A One‑Year Look Back At Michigan's Earned Sick Time Act

Roughly one year since the Earned Sick Time Act (ESTA) came into effect, employers are acclimating to its requirements and developing best practices for compliance. On February 21, 2025, an amended version of ESTA came into effect, while also allowing employers a 30-day grace period for finalizing policies. This article provides an overview of ESTA, including some of its features and a discussion of the first legal challenge to ESTA since its effective date.

1. ESTA’s Basic Requirements

ESTA requires all Michigan employers with at least one employee to provide most employees with paid sick time, either accrued at a rate of one hour for every 30 hours worked or frontloaded at the start of the benefit year. ESTA covers a wide range of reasons for leave, including an employee’s or family member’s illness, medical care, issues related to domestic violence or sexual assault, school meetings for a child’s health, and closures due to public health emergencies. The Act sets annual caps on the amount of paid sick time employees can use—40 hours for small businesses (10 or fewer employees) and 72 hours for larger employers—while allowing for carryover of unused hours unless hours are frontloaded.

2. Administrative Remedies Under ESTA

While not as well-known as other components of the law, ESTA contains anti-retaliation provisions within a unique statutory administrative scheme. Aggrieved employees can leverage these administrative remedies for three years following an alleged violation by filing a claim with the Michigan Department of Labor and Economic Opportunity (LEO). LEO must investigate complaints it receives regarding ESTA violations, and has the authority to issue relief, including payment of all earned sick time improperly withheld, award of damages incurred by the complainant, back pay, reinstatement, and penalties against an employer. Employers should be mindful of this potent administrative scheme and use it as motivation to ensure strict compliance with ESTA’s requirements.

3. Frontloading vs. Incremental Accruals

The administrative burden of tracking accrued sick time under ESTA has resulted in many employers opting to frontload. Frontloading leave time under ESTA allows employers to provide the full annual allotment of ESTA leave at the start of the benefit year, making it immediately available to employees. This approach eliminates the need for carryover of unused hours, tracking accruals, and the 120-day waiting period for new hires. Employers must prorate frontloