Effective February 21, 2025, Michigan employers will face significant changes under the new Earned Sick Time Act (ESTA), replacing key provisions of the Paid Medical Leave Act (PMLA).
Current Law: Paid Medical Leave Act (PMLA) Overview
Under current law, employers with 50 or more employees are required to provide nonexempt, full-time employees with paid medical leave. The law allows for accrual at a rate of one hour of paid medical leave for every 35 hours worked, up to a cap of 40 hours annually. Employers have the option to “front load” 40 hours of paid leave at the start of the year, reducing the administrative burden of tracking accruals. Unused time may roll over to the following year, but only up to 40 hours unless the employer front-loads.
What’s Changing: Earned Sick Time Act (ESTA)
The new Earned Sick Time Act, effective February 21, 2025, dramatically expands employee coverage and benefits. Here’s a breakdown of the key differences:
- Employer Coverage: ESTA applies to all Michigan employers with at least one employee, eliminating the 50-employee threshold under the PMLA.
- Employee Eligibility ESTA extends to all employees with limited exceptions, whereas the PMLA restricted coverage to non-exempt, full-time employees.
- Accrual Rate: The accrual rate under ESTA is improved: employees earn one hour of paid sick leave for every 30 hours worked, slightly better than the one hour for every 35 hours under the PMLA.
- Accrual Cap & Usage: The ESTA permits employees to accrue up to 72 hours of sick leave annually, with 40 hours being the cap for small employers (10 or fewer employees). Large employers (more than 10 employees) must allow accrual up to the full 72 hours. Notably, all accrued sick leave rolls over to the next year, subject to the usage cap.
- Front Loading & Roll-Over: Like the PMLA, ESTA permits front-loading of leave; however, it does not allow for limiting roll-over amounts when front-loading is used.
- Documentation Requirements:ESTA simplifies documentation: employers cannot request documentation unless the employee has used three or more consecutive days of sick leave, reducing the administrative burden on both parties.
Key Takeaways for Employers
Employers must prepare to update their sick leave policies and handbooks to comply with ESTA’s broader coverage and benefits. Smaller businesses that were previously exempt under the PMLA will need to implement systems for tracking accrual and use of sick leave. It will also be essential to review existing front-loading practices and documentation requirements to ensure they align with ESTA’s more flexible approach. Lastly, employers should note the heightened risk of retaliation claims under ESTA and consider training management on compliance and best practices in leave administration.
Action Items:
- Audit and Update Policies: Ensure current paid leave policies align with the new ESTA requirements, including accrual rates, usage caps, and roll-over provisions.
- HR Training: Educate HR staff and managers on new enforcement standards and how to handle employee requests under the ESTA.
- Employee Communications:Notify employees of their expanded leave rights and update employee handbooks accordingly.
For further guidance or assistance in preparing for these changes, please contact our Employment Law team.
