Late into the evening on Thursday February 20^th, just before the Earned Sick Time Act and Minimum Wage Act were to take effect, the Michigan Legislature amended the two laws. The amended laws were brought about by two ballot initiatives in 2017 and 2018 that were passed by the Legislature and signed by Governor Snyder at the end of their terms. This “adopt and amend” action was found unconstitutional by the Michigan Supreme Court last summer. The Court ruled that the original two laws passed before they were amended should be re-instated and gave until February 21, 2025, for enactment. The Governor signed these amendments into law in short order.

The following outlines key changes to both ESTA and the Minimum Wage law in Michigan.

Earned Sick Time-off Act (ESTA)

The amendments to the Earned Sick Time Act (ESTA) are:

• Sets the definition of "small employer" as one that employs ten (10) or fewer individuals.
• Excludes unpaid trainees, unpaid interns, variable-time workers, independent contractors, and minors from the definition of employee.
• If a formal policy is issued in writing, the amendments delay the accrual of any paid time off for part-time employees until 10/1/2025 for a small business. (Unless the accrual is provided by frontloading it.)
• New businesses started after the enactment are not covered by this law for three (3) years.
• Allows both small and larger businesses to provide the Act's required sick time to employees at the beginning of the year, rather than throughout. Frontloading of PTO.
• If the frontloading method is used the employer does not have to carryover any unused earned sick time into the following year.
• Allows for frontloading of paid time off for part-time employees on a pro-rata basis.
• For employers ten (10) or under employees in size the law and using the accrual method now caps the amount of accrued, but unused sick time, that can be carried over to 40 hours per year and all larger employers (11 or more) are capped at 72 hours per year unless the employer pays off unused PTO by the end of the year.
• If an employer uses the accrual method but does not allow the carryover of unused earned sick time, they may choose to compensate employees for the unused sick time at the end of the year.
• Excludes overtime, bonuses, commissions, supplemental pay, piece-rate pay, tips, or gratuities from the calculation of an hourly rate.
• Delays use of accrued earned sick time for employees hired after enactment to 120 days rather than the 90 days under the previous ESTA law.
• Specifies that the Act would apply to an employer that was a member of a multiemployer collective bargaining agreement under certain circumstances.
• • Excludes employees in a CBA from the 120-day waiting period specified for non-union employees.
• Provides that an employer that was a member of a multiemployer collective bargaining agreement could not require a qualifying employee to wait 90 days before using accrued sick time if the qualifying employee also were employed by another member of the multiemployer collective bargaining agreement.
• States that in the event the absence is not foreseeable an employer’s written notice procedures can specify when an employee must provide notice of absence to the employer.
  • As soon as practicable
  • In accordance with the employer’s policy on requesting/using sick time or IF
  • On the date of hire or the effective date of the Act, whichever is latest, provides the employee with a written copy of the policy that includes the procedure for how the employee must provide notice and that the notice requirement allows the employee to provide notice after the employee is aware of the need for earned sick time.
• Employers may take adverse action against an employee that fails to notify them according to the employer’s policy or misuses the benefit.
• Allows the employer to take adverse action against an employee that uses earned sick time for a purpose other than the purposes described by the act or violates the notice requirements under the act.
• Sets the smallest increment of earned sick time that can be used by an employee under this act at one (1) hour but employer may choose to use the smallest increment their attendance system allows for.
• Changes the medical documentation requirement from a providing it in “timely manner” to providing it to the employer not more than fifteen (15) days after the employer’s request.
• Reduces the length of time an employee may maintain their earned sick time after separation from employment from six (6) months down to just two (2) months unless the employer pays out the unused earned sick time at the time of separation or transfer in which case no earned sick time may transfer.
• Removes provisions about the rebuttable presumption of retaliation if:
• • a) the adverse action was taken within 90 days of the filing of a complaint against the employer,
  • b) informs any person about an employer’s violation,
  • c) cooperates with the department or another person in the investigation of prosecution of any violation, or
  • d) expresses opposition to a policy, practice of act that is prohibited under this law or informs any person of his or her rights under the law.
• Allows an employee to bring a claim for breach of the act to Department of Labor and Economic Opportunity (LEO) not later than three (3) years after the violation.
• Deletes a provision allowing an employee to bring a civil action against the employee's employer for appropriate relief due to a violation of the Act.
• Modifies references to the Department of Licensing and Regulatory Affairs (LARA) to instead refer to the Department of Labor and Economic Opportunity (LEO).
• Provides that, if an employer failed to provide sick time to an employee as required, the employer would be subject to a fine of up to eight (8) times the employee's normal hourly wage.
• As noted above, the law also expands the terms for employees under a collective bargaining agreement (CBA) to include provisions addressing multiemployer CBAs. These new provisions extend ESTA benefits and protections to multiemployer bargaining agreements beginning on the date the agreement expired or was terminated, amended, extended or renewed if the agreement was in effect on the effective date of the act or if the agreement conflicts with the Acts’ provisions. Other qualifying provisions for multiemployer CBAs apply.
• Penalties for violation of the Act such as retaliation or failing to provide earned sick time are $1000 per violation or the employer could be subjected to a civil fine of up to eight times (8x) the employee’s normal hourly wage.
• Employers must still provide written notice as specified by the current ESTA law at the time of hiring or to current employees not later than thirty (30) days after the effective date of this act’s enactment. In addition to the previous law’s provisions for notice the definition of the employer’s “year” must be included.
• Employers must have new posters up within thirty (30) days and provide employees with written notice about the amount of earned sick time required to be provided.

Michigan Minimum Wage

This law is more accurately known as The Improved Workforce Opportunity Act. It was amended by Senate Bill 8.

Under the new law Michigan’s minimum wage is:

-- Beginning February 21, 2025, $12.48.

-- Beginning January 1, 2026, $13.73.

-- Beginning January 1, 2027, $15.00

The tipped wage rate also was amended. The new minimum wage schedule is:

-- Beginning February 21, 2025, 38% of the minimum hourly wage rate ($4.74)

-- Beginning January 1, 2026, 40% of the minimum hourly wage rate. ($5.49)

-- Beginning January 1, 2027, 42% of the minimum hourly wage rate. ($6.30)

-- Beginning January 1, 2028, 44% of the minimum hourly wage rate.

-- Beginning January 1, 2029, 46% of the minimum hourly wage rate.

-- Beginning January 1, 2030, 49% of the minimum hourly wage rate.

-- Beginning January 1, 2031, 51% of the minimum hourly wage rate.

-- Beginning January 1, 2032, 53% of the minimum hourly wage rate.

-- Beginning January 1, 2033, 55% of the minimum hourly wage rate.

-- Beginning January 1, 2034, 57% of the minimum hourly wage rate.

-- Beginning January 1, 2035, 60% of the minimum hourly wage rate

ASE Connect

ASE has updated its ESTA FAQ webpage and will have a full update at its upcoming HR Conference on March 13^th in Novi during the Employment Law & ESTA Update general session.

Source: Gongwer. HB 4002