Navigating the Michigan Earned Sick Time Act: A Guide for Employers of All Size

The Michigan Earned Sick Time Act, effective February 21, 2025, introduces significant changes to paid sick leave requirements for Michigan employers. While this legislation has been years in the making, many small to mid-sized businesses remain unaware of its implications.  

With the deadline fast approaching, now is the time for employers to understand their responsibilities, make necessary adjustments, and ensure compliance.

Key Provisions of the Michigan Earned Sick Time Act

The Act applies broadly, requiring all Michigan employers, regardless of size, to provide paid sick leave to eligible employees. Below are the primary provisions employers should be aware of:

1. Accrual and Usage:

• Employees accrue one hour of paid sick leave for every 30 hours worked.
• Employers may cap employee usage of earned sick leave at 72 hours per 12-month period.
• Accrual of sick leave hours for all employees must begin by February 21, 2025 and must be tracked and documented.
  

2. Eligibility:

• Full-time, part-time, and temporary employees are covered. The law does not restrict eligibility based on hours worked per week.
• Independent contractors are not considered employees under this Act and are therefore not considered eligible.
• Employees start accruing sick leave from their first day of employment, but employers may restrict usage until the employee has worked for 90 calendar days. ‍

3. Permitted Uses:

• Sick leave can be used for a range of health needs, including preventative medical care or diagnosis, injuries suffered, both physical and mental health, and issues related to domestic violence or sexual assault.
• Eligibility extends to the employee’s self care as well as to care for a family member.
• Employees may even use sick leave for closures of workplaces or schools due to public health emergencies.
  

4. Documentation Requirements:

• Employees taking leave for more than three consecutive days may be asked by the employer for documentation, such as a doctor’s note.  
• However, the documentation cannot disclose specific medical details, so as to comply with privacy laws.
  

5. Unused Sick Leave:

• While unused sick leave carries over annually, employers are not required to allow more than 72 hours to be used within a given year. (They have the option to do so, but they are not required to do so.)
• Employers are not obligated to pay out unused sick leave upon an employee’s departure, as many employers do with other unused PTO.
  

6. Compliance:

• Employers must display a mandatory poster outlining employees' rights under the Act (similar to the minimum wage and OSHA notices that must be displayed in the workplace).
• Detailed records of accrual and usage must be maintained by the employer. Failure to provide documentation when asked for could result in legal action or financial penalties.

Implications for Employers

The new requirements will have varying impacts on employers in Michigan, depending on each company’s size and existing policies:

• Smaller Employers: Businesses without a formal paid time off (PTO) policy will need to implement tracking systems to manage sick leave accrual and usage.
• ‍Existing PTO Policies: Employers offering a general “PTO bank” may need to revise their policies to track and designate time taken under the Act. Some may opt to track Act-eligible sick time separately from other types of PTO.
• ‍Administrative Obligations: Employers will need to update their payroll systems, employee handbooks, and employee notices to reflect the new rules.

Steps to Prepare

Though February 21 may seem a long way off, we recommend that employers begin working toward that deadline in advance, as there are a lot of moving parts when it comes to ensuring compliance, and some steps will take time to plan out and implement.  

For starters, employers should begin work immediately to:

1. Review Current Policies:

• Evaluate existing time-off policies to determine alignment or misalignment with the Act’s requirements.
• Decide whether to integrate sick leave into a single PTO bank or create a separate sick leave category.
• Inventory what changes need to be made to various company policies and documents.
  

2. Update Systems:

• Work with your payroll provider or HR software vendor to ensure accrual tracking is in place by February 21. There may be some steps your payroll provider asks you to complete to ensure compliance.
• Work with payroll to document the necessary processes for documenting and verifying both accrual and sick leave usage.  

3. Post Required Notices:

• Obtain and display the mandatory sick leave poster in a visible location for employees.

4. Seek Professional Guidance:

• Consult with a labor and employment attorney to ensure compliance and address any unique challenges your business may face. Remember, the worst-case scenario is costly litigation, should an employee file a claim for non-compliance, so it’s never too early to seek specialized legal expertise.
• Work with your employee benefits advisor, who can provide some high-level oversight and guidance on this topic, and who may be able to assist with some elements of your updates to policies and employee documents.
  

5. Communicate with Employees:

• Notify employees of the new policy, including accrual rates, usage limitations, and any documentation requirements.  
  

Need Assistance?

If you have questions about how the Michigan Earned Sick Time Act impacts your business, reach out to your benefits advisor or labor attorney. If you’re not receiving guidance from your current advisor, we’re happy to share with you the educational presentation we are sharing with our clients on everything they need to know to prepare for the quickly approaching February deadline. We can help you take the first steps toward compliance and connect you with the additional resources you may need.

Preparing now will ensure your business meets its obligations, while supporting the health and well-being of your valued employees.