On March 3, Detroit Regional Chamber members received an update on Michigan’s Earned Sick Time Act (ESTA) amendments from the Chamber’s Vice President of Political Affairs, Brad Williams, and Sean Egan, the Deputy Director of Labor for the Michigan Department of Labor and Economic Opportunity (LEO).
What Happened
At 11:18 p.m. on Feb. 20, the Michigan Legislature wisely heeded the business community’s advice and concerns by amending ESTA and the tipped minimum wage provisions from the proposed 2018 voter-initiated laws.
RELATED: Chamber Advocacy Success: Earned Sick Time Act Amendments Pass Senate, To Become Law
Despite these positive legislative changes, many questions stand about the implementation and interpretation of ESTA.
Earned Sick Time Act Implementation
Egan detailed the revisions to the accrual method and front loading for earned sick time, which permits employers to estimate and periodically adjust sick time for part-time employees based on actual hours worked. Employers can utilize existing PTO policies to meet ESTA requirements if the total paid leave meets or exceeds the necessary amounts and serves the same purposes.
Employers may establish a written policy indicating how employees should notify them of the need for leave, as long as it allows employers to be informed as soon as they are aware of the need. They can also front load sick time for new hires and adjust the amount based on the start date within the calendar year. Additionally, employers can impose limits on the use and rollover of accrued sick time to 72 hours per year for large employers and 40 hours per year for small employers.
Egan highlighted that small businesses with 10 or fewer employees have until Oct. 1, 2025, to comply with ESTA. He also mentioned a three-year look-back period for small businesses starting from Feb. 21, 2022.
Minimum Wage Changes
Egan also discussed the adjustment to the regular minimum wage to $12.48 for 2025, gradually increasing to $15.00 by 2027, and annual adjustments for inflation thereafter. Additionally, the tipped minimum wage will be 38% of the regular minimum wage for 2025, gradually increasing to 50% by 2031. Employers must make up the difference if tipped employees do not earn the full minimum wage through tips, and ESTA prohibits tips through a tip pool or directly.
Record Keeping and Compliance
Egan addressed the notification and documentation requirements for employers, explaining that they can establish written policies for employee notifications. He also noted that documentation may be required for absences lasting three days or more. Additionally, he highlighted that employers must maintain records of employee requests for ESTA, denials, and usage for a period of three years to ensure compliance and support potential investigations. Egan advised that employers should periodically review and adjust front-loaded sick time for part-time employees to ensure it corresponds with actual hours worked.