Michigan Labor Law Changes: Wage & Paid Sick Leave Updates Employers Need to Know

Pivotal Moment in Michigan Labor Law History

The eleventh-hour is a pivotal moment in Michigan’s labor law history, marking a season of significant change for employers. This article delivers an immediate, thorough analysis of the recent amendments to the state’s wage and paid sick leave regulations. Originally enacted in February 2024, these legislative amendments have raised the bar on wage standards and paid sick leave policies.

At HOL, our legal experts are committed to providing employers with the insights and guidance needed to navigate these transformations effectively. Let’s get you informed so that you and your team are prepared to address the new requirements and maintain compliance.

The Winding Road of Michigan Labor Laws

The original Michigan wage and paid sick leave laws emerged from a 2018 voter initiative and were later reinstated by a 2024 Michigan Supreme Court ruling. These laws—namely the Earned Sick Time Act (ESTA) and the Improved Workforce Opportunity Wage Act (IWOWA)—established benchmarks for minimum wage and paid sick leave accrual. The recent amendments are the result of competing legislative efforts aimed at balancing employee protections and employer concerns.

Michigan Minimum Wage Overhaul: Reviewing the Changes

Senate Bill 8 brings several changes to Michigan's minimum wage landscape. This comprehensive bill has accelerated the timeline for reaching a $15 minimum wage and adjusted the trajectory of the tipped minimum hourly wage.

Here's a snapshot of these changes:

In addition to these wage adjustments, Senate Bill 8 now carries a penalty of a possible $2,500 fine for violating the tipped minimum hourly wage provisions.

Michigan's ESTA Transformation: A Breakdown of the Changes

House Bill 4002 introduces several key changes to ESTA that impact Michigan employers directly. Here's a detailed overview:

Waiting Period: 

• New hires after February 21 can be required to wait up to 120 calendar days before using accrued earned sick time (formerly 90 days). The Department of Labor and Economic Opportunity states that waiting periods are only applicable to accrual-based employers, not front-load employers.

Small Business Definition & Sick Leave Requirements: 

• Small businesses with 10 or fewer paid workers now have less demanding requirements under ESTA, allowing employees to use up to 40 hours of paid sick time annually.

Small Business Effective Date: 

• Small businesses have an adjustment period until October 1 to start complying with ESTA.

Covered Employee Clarification: 

• The law clarifies who is considered a covered employee, excluding statutorily defined "unpaid trainee or unpaid intern," employees subject to the Youth Employment Standards Act, and those working under an employer policy that allows flexible scheduling and prohibits penalties for not scheduling minimum hours.

Yearly Carryover Cap: 

• Employers can cap the carryover of accrued paid sick time at 72-hours per year (40-hours for small businesses).

Pay Rate Guidelines: 

• Pay rate for earned sick time is now the greater of the employee's base wage or the minimum wage under IWOWA. Overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece rate pay, tips, or gratuities do not need to be included in the base/hourly wage for ESTA-covered time.

Unforeseeable Request Timing: 

• While employers still can only require 7-days advance notice for foreseeable uses of ESTA-covered time, employers now have two options for notice of unforeseeable uses of ESTA-covered time.

Earned Sick Time Increments: 

• Employers now have the choice of using one-hour increments or the smallest increment the employer's payroll system uses for other absences.

Document Request: 

• When ESTA allows an employer to request supporting documentation for ESTA-covered time usage, the employer can demand the documents be provided within 15-days of the employer's request.

Rehire Provision: 

• Two changes were made to this provision:

(1) the rehire provision only applies if the employee is rehired within two months (was six months); and

(2) the rehire provision does not apply if an employer pays out accrued but unused earned sick time at the time of separation.

Prorating: 

• Employers that provide 72-hours (40-hours for small businesses) of earned sick time for immediate use at the beginning of the benefit year do not have to:

(1) allow carry over of unused time;

(2) calculate and track employees accrual of paid earned sick time; or

(3) pay out unused accrued paid earned sick time at the end of the year in which it was accrued.

PTO Compliance: 

• Employers can still comply with ESTA by offering a PTO policy that provides at least 72 hours of time off for ESTA-covered reasons.

Adverse Action: 

• Employers can take disciplinary action if the employee uses earned sick time for a purpose other than one covered by ESTA, or violates the notice requirements under ESTA.

Notice Requirement timeline extension: 

• Employers previously had until February 21 to provide written notice of certain items to current employees and then upon hire for all new employees thereafter. Now because of the late amendment, employers have until March 23, 2025 to provide employees with notice of all of the following.

Rebuttable Presumption: 

• The presumption of an ESTA violation has been removed if an employer takes an adverse personnel action within 90-days of exercising a right provided by ESTA.

Michigan's Employer Obligations Moving Forward

Reviewing and understanding these legislative changes requires swift action. Employers are advised to take the following steps to stay ahead and remain compliant:

Strategy Review: 

• Evaluate how the changes impact your organization and update your compliance strategy accordingly.

Legal Consultation: 

• Seek legal counsel to align your policies with the latest amended version of ESTA.

Budgeting: 

• Account for the accelerated increase to the $15 minimum wage in your budget.

Staff Training: 

• Train your HR, payroll, and other key staff to ensure everyone understands the new rules.

Stay Informed: 

• Subscribe to The HOL Blog to receive timely updates on labor law developments.

Still No Replacement Requirements Allowed

• Employers still cannot require an employee to find a replacement as a condition of using ESTA-covered leave.

Collective Bargaining Agreements

• If a CBA is in effect on February 21 and it conflicts with ESTA, then ESTA does not apply to the employees subject to that agreement until the stated expiration of the agreement.

Stay Ahead with HOL

Michigan’s labor laws are evolving, and staying informed is critical for compliance and business success. HOL is committed to keeping employers ahead of these changes with expert insights and proactive legal strategies.

– Stay Legally Compliant with HOL: Required Workplace Posters for Small Businesses and Other Michigan Employers –

To help businesses meet legal requirements, HOL is providing direct access to the official state-mandated labor law posters. These must be displayed in the workplace to comply with Michigan’s Minimum Wage & Paid Sick Leave Laws.

Employers can download and print the required posters below:

• Minimum Wage & Overtime Poster – (Effective 2/21/2025)

• Earned Sick Time Act (ESTA) Poster -  (Effective 2/21/2025 – Required for covered employers)

HOL is dedicated to supporting both small and large businesses by simplifying compliance and providing the tools you need to protect your company and employees. Stay compliant and trust HOL to keep you informed.

💡 Need further legal guidance? Contact HOL Law Firm today for a consultation on how these laws impact your business.