Navigating Michigan’s New Sick Leave Law: Key changes and what to know

The transition from the Paid Medical Leave Act (PMLA) to the Earned Sick Time Act (ESTA) is a significant shift in paid leave policies for businesses of all sizes in Michigan. The new law came into effect on February 21, 2025. With this new law, sick leave policies will change and will provide up to 72 hours of sick leave annually to employees.

There is no denying that such changes in the law have its share of novelties. Companies will have to deal with these new features. A good understanding of what the ESTA entails, as well as good communication within the company, will ensure that the new procedures are properly integrated.

Main changes coming into effect

Now that the law on paid leave has been changed from PMLA to ESTA, a series of changes have come into effect for all types of businesses. These changes are important for both employers and employees to be aware of.

Number of hours worked to qualify

Under PMLA, employees had to work 35 hours to earn one hour of paid sick leave. Now, with ESTA, this threshold has been reduced to 30 hours, allowing employees to accumulate paid sick leave more quickly.

Leave accumulation

Unlike the previous law, ESTA no longer sets a limit on the accrual of paid sick leave. However, a restriction on usage will be implemented: only small businesses can limit the use of paid sick leave to 40 hours. Once this limit is reached, employees can still accumulate unpaid sick leave.

Additionally, all unused sick leave can now be carried over indefinitely, with no maximum cap. This provision also applies to temporary, seasonal, and part-time employees.

Leave anticipation

Unlike the PMLA, which allowed employers to anticipate employees' paid sick leave, ESTA does not address leave anticipation. That said, nothing prevents employers from doing so, if they comply with ESTA requirements, of course.

Differences between states

     Source: Michigan Employers: Get Ready for Expanded Paid Sick Leave, Epstein Becker Green

Impact on small businesses

From now on, small businesses, including those with fewer than 10 employees, will have to comply with ESTA requirements. This can present a number of challenges for companies with fewer employees and therefore fewer resources.

Increased costs

Small businesses will now be required to fund up to 40 hours of paid sick leave for each of their employees, which corresponds to a rather increased financial burden. Additionally, some companies will also have to invest in extra administrative and accounting resources to track and manage these new leave policies.

Reduced operational efficiency

Now that employees can take up to 40 hours of paid sick leave, and there is no longer a limit on unpaid sick leave, some companies could find themselves with employees taking long periods of leave. This in turn can complicate work planning for smaller companies with limited staff to cover the time off.

What employees need to know 

All employees in the private sector will be covered by this new law. This means that even part-time and seasonal workers will benefit. However, there are a few things that employees should bear in mind to ensure that their employer complies with the new terms and conditions.

• Employers can not punish an employee for using sick leave.
• Employers must inform employees of their rights and provide the necessary documentation to ensure that everyone is well informed.
• In return, workers are required to inform their employer as soon as possible in the event of absence.
• Employees are required to provide reasonable documentation to their employer if their leave is above three days.

The ESTA aims to protect workers by imposing clear obligations on employers, requiring both parties to juggle together to ensure a smooth transition to these new laws.

What employers need to know

Employers and HR managers must adapt their practices to comply with ESTA's new requirements.

Adapt HR policies and ensure compliance 

Employers will need to revise their internal leave policies to bring them into line with the new ESTA laws. They will also need to ensure that all employees are informed of the new laws and provided with the documentation they need to fully understand them. Employers who do not provide their employees with the necessary information about their new rights or who do not provide complete documentation could be fined up to $100 per violation. HR managers and supervisors also need to be well-informed about the new requirements of the law, to ensure that they are respected in the workplace. If an employer does not provide the correct amount of sick leave to their employees or if they engage in retaliatory actions, they may face a fine of 1000$ per violation.

Adjustments to Leave and Payroll Tracking

Sick leave management systems will have to be adjusted to track the accumulation of leave. Payroll management will also have to change, since it will be necessary to integrate the new leave arrangements and distinguish between paid and unpaid leave, depending on the size of the company. Employers must keep records of hours worked and sick leave taken for at least three years to prove they respected the ESTA laws.

Best practices for a smooth transition

These changes are significant, and their implementation must be well supervised to ensure a smooth transition. There are a number of things that managers can do. Organizing an information session for employees and creating an in-house FAQ are two solutions that can help employees feel guided and confident about the new law. Supervising the staff who will be responsible for applying the new terms and conditions can also be a way of ensuring that integration goes smoothly.

For PurelyHR users

Changing your time-off policies shouldn’t be so hard. You can change or create new policies easily with PurelyHR. You can also create different time-off types and ad it to your policy. If you need help changing your settings to accommodate the new law, our customer service team is always on hand to answer your questions or help you implement the new settings. This way you can be sure that everything is integrated efficiently and that there are no errors. You can then rest easy!

For nonusers

Of course, a key aspect to bear in mind when integrating ESTA into the company is to adapt employee time-off and leave tracking. That said, Purely HR's Time-Off module greatly simplifies these processes. Among other things, this tool saves an enormous amount of time on leave management and enables the integration of customizable time-off policies. Customer service is also on hand to help you make sure everything is programmed correctly, to avoid any errors. PurelyHR's tools also help you automate the process of integrating new legislation and staying consistent with changes. And if ever there's a problem, our service is available to all companies at any time, free of charge, making it much easier to integrate new legislation into your business