Detroit Regional Chamber > Advocacy > Earned Sick Time Act: Preparing for Implementation

Earned Sick Time Act: Preparing for Implementation

February 3, 2025

Top Takeaways

  • Starting Feb. 21, all employees will accrue sick time with no exemptions, except railway workers and federal government employees due to federal preemption.
  • LEO will work with all employers who are working in good faith to adjust to ESTA’s changes.
  • Employers should contact legislators to support HB 4002 and SB 15 before Feb. 21.

On Jan. 31, the Detroit Regional Chamber hosted a webinar with the Michigan Department of Labor and Economic Opportunity (LEO) to discuss the extreme changes to earned sick time and minimum wage in Michigan.  

Legislative Updates 

The Chamber’s Brad Williams opened the webinar by giving legislative updates regarding the Earned Sick Time Act (ESTA). 

On Jan. 23, the Michigan House of Representatives passed Chamber-approved legislation that includes much-needed changes to ESTA. Now that the legislation awaits action in the Senate, Williams advised attendees to contact their legislators and express support for HB 4002 and SB 15 before the Feb. 21 implementation date. 

Remember, Chamber members have the added benefit of receiving advice and help on reaching out to legislative leaders personally from the Chamber’s Public Policy and Business Advocacy team. 

Key ESTA and Minimum Wage Changes For Employers 

LEO’s Sean Egan began his presentation by updating attendees on the latest minimum wage increases before giving a general overview of ESTA’s changes and answering many audience questions.

Minimum Wage

As indicated by the State Treasury in September 2024, Michigan saw two slight increases in the minimum wage before Feb. 1, bringing it to $12.48 per hour. This also includes changes for tipped workers, where the minimum wage utilizing the tip credit was raised to $5.99 per hour, reflecting 48% of the standard minimum wage. 

Related: Treasury Department Updates Wage Rates for 2025 and Beyond 

Front-loading and Carryover of Sick Time 

Egan outlined challenges with front-loading sick time and the need to carry over accrued hours annually. Employers must verify hours each year for compliance. Starting Feb. 21, all employees will accrue sick time, with no exemptions under the new law, except railway workers and federal government employees due to federal preemption. 

Use of Earned Sick Time and Notice Requirements 

Egan explained that earned sick time can be used for personal illness and child care. Employees must give seven days’ notice for planned leave and notify “as soon as practical” for unplanned leave, with documentation needed for absences of three or more consecutive days.  

Further, Egan said employers are not required to pay out unused earned sick time when an employee leaves the company. He also suggested that employers who offer unlimited PTO should still track usage and carryover to ensure compliance. 

Part-time, Temp, and Commissioned Employees 

Egan also clarified how ESTA applies to temporary, intern, and commissioned employees. He explained that temporary employees accrue sick time but may be unable to use it. He also said employees’ sick time is calculated based on their average earnings from the previous week, and the definition of “employee” is crucial in determining the right to earned sick time. 

Egan then explained employees in one’s home depend on whether they are considered employees or independent contractors.

  • Independent Contractors: If the individuals are independent contractors (e.g., a cleaning crew hired through a company), they are not considered employees, and the homeowner is not responsible for their earned sick time. 
  • Employees: If the individuals are directly employed by the homeowner (e.g., a grounds crew who receives W-2s and is on the homeowner’s payroll), they are considered employees and would be covered by ESTA. 

Collective Bargaining Agreements 

Egan also explained how ESTA applies to employees covered by collective bargaining agreements, stating that existing agreements with earned sick time provisions or explicit exclusions will remain in effect until the next contract negotiation. 

Moving Forward 

In closing, Egan said LEO does not intend to immediately penalize employers making a good faith effort to comply with ESTA after Feb. 21. Instead, the department will work with employers to correct any issues and ensure compliance, focusing on informal resolution of problems rather than immediate enforcement. To learn more about ESTA, visit LEO’s website 

The Chamber is continuing its collaboration with several law firms within its membership to address the pressing questions of its members. If you have questions about the ruling, please submit them here. 

The Chamber will continue to monitor ESTA changes and share updates with all members.