Michigan: Paid Sick Leave and Minimum Wage Updates

Michigan’s battle over updates to paid sick leave and minimum wage has a long legal and legislative history. The big question was if we’d see one last plot twist before the effective date. And did we ever! Just hours before the new laws were set to take effect, the state legislature passed amendments to both minimum wage and sick leave, which took effect when the governor signed them the morning of February 21.

Here are the key details of the laws currently in effect.

Paid Sick Leave

The Earned Sick Time Act requires employers of all sizes to provide paid earned sick time (EST) to all Michigan employees, up to 72 hours per year. However, small employers, defined as those with ten or fewer employees, only have to provide up to 40 hours of paid EST. Additionally, small employers don’t need to allow employees to start accruing EST until October 1, 2025.

Accrual, Carryover, and Frontloading

Employees will accrue EST at a rate of one hour for every 30 hours worked beginning February 21 (October 1 for employees of small employers) or on their hire date— whichever is later. Employers can calculate exempt employees’ accrual based on a 40-hour workweek (even if they generally work more than that) or their usual number of hours worked if they regularly work less than 40 hours. usual number of hours worked if they regularly work less than 40 hours.

Employers can cap EST accrual as follows:

• Small employers: 40 hours per year

• All other employers: 72 hours per year

Accrued but unused EST must be carried over from year to year.

Frontloading is allowed and eliminates the need for carryover. If pro-rating for part-time employees, employers must provide a written notice at the time of hire specifying the total number of hours they’re expected to work for the year.

Use

Employees can use EST as it is accrued, except that employers can require new hires to wait until their 120th calendar day to start using EST. Employees can use EST for the following reasons:

• Their own or their family member’s mental or physical illness, injury, or health condition, including medical diagnosis, care, treatment, or preventive medical care.

• Certain reasons related to domestic violence or sexual assault.

• Meetings at their child’s school or place of care related to the child’s health, disability, or the effects of domestic violence or sexual assault on the child.

• The closure of their workplace or their child’s school or place of care by a public health official because of a public health emergency.

• Certain reasons related to limiting the spread of a communicable disease.

Employers can cap annual use of EST at 72 hours, or 40 hours for small employers.

EST needs to be provided in the smallest increment that the employer uses for other absences (but not more than one hour) and paid at the greater of the employee’s hourly wage or base wage, or the minimum wage. Certain types of pay such as overtime, holiday, bonuses, commissions, and tips are not required to be included in the hourly wage or base wage.

Documentation

When employees use EST for more than three consecutive days, employers can request reasonable documentation that the leave was used for a covered purpose. However, the employer will be responsible for the employee’s out-of-pocket costs associated with getting the required documentation.

Notice and Posting

Employers must give employees written notice of their EST rights at the time of hire or by March 23, 2025, whichever is later. The notice needs to include the amount they’re entitled to, the employer’s definition of a year, the terms of EST use, and the employee’s right to file a complaint. It also needs to say that employers can’t take retaliatory action against employees who request or use EST. Employers are also required to display a poster with the same information in a conspicuous and accessible location in the workplace.

Both the notice and posting must be provided in English, Spanish, and any primary language spoken by at least 10% of employees, if the state provides a translation in that language. The state has created a model notice that can be found here.

Reinstatement

Employers aren’t required to pay out unused EST when an employee quits or is terminated. However, employees who are rehired within two months of separation and did not have their EST paid out, must have their accrued but unused EST restored.

Paid Leave Policies

Employers can use a paid leave policy to meet the requirements of EST as long as it meets or exceeds the requirements of the EST law.

More Information

The state has provided FAQs.

Minimum Wage and Tip Credit

The minimum wage will increase on a revised annual schedule as follows:

• February 21, 2025: $12.48 per hour and tipped employee base wage of $4.74

• January 1, 2026: $13.73 per hour and tipped employee base wage of $5.49

• January 1, 2027: $15.00 per hour and tipped employee base wage of $6.30

After that, the minimum wage will be adjusted annually each January based on inflation.

The minimum base wage for tipped employees will be:

• January 1, 2028: 44% of the minimum hourly wage

• January 1, 2029: 46% of the minimum hourly wage

• January 1, 2030: 48% of the minimum hourly wage

• January 1, 2031: 50% of the minimum hourly wage

Action Items

• If you use our Smart Employee Handbook, keep an eye out for the notification to

• update the sick leave policy. If you don’t use our Smart Employee Handbook,

• update your sick leave policy to reflect the new requirements.

• Add the EST notice to your new hire packets.

• Post the EST notice in a conspicuous and accessible location in the workplace.

SB 8 and HB 4002 were signed by the governor on February 21, 2025.