Update Applicable to:	Effective date
All employers in Michigan with at least 1 employee	ESTA – February 21, 2025

What happened?

On October 10, 2024, The Michigan Department of Labor and Economic Opportunity (LEO) released the Frequently Asked Questions (FAQs) regarding the Earned Sick Time Act (ESTA). These FAQs provide the first detailed guidance on the new paid sick leave law.

Quick Summary:

• Effective February 21, 2025, Michigan’s Earned Sick Time Act (ESTA) will replace the Paid Medical Leave Act (PMLA). The ESTA is more pro-employee, offering broader eligibility, faster accrual rates, higher usage caps, expanded reasons for use, and covered family members.

• The Michigan Department of Labor and Economic Opportunity (LEO has published FAQs and a new model poster for the ESTA. These materials provide guidance on employer coverage, accrual, usage, covered family members, and other key aspects of the paid sick leave law.

What are the details?

Key Points

Some FAQs include the following:

• Employee Threshold: ESTA applies to all employers with at least one employee in Michigan, excluding U.S. government employees. Small businesses with fewer than 10 employees have reduced obligations but must still comply with most standards.

• Accrual and Year-End Carryover: Paid sick leave accrual starts on February 21, 2025, or upon employment, with no cap on accrual. All unused paid sick leave must be carried over to the next year.

• Frontloading: Employers can provide the total amount of paid sick leave at the beginning of the benefit year but must still track accrual and carryover.

• Annual Usage Cap: Employees can use up to 72 hours of paid sick leave annually. Small businesses can limit this to 40 hours of paid and 32 hours of unpaid leave.

• Rate of Pay: Sick leave must be paid at the employee’s regular rate or minimum wage, whichever is higher.

• Increments of Use: Employees can use paid sick leave in hourly increments, or the smallest increment used by the employer’s payroll system.

• Notice, Poster, and Documentation: Employers can require advance notice for foreseeable leave and documentation for absences over 3 consecutive days and must cover any costs for obtaining documentation. Employers must display a new ESTA poster in the workplace and provide a notice of rights to new employees at hiring and to current employees by February 21, 2025.

• Recordkeeping: Employers must keep records of hours worked and paid sick leave used for at least three years.

Business Considerations

• Employers should review and update their existing sick leave or PTO policies to ensure compliance with the ESTA, including related policies on attendance, conduct, anti-retaliation, and discipline.
• Employers should train supervisory and managerial employees, as well as HR staff, on the new ESTA requirements to ensure proper implementation and compliance.
• Employers should monitor the Department’s website for additional guidance, updated FAQs, and potential rulemaking on paid sick leave compliance obligations.
• Employers should display the new ESTA poster in the workplace and provide a notice of rights to new employees at hiring and to current employees by February 21, 2025.
• Employers should retain records of hours worked and paid sick leave used by employees for at least three years to comply with recordkeeping requirements.

Source References

• MI LEO FAQs
• MI LEO Posting Requirements
• MI LEO Notice Requirement
• MI LEO Poster Requirement Link

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