrictions must be described in a written plan.

The $5,250 limit often means that the restrictions are not problematic in practice. Educational benefits can help retain highly motivated employees and those with leadership potential from leaving, support leadership development, and promote a positive workplace culture.

Retirement Plans

If your 401(k) plan provides matching contributions, you can allow certain student loan repayments to count as contributions for matching purposes. Once the plan is amended, employees can receive 401(k) matching contributions based on eligible student loan repayments, as if they had contributed those amounts to the plan as an elective deferral.

Employers who want to provide this option should work with legal counsel, their recordkeeper, and their payroll provider to ensure the benefit is properly implemented, communicated, and administered.

A fresh look at student loan and educational benefits is needed at many companies. If you have questions, need your documentation updated, or want more information, contact a member of our Employee Benefits Practice Team.

Earned Sick Time Act Compliance for Small Businesses

Earned Sick Time Act Compliance for Small Businesses

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.