UPDATE January 8, 2025: The Michigan Department of Labor and Economic Opportunity recently published an FAQs webpage providing clarity and additional guidance to employers on the Michigan Earned Sick Time Act (MI ESTA), ahead of its February 21, 2025 effective date.
Read on for key highlights of the FAQs guidance referenced below throughout this article.
Summary: On July 31, 2024, the Michigan Supreme Court ruled in Mothering Justice v. Attorney General that the Michigan state legislature’s 2018 adoption and amendment to the Michigan Earned Sick Time Act (MI ESTA) was unconstitutional. As a result, nearly all Michigan employers will be required to provide employees with more generous paid sick leave than what is currently required under Michigan’s current paid sick leave law called The Paid Medical Leave Act, beginning on February 21, 2025.
The Mothering Justice decision brings the ongoing Michigan paid sick leave litigation to a final close regarding the constitutionality of the ESTA amendment made to the law when it was first proposed as a citizen ballot initiative in 2018.
Read on for more information and next steps for employers.
MI ESTA Background
The Mothering Justice lawsuit revolved around actions of the Michigan state legislature to quickly enact an amended version of the MI ESTA with significant changes, and renamed The Paid Medical Leave Act (MI PMLA).
In 2018, the paid sick leave requirements under the MI ESTA and minimum wage law[1] ballot initiatives were sent to the Michigan legislature. The legislature adopted the measures intact, resulting in their removal from the ballot for the 2018 election. Following the election and within the same legislative session, the legislature significantly amended both laws, becoming effective in 2019[2].
Mothering Justice, a labor advocacy organization, along with other groups, sued to challenge the constitutionality of the state legislature's actions with respect to both laws. The lawsuit worked its way through Michigan state courts, with the Michigan Court of Claims first ruling in favor of Mothering Justice and then the Michigan Court of Appeals reversing that decision. It ultimately ended up at the Michigan Supreme Court.
The Michigan Supreme Court reversed the Court of Appeals decision and ruled that the Michigan legislature’s “adopt-and-amend” procedural actions with respect to both laws violated the Michigan Constitution. The Mothering Justice decision by the Michigan Supreme Court reinstated the MI ESTA and the minimum wage law as they initially appeared on the ballot initiatives. Both the MI ESTA and the minimum wage law will go into effect on February 21, 2025.
Notably, the decision confirmed that employers will not be held liable for reasonably relying on state government assurances that MI PMLA and the amended minimum wage law were “good law,”[3] providing welcome relief for Michigan employers who have continued to comply with the MI PMLA.
Michigan Paid Sick Leave Changes in 2025
The table below highlights the paid sick leave changes that employers will be required to implement for their employees working in Michigan, as a result of the Mothering Justice decision, starting on February 21, 2025.
Note that the MI ESTA requirements in certain instances are significantly more generous to employees than the current MI PMLA requirements.
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Paid Sick Leave Requirement
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Michigan Paid Medical Leave Act (currently in effect)
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Michigan Earned Sick Time Act (in effect on February 21, 2025)
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Covered Employers
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Employers with 50 or more employees
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All employers with one or more employee(s)
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Eligible Employees
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All employees, except for:
- collectively bargained employees,
- employees who worked less than 25 hours per week on average in the preceding calendar year, and
- employees exempt from overtime under the Fair Labor Standards Act (FLSA).
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All employees except those employed by the United States government.
FAQ UPDATE: The FAQs clarify that MI ESTA applies to work performed by employees who are physically located in Michigan, regardless of the employer location.
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Covered Use Reasons
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Employees may take paid sick leave for the following reasons for themselves or a family member:
- care for or treat mental or physical illness, injury, or condition;
- obtain preventative medical care;
- closure of an employee’s workplace or child’s school/daycare due to a public health emergency;
- exposure to a communicable disease;
- absence due to domestic violence and sexual assault situations.
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Same as MI PMLA covered use reasons and also including 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 on the child.
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Definition of Family Member
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Family member includes spouse, children, grandchildren, parents, grandparents, siblings, as well as children for whom the employee stands in loco parentis.
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Same as MI PMLA family member definition and also including the following individuals:
- domestic partner, and
- “any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.”
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Accrual Amount Limits
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One hour of paid sick leave for every 35 hours worked, up to 40 hours per year.
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One hour of paid sick leave for every 30 hours worked, up to 72 hours a year.
Employers with 10 or fewer employees (“small business” under MI ESTA): One hour of paid sick leave for every 30 hours worked, up to 40 hours per year. If an employee of a small business accrues more than 40 hours of earned sick leave in a calendar year, the employee will be able to use an additional 32 hours of unpaid earned sick leave in that year.
FAQ UPDATE: The FAQs clarify that:
- MI ESTA accrual begins on Feb. 21, 2025, or upon commencement of the employee's employment, whichever is later.
- Employees of a “small business” must be entitled to use paid MI ESTA time before using unpaid MI ESTA time.
- An employer is not required to permit an employee to use more than the annual allowed maximum time (paid or unpaid) in a 12-month period.
- Overtime-exempt employees (under the Fair Labor Standards Act) are assumed to work 40 hours per work week for MI ESTA accrual purposes, unless their normal workweek is less than 40 hours. In that case, MI ESTA accrues based upon an employee’s normal workweek schedule.
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Carryover Rules
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Employees may carry up to 40 hours of paid sick leave per year.
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No cap on carryover since paid sick leave carries over from year to year.
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Frontloading
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Frontloading 40 hours at the beginning of the year is permitted in lieu of carrying over accrued, unused paid sick leave.
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FAQ UPDATE: The FAQs clarify that frontloading is permitted.
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Increments of Use
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Paid sick leave must be used in one-hour increments unless the employer has a different increment policy set forth in writing in an employee handbook or other employee benefit document.
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Paid sick leave may be used in the smaller of one-hour increments or the smallest increment that the employer's payroll system uses to account for absences or use of other time.
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Employee Notice & Documentation
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Employees must follow the employer’s usual and customary notice, procedural, and documentation requirements for requesting leave when using paid sick leave. Employers must give employees three days to provide documentation related to the use of paid sick leave.
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An employer may require reasonable documentation that the MI ESTA time has been used for covered use absences of more than three consecutive days.
FAQ UPDATE: The FAQs clarify the following with respect to MI ESTA-related documentation:
- Employer required documentation should not include a description of the illness or details of the violence.
- If an employer requires documentation, the employer is responsible for paying all out-of-pocket expenses the employee incurs in obtaining the documentation.
- An employer cannot delay commencement of the leave based on a failure to receive documentation.
- Employers must maintain the confidentiality of health, domestic violence, and sexual assault information about an employee or their family member, and cannot disclose the information to others without the employee's permission.
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Unlawful Retaliation/Interference
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No specific unlawful retaliation or unlawful interference provisions.
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Employers are prohibited from interfering with an employee requesting or taking MI ESTA time or taking retaliatory action against an employee for requesting. exercising. or enforcing rights under MI ESTA.
FAQ UPDATE: The FAQs clarify there is a rebuttable presumption that an employer violated MI ESTA if it takes any adverse personnel action against an employee within 90 days after the employee engages in protected activity.
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Enforcement
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Employees may file a claim with the Michigan Department of Licensing and Regulatory Affairs (the Department) within six months after the alleged violation.
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Employees may file a civil action within three years after the alleged violation or the date when the employee knew of the violation, whichever is later. Employees may file a claim with the Michigan Wage and Hour Division as well within three years since filing a claim is neither a prerequisite nor a bar to bringing a civil action.
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Recordkeeping
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Employers must retain records that document the hours worked and paid sick leave taken by employees for not less than one year.
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Employers must retain records that document the hours worked and paid sick leave taken by employees for not less than three years.
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Reinstatement of Paid Sick Leave upon Rehire
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Employer is not required to reinstate any unused paid sick leave upon rehire of an employee.
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Employers must reinstate previously accrued, unused paid sick leave for an employee to use if the employee is rehired within 6 months of the separation of employment.
