Michigan Earned Sick Time Act: Essential 2025 Updates You Need to Know

Michigan's Earned Sick Time Act will bring the most important changes to your business operations starting February 21, 2025. The new law raises the minimum wage from $10.56 to $12.48 per hour. Your employees will see further increases that reach $15.00 by January 2027.

Your employees can now earn one hour of sick time after working 30 hours, with a yearly limit of 72 hours. The paid sick leave rules vary based on your company's size. Large employers must provide more detailed coverage. Small businesses with fewer than 10 employees have extra time to comply until October 1, 2025.

Let us walk you through everything in Michigan's sick leave law. You will learn the new rules, deadlines, and what your business needs to do based on its size.

Key Changes to Michigan's Sick Leave Law in 2025

Michigan's sick leave regulations got a major update when Governor Gretchen Whitmer signed House Bill 4002. These changes protect working families from rising costs and make workplaces more flexible.

New minimum wage rates

The base wage rate will jump to $12.48 per hour starting February 21, 2025. Workers will see another increase to $13.73 on January 1, 2026, and then to $15.00 on January 1, 2027. Starting January 1, 2028, the rates will line up with yearly changes in the Midwest Consumer Price Index.

Tipped workers' minimum wage stays at 38% of the regular rate through 2025. The rate will grow by 2% each year from 2026 and ended up reaching 50% by 2031.

Updated sick time accrual rules

Workers now get one hour of paid sick time for every 30 hours they work under the new optimized system. Companies with more than 10 employees must give up to 72 hours of paid sick leave each year.

Employers can pick between two ways to give sick time:

• Accrual Method: Workers build up time throughout the year, with a 72-hour yearly limit
• Frontloading Option: Workers get all 72 hours at the start of the benefit year

Unused time rolls over with both options, though employers can limit the rollover to 72 hours. Companies can now use a single paid time off policy to meet these rules.

Changes in employee coverage

The new law covers much more ground. All but one of these workers must get earned sick time:

• Trainees or unpaid interns
• Youth employees under the Youth Employment Standards Act
• Workers who set their own schedules without disciplinary consequences

Small businesses with 10 or fewer employees play by different rules. They need to give 40 hours of paid sick leave each year instead of 72 hours. These businesses have until October 1, 2025, to put the new rules in place.

New businesses get a three-year grace period after hiring their first employee. This helps startups adjust to the requirements over time.

Employers keep some rights under the new system. They can ask for proof when someone misses more than three days in a row. The employer must pay any costs their workers face when getting this proof.

North Peak Finance can help you learn about putting these changes into action in your business. Their team knows how to make your switch to the new requirements smooth.

Understanding Employee Eligibility and Benefits

Michigan's workplace policies will see a radical alteration as the Earned Sick Time Act takes over from the current Paid Medical Leave Act at the time of February 21, 2025. These changes expand coverage to almost all Michigan employers and establish complete requirements for sick leave benefits.

Who qualifies for sick leave

Most employees working within state boundaries now qualify under Michigan's Earned Sick Time Act. Your employees become eligible for sick leave benefits if they provide services to your business, whatever their employment status.

Notwithstanding that, some exceptions exist. Your employees do not qualify if they:

• Work for the U.S. government
• Serve as unpaid trainees or interns
• Fall under the Youth Employment Standards Act
• Set their own working hours without penalties for minimum scheduling requirements

Public officials, appointed board members, and similar office holders stay exempt from these requirements, unless their governing entity classifies them as employees.

Benefit amounts for different business sizes

Your business's size determines your employees' sick leave amounts. Here's what you need to provide:

For businesses with 10 or more employees:

• Your workers can use up to 72 hours of paid sick time annually
• Employees earn one hour of paid sick time for every 30 hours worked
• Salaried employees earn time based on a 40-hour workweek

For businesses with fewer than 10 employees:

• Your workers receive 40 hours of paid sick time plus 32 hours of unpaid sick time annually
• Employees must use their paid sick time before unpaid hours
• Small businesses have until October 1, 2025, to make these changes

Your business size calculation should include all employees within the United States or its territories. This includes full-time, part-time, and temporary workers, even those from staffing agencies.

Employees begin earning sick time from their first day or the law's effective date, whichever comes later. You can implement a 90-day waiting period before new hires use their accrued time.

