More Changes to Michigan Paid Sick Leave: What Employers Need to Know

MI ESTA Requirement

H.B. 4002 Amendments to ESTA

Start Date

February 21, 2025 for employers with more than 10 employees.

Employers with 10 or fewer employees (defined as a “small business” under MI ESTA) have until October 1, 2025, to comply with MI ESTA requirements.

NOTE: If a small business did not employ an employee on or before February 21, 2022, the employer is not required to comply with this act until 3 years after the date that the employer first employs an employee.

Example: Jordan started a small business in October 2024 with two employees. His employees would begin to accrue MI ESTA time in October 2027.

Covered Employers

All employers with one or more employee(s) except for the federal government.

Eligible Employees

All employees except for the following excluded employees:

1. Employees of the federal government,
2. Employees that schedule their own working hours (with certain conditions),
3. Unpaid trainees or unpaid interns.
4. Railway workers covered by the Railroad Unemployment Insurance Act, and
5. Youth employees defined under applicable Michigan state youth employment standards.

Covered Use Reasons

Employees may take MI ESTA time for the following reasons for themselves or a family member to:

• 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, and
• 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.

Definition of Family Member

Family member is defined broadly to include spouse, domestic partner, children, grandchildren, parents, parents-in laws, grandparents, siblings, and any other individual related by blood, or an individual whose close association with the employee is the equivalent of a family relationship.

Additionally, family member includes an individual who stood in loco parentis when the employee was a minor child, and a child to whom the employee stands in loco parentis.

Accrual Amount Limits

One hour of MI ESTA leave for every 30 hours worked, up to 72 hours a year.

Small business employers: One hour of MI ESTA leave for every 30 hours worked, up to 40 hours per year.

NOTE: Hours an employee takes as paid time off (PTO) do not count in the accrual of MI ESTA leave.

Carryover Rules

Employees must be allowed to carry over up to 72 hours, and up to 40 hours for small businesses, from year to year, as long as the employer is using the accrual method.

Employers using this method must calculate and track employee accruals.

Frontloading

As an alternative to the accrual method, employers may choose to frontload at least 72 hours of MI ESTA time for immediate use each year, or 40 hours for a small business, eliminating the carryover requirement or accrual tracking for full-time employees. 

Employers may frontload MI ESTA time for part-time employees, as long as:

• The employer provides the employee with written notice at the time of hire of how many hours the employee is expected to work during the year;
• The amount of frontloaded time is, at a minimum, proportional to the earned sick time the employee would accrue if they worked all the hours expected in the written notice.
• If the employee works more hours than expected, the employer must provide additional earned sick time in accordance with the ESTA accrual requirements.

When an employee terminates employment from an employer that frontloads MI ESTA time, the employer may determine the amount that would have accrued as of the date of separation and recoup the value of leave used that exceeds the employee’s adjusted leave balance if:

• This deduction does not reduce the final paycheck to less than minimum wage, and
• The employer obtained a prior written, voluntary agreement for the deduction.

Increments of Use

MI ESTA time may be used in the smaller of one-hour increments or the smallest increment that the employer’s payroll system uses to account for other absences.

Rate of Pay

Employees taking MI ESTA time must be paid at rate equal to or greater than either:

• their normal hourly wage pr base wage, or
• the Michigan minimum wage rate in effect.

Employers are not required to include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay, tips or gratuities in the calculation of an employee’s normal hourly wage or base wage.

Employee Notice

Employers may require employees to provide up notice up to seven days in advance foreseeable leave under MI ESTA.

For unforeseeable leave, employers may require notice as soon as practicable or according to their policy, if:

• The employer provides the employee with a written copy of the policy that includes procedures for how the employee must provide notice;
• The policy is provided by Feb. 21, 2025, the employee's hiring date or the date the policy takes effect, whichever is latest; and
• The policy allows the employee to provide notice after the employee is aware of the need for sick time.

Documentation

An employer may require reasonable documentation that the MI ESTA time has been used for covered use absences of more than three consecutive days.

Reasonable documentation under MI ESTA include the following:

1. Health care professional note, or
2. Police report, victim/witness advocate signed statement, and/or court documents for domestic violence/sexual assault absence purposes

Upon the employer’s request, the employee must provide the documentation to the employer not more than 15 days after the employer’s request.

However, an employer may not delay the commencement of MI ESTA time simply because the employer has not yet received 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.

Existing PTO Policies

Employers can use their existing paid time off (PTO) policy to satisfy MI ESTA requirements, as long as the policy provides paid leave in an amount that meets or exceeds the requirements for MI ESTA, and may be used for the same purposes.

Waiting Period

Employers may prohibit the use of accrued MI ESTA time until a new employee’s 120^th calendar day of employment.

NOTE: Prior to H.B. 4002, the new hire waiting period for use of MI ESTA time was 90 days.

Payout Upon Termination

Employers are not required, but may choose, to pay out unused, accrued MI ESTA time upon termination of employment.

However, the Michigan Payment of Wages and Fringe Benefit Act may require MI ESTA time to be paid out upon termination, pursuant to the employer's written policy or contract.

Recordkeeping

Employers must retain records that document the hours worked and MI ESTA time taken by employees for not less than three years.

Reinstatement of MI ESTA Time Upon Rehire

Employers must reinstate previously accrued, unused MI ESTA for an employee to use if the employee is rehired within 2 months of the separation of employment, unless the employee pays out the accrued, unused MI ESTA time to an employee upon separation of employment.

Notice & Posting Requirements

Employers must provide written notice of an employee’s rights under MI ESTA at the time of hiring or within 30 days or February 21, 2025 (March 23, 2025), whichever is later. This written notice must include the following information:

• The amount of earned sick time required to be provided;
• The employer's choice of how to calculate a year;
• The terms under which earned sick time may be used;
• That employers may not retaliate against employees for taking earned sick time; and
• The employee's right to file a complaint with the department for any violation of the MI ESTA.

The notice must be made available in English, Spanish, and any language that is the first language spoken by at least 10% of the employer's workforce, if the Michigan Department of Labor and Economic Opportunity (Department) has translated the notice into that language.

Employers must also display a MI ESTA poster (accessed here) in an accessible location for employees. The poster must be displayed in English, Spanish, and any language that is the first language spoken by at least 10% of the employer's workforce, if the Department has translated the notice into that language.

Unlawful Retaliation/Interference

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 their rights under MI ESTA.

An employer's absence control policy must not treat earned sick time taken under MI ESTA as an absence that may lead to or result in retaliatory personnel action, unless the employee does not follow the employer’s written policy.

Additionally, an employer may not require an employee to search for or secure a replacement worker as a condition for using MI ESTA time.

Enforcement

Employees may file a claim with the Michigan Wage and Hour Division within three years of the alleged MI ESTA violation.

If a MI ESTA violation is found, the Department has the authority to award appropriate relief, including but not limited to, payment of earned sick time improperly withheld, damages incurred by the complainant as a result of the violation, back pay, and reinstatement.

In addition, the Department may impose administrative fines on employers of up to $1,000 per violation for prohibited retaliation and up to eight times the employee’s hourly wage for denying MI ESTA time.

An employer who willingly violates the MI ESTA notice or posting requirement is subject to a $100 administrative fine for each separate violation.

NOTE: H.B. 4002 removed the right for employees to file a civil action within three years after the alleged MI ESTA violation.

Collective Bargaining Agreements (CBAs) & Employment Contracts

Special rules apply with respect to the MI ESTA for CBAs and employment contracts with certain conditions outlined in H.B. 4002.