If you’ve been scrambling since the Michigan legislature updated the Earned Sick Time Act (ESTA) back in February, this is your friendly reminder that October is THIS WEEK. If you employ any individual in the state of Michigan, you are required to provide earned sick time to that employee.
Timeline for Compliance
For most employers, these requirements went into effect on February 21, 2025. You should already be in compliance with this law.
What Does Compliance Look Like?
Your employees should be accruing a minimum of 1 hour for every 30 hours worked, up to 72 hours per year. If they don’t use it, they can carry it over to the following year.
The updated laws did make things slightly easier for employers. While employees can carry over unused hours, you can still limit the amount you will pay the following year to 72 hours. You are also not required to pay out unused sick time when an employee leaves.
If you are not currently in compliance, we strongly recommend you address this immediately and consider consulting with a lawyer. Penalties for non-compliance can be significant.
Small Employer Provisions
The part of the law making headlines this week specifically affects small employers. For this law only, the state of Michigan defines small employers as those that do not employ eleven or more individuals for greater than 20 weeks during the year.
The definition of “employed individuals” includes anyone who works for you – full-time, part-time, or even hired temporarily through a staffing agency.
Simplified Definition
To put it simply, if you do not pay 10 different people throughout the year, you probably qualify as a small employer. If you pay more than 10 different people throughout the year, you probably do not qualify.
Benefits for Small Employers
If you qualify as a small employer, you received additional flexibility:
- Reduced accrual cap: You can limit accrual, use, and carryover to 40 hours per year instead of 72 hours
- Delayed compliance for new businesses: If you did not have an employee as of February 21, 2022, you can delay compliance until 3 years from the date you hired your first employee
- Extended implementation timeline: You had additional time to start accruing for employees and to get paperwork and notices in order – but that deadline ends this week
Remember, you must provide this information to your employees so they know their rights. If your workplace posters do not include ESTA information, you need to update them immediately.
Simplifying Compliance
Combined PTO Policy
You can offer a combined Paid Time Off (PTO) policy as long as it meets the minimum requirements listed in the ESTA. This approach can simplify administration.
Front-Loading Option
You can choose to front-load sick time, providing the full 72 hours (or 40 hours for small employers) for immediate use at the start of the year.
Warning: There are risks with front-loading. If an employee uses all their hours in the first few weeks of the year and then leaves, you cannot reclaim any of it. Additionally, if you front-load on a prorated basis for part-time employees, you must still track actual hours worked and perform a true-up calculation at least annually.
Getting Help with Compliance
If you are paying employees, you should be using at minimum a reputable payroll software that can help you maintain compliance with this law. Most modern payroll systems have built-in tracking for earned sick time.
If you work in a niche field using specialized software, you may need to track this separately using spreadsheets or other methods.
Don’t want to handle this yourself? Book an appointment with SMP Business Services, and we’ll customize a solution to meet your specific needs. We can help ensure you’re in full compliance while minimizing the administrative burden on your business.
Questions about Michigan’s Earned Sick Time Act? Contact SMP Business Services at (517) 258-0592. We’re here to help Michigan employers navigate changing employment laws and maintain compliance.
This blog post is for informational purposes only and does not constitute legal advice. For specific legal guidance regarding your business, please consult with an employment attorney.