Your employees can carry over all unused hours to the next year. You don't need to pay out unused sick time at employment end. North Peak Finance offers expert consultation services that are a great way to get guidance on implementing these changes based on your specific needs.

Employer Requirements and Deadlines

Your business should prepare for Michigan's Earned Sick Time Act's new requirements before the February 21, 2025 deadline. A clear understanding of timelines and compliance duties will help you transition smoothly to these updated regulations.

Implementation timeline

The law becomes active at 12:01 a.m. on February 21, 2025. Your company size determines when you need to comply:

• Large businesses (11+ employees): Must comply immediately on February 21, 2025
• Small businesses (fewer than 10 employees): Have until October 1, 2025, to implement the changes
• New businesses: Receive a three-year grace period after formation

Documentation requirements

The new law requires you to keep detailed sick time records for at least three years. These records must track:

• Hours worked by employees
• Earned sick time accrued
• Sick time taken by employees

You can ask for documentation only after three consecutive days of absence. Employees need to provide this documentation within 15 days. Note that you must cover your employee's out-of-pocket expenses when they get this documentation.

Notice and posting obligations

Several notification requirements start on February 21, 2025:

Workplace Posting

• Display the official ESTA poster in an available, visible location
• Post in English (required) and other languages as needed
• Fill in your designated 12-month benefit year on the poster

Employee Notifications

• Provide written notice to all current employees by February 21, 2025
• Give notice to new hires at the time of employment
• Include detailed information about:
  • Accrual methods
  • Usage terms
  • Your designated benefit year

Your policy can require employees to notify you about unplanned sick time use, but you must:

• Give employees written notice of the policy
• Allow notification after they become aware of the need

North Peak Finance helps businesses meet these requirements. Their team specializes in creating compliant sick leave policies that match your specific business needs.

Calculating and Managing Sick Time

Your business needs to adapt to Michigan's new earned sick time requirements. The right management of sick time calculations will give a smooth implementation of these changes. You should understand how accrual, frontloading, and tracking methods work.

Accrual methods

The standard accrual rate mandates one hour of earned sick time for every 30 hours worked. Salaried employees exempt from overtime requirements should assume a 40-hour workweek for accrual calculations. This rule changes if they have shorter normal workweeks.

Employees begin accruing sick time right from:

• The law's effective date (February 21, 2025)
• First day of employment for new hires

The new law removes annual accrual caps, unlike previous regulations. Usage limits still apply based on your business size:

• Large businesses (10+ employees): Up to 72 hours annually
• Small businesses (fewer than 10 employees): Up to 40 paid hours plus 32 unpaid hours yearly

Frontloading options

You might prefer providing sick time upfront instead of tracking ongoing accrual. Frontloading allows you to offer:

• 72 hours at year's start (large businesses)
• 40 hours at year's start (small businesses)

The frontloading method brings several benefits:

• No need to calculate ongoing accruals
• No requirement to track employee sick time accumulation
• No carryover obligations

Notwithstanding that, frontloaded time must meet these conditions:

• Available for immediate use
• Provided at benefit year start
• Covers all purposes outlined in the act

Usage tracking requirements

The new regulations demand accurate record keeping. Your tracking system should document:

• Hours worked by each employee
• Sick time earned
• Leave hours used

Here are the key tracking elements:

Usage Increments: Time can be used in the smaller of:

• Hourly increments
• Smallest increment your payroll system uses

Record Retention:

• Keep all sick time records for minimum three years
• Include documentation of hours worked plus leave taken

Carryover Rules:

• Accrual method: Unused hours carry forward
• Large businesses: Cap carryover at 72 hours
• Small businesses: Cap at 40 paid hours

Documentation Timeline:

• Ask for proof only after three consecutive days of absence
• Allow 15 days for employees to provide documentation

North Peak Finance provides budget-friendly solutions that match your business's size and specific needs. Their expertise helps arrange your sick time calculations and tracking methods with Michigan's new regulations.

Compliance Steps for Different Business Sizes

Michigan's Earned Sick Time Act sets different rules based on your business size. The law creates specific requirements that match your organization's scale and workforce count.

