Earned Sick Time: New Law, New Requirements

This week, we are taking a second to break down the recent changes to the Earned Sick Time Act passed by the Michigan legislature and signed by the Governor (PA 2 of 2025). This may feel a bit like Groundhog Day since we discussed this topic late last year, following the Michigan Supreme Court decision. But prior to those requirements being effective, the Michigan legislature took action to provide much-needed clarity around earned sick time. So, let’s dive into the new requirements under PA 2 of 2025. 

Key Provisions 

The new language of the Earned Sick Time Act (ESTA) provides employers with more options than the previous law would have. Let’s break it down!  

Small businesses are now defined as businesses employing 10 or fewer employees, and small businesses do not have to comply with the new law until Oct. 1, 2025. Employers are now specifically able to either front-load the required amounts of earned sick time or choose to allow their employees to accrue time. The two tiers of employer-provided hours did not change. It is still 40 hours of paid earned sick time required for small businesses and 72 hours of paid earned sick time for all other employers.  

If a business chooses the accrual method, then employees are required to accrue at least one hour for every 30 hours that they work. The amount of time that can be used is still able to be capped at 40 hours for small businesses and 72 hours for all other employers. If the business does choose to utilize this method, then they are required to allow their employees to carry over 40/72 hours of paid earned sick time from one year to the next.  

Employers can also front load the required amounts of time based on business size. If an employer chooses this method, then they are not required to allow employees to carry over the time from one year to the next.  

The final option is, if the employer is already providing the employee with paid time off that is at least 40/72 hours (based on employer size) that may be used for any purposes as allowed under the act, then they are deemed to be complying with the act and do not have to provide an additional or separate bucket for the ESTA time. 

The changes to the notice requirements allow employers to establish written policies for accountability to prevent cases of “no call, no show.” It also increases the smallest amount of time an employee can take of ESTA to one-hour increments. 

There are various other changes to the newly enacted law, but the breakdown above highlights the biggest changes.  

What Now? 

It is going to take the Department of Labor and Economic Opportunity time to update their guidance, posters and compliance materials, which they’ve said will likely lead to delayed enforcement of the new law. Employers, however, should review the language of the new law and ensure they are in compliance with the new requirements.  

Also, on March 14 at 10 a.m., MCUL will be hosting a Town Hall with Holzman Law attorney Mike Krempa to discuss the changes in more detail. An email with a link to register for that event was sent late last week to all CEOs.  

To sum it up…  

The changes that the legislature enacted provide greater clarity and pathways to comply with the law and should allow many businesses to have to make only minor tweaks to their policies to bring themselves into compliance. The advocacy efforts undertaken by the broader business community truly should be applauded; who knows what would have been the result without them. 

As always, this article is intended for general information only and does not constitute legal advice. If you have any questions about this topic and/or the possible implications, you should contact your attorney for advice. 

Hope to see you next time when we take a second to discuss another legal topic in the financial services industry! 

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