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Waiting Period
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Employers may prohibit the use of paid sick leave until a new employee’s 90th calendar day of employment.
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Same as MI PMLA
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Payout Upon Termination
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Employers are not required to pay out unused, accrued paid sick leave upon termination of employment.
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Same as MI PMLA
FAQ UPDATE: The FAQs indicate that the Michigan Payment of Wages and Fringe Benefit Act may require payment upon termination pursuant to the employer's written policy or contract.
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Additional MI ESTA FAQs Highlights
The recent MI ESTA FAQs provide additional guidance and clarity on the following items for employers to be aware of:
- Determining if an employer is a “small business” under MI ESTA:
- All employees of the employer within the United States or its territories are included for purposes of the total number of employees.
- An employer is considered a “small business” if it employs nine or fewer employees and employed 10 or more employees in 19 or fewer workweeks in the current or previous calendar year. The workweeks with 10 or more employees need not be consecutive. This includes full-time, part-time, and temporary employees including those provided through a temporary service or staffing agency or similar entity.
- Once an employer employs 10 or more employees for 20 or more workweeks in the current or prior calendar year, the employer cannot be a "small business" again until it meets the requirements above.
Example: Consider a new employer that employs nine individuals from January 2025 through March 2025, then employs 10 individuals for any 20 weeks from April 2025 through Sept. 2025, but then employs only 9 employees again starting in Oct. 2025 and continuing indefinitely. This employer was a “small business” from Jan. 2025 until it reached the 20-workweek threshold. Once they reached the 20 or more workweeks with 10 or more employees' threshold, this business will not be a “small business” for the remainder of 2025 and all of 2026. Starting in Jan. 2027, however, this employer can again be considered a “small business.”
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Rate of Pay: MI ESTA must be paid at a pay rate equal to the greater of either (i) an employee’s regular rate of pay, or (ii) the Michigan minimum wage rate.
For any employee whose hourly rate varies depending on work performed, the “normal hourly wage” means the average hourly wage of an employee in the pay period immediately prior to the pay period in which the employee used MI ESTA time.
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Notice & Posting Requirements: Employers must provide written notice of an employee’s rights under MI ESTA at the time of hiring or on Feb. 21, 2025, whichever is later.
Employers must also display a MI ESTA poster (accessed here) in an accessible location for employees.
Employer Next Steps
Employers with employees working in Michigan should be aware of the Mothering Justice decision by the Michigan Supreme Court, which significantly expands paid sick leave rights for Michigan employees. Nearly every employer in the state will be covered under the MI ESTA and will be required to provide paid sick leave to their employees, beginning on February 21, 2025.
Additionally, employee eligibility for MI ESTA will broaden to apply to virtually all employees working in Michigan, with the exception of individuals employed by the United States government.
As the February 21, 2025 effective date approaches for MI ESTA requirements, employers with Michigan-based employees are advised to begin working with their employment and labor counsel now on the following items to ensure compliance:
- Review and update, as necessary, leave policies and procedures, taking into account previously excluded employees who will now be eligible for MI ESTA paid sick leave
- Previously exempted employers (those employing 50 or fewer employees) will be required to provide paid sick leave and develop applicable MI ESTA policies and procedures
- Review and update, as necessary, attendance and payroll systems, especially accounting for the higher accrual amount limits than required under MI PMLA
- Train Human Resources team members and other employees who manage employee leaves
- Communicate these MI ESTA changes to employees
- Monitor the Michigan state webpage for the updated MI ESTA model postings and notices (when available), as well as additional MI ESTA guidance
Risk Strategies helps employers navigate the ever-changing and complex state/local paid leave landscape. Contact us directly at benefits@risk-strategies.com.
[1] The minimum wage law titled “The Improved Workforce Opportunity Wage Act” provides for an accelerated minimum hourly wage and tip credit schedule. Discussion of the Michigan minimum wage law is beyond the scope of this article.
[2] The MI PMLA went into effect on March 29, 2019.
[3] The Mothering Justice decision continued on regarding this point and stated that “’injustice might result’ if courts punished employers for following the law as provided on the state’s official websites.”