Large business requirements

Businesses with more than 10 employees must follow new sick leave rules starting February 21, 2025. Your duties as a larger employer are:

Paid Leave Allocation:

• Give 72 hours of paid sick time each year
• Add one hour of sick time per 30 hours worked
• Let employees use their time right away, except during their first days

Carryover Management:

• Let unused hours roll over to next year
• Keep the total rollover at 72 hours per year
• Keep good records of time earned and used

Implementation Options:

• Pick between earning over time or getting it all upfront
• When giving it upfront, hand over all 72 hours at year start
• Set clear rules about using and documenting time off

Your company becomes "large" when you have 11 or more people working for 20+ weeks in this or last calendar year. This number covers your full-time, part-time, and temp workers, even those from agencies.

Small business accommodations

The updated law gives special treatment to businesses with 10 or fewer employees. These rules help smaller companies manage their operations better.

Modified Requirements:

• Give 40 hours of paid sick time yearly
• You have until October 1, 2025 to comply
• You can give all 40 hours upfront if you want

Implementation Flexibility:

• Choose how employees get their time
• Set a 40-hour limit per benefit year
• Let workers carry over up to 40 hours yearly

Startup Provisions:

• New businesses get three years to adjust
• This starts when you hire your first employee
• You can phase in the changes gradually

Documentation Guidelines:

• Keep records for three years
• Track work hours and time off
• Write down when your benefit year starts and ends

Your employee count should include everyone who gets a paycheck in any week. This means:

• Full-time workers
• Part-time staff
• Temp workers
• Seasonal staff (unless they're gone more than six months)

A single paid time off policy might be the quickest way to handle compliance. This works when your policy:

• Gives enough time off
• Works the same way as sick time
• Builds up at the right rate

Breaking these rules can cost you:

• A $1,000 fine if you don't give proper sick time
• A $100 penalty if you don't post the requirements

North Peak Finance helps both large and small businesses handle these new rules. They'll help you arrange your sick leave policies to match Michigan's laws while keeping your business running smoothly.

Conclusion

Michigan's Earned Sick Time Act introduces major changes that affect businesses of all sizes. Starting February 21, 2025, employees will earn one hour of sick time for every 30 hours worked, though requirements vary based on company size. Large businesses must provide up to 72 hours annually. Smaller organizations have until October 2025 to implement their 40-hour requirement.

Your business must maintain detailed records of sick time accrual and usage for at least three years. You also need to ensure proper notification to all employees about their rights under the new law. The quickest way to implement these changes successfully requires careful attention to documentation, tracking systems, and compliance deadlines.

North Peak Finance offers expert guidance on implementing compliant sick leave policies. Their team will help establish effective tracking systems and ensure your business meets all requirements before the deadlines. Contact us today!

Note that early preparation helps avoid potential risks and creates a smoother transition for employers and employees alike. The changes may seem complex, but proper planning and professional support will help your business adapt smoothly to Michigan's new sick leave requirements.

FAQs

Q1. What are the key changes to Michigan's sick leave law in 2025?

The new law requires employers to provide one hour of sick time for every 30 hours worked, with larger businesses offering up to 72 hours annually and smaller businesses providing 40 hours. The law also increases the minimum wage and expands coverage to most employees.

Q2. When does the new Michigan Earned Sick Time Act take effect?

The Michigan Earned Sick Time Act takes effect on February 21, 2025. Large businesses must comply immediately, while small businesses with fewer than 10 employees have until October 1, 2025, to implement the changes.

Q3. How do sick time accrual and usage work under the new law?

Employees accrue one hour of sick time for every 30 hours worked. Usage caps depend on business size: up to 72 hours annually for large businesses and 40 hours for small businesses. Employers can choose between accrual or frontloading methods to provide sick time.

Q4. What are the record-keeping requirements for employers under the new sick leave law?

Employers must maintain detailed records of sick time accrual and usage for at least three years. This includes tracking hours worked, sick time earned, and leave taken by employees. Employers should also document their designated benefit year.

Q5. Are there any exemptions or special provisions for certain types of businesses?

Yes, small businesses with 10 or fewer employees have modified requirements and an extended compliance deadline. New businesses receive a three-year grace period after hiring their first employee. Additionally, certain categories of workers, such as unpaid interns and youth employees, are exempt from the law.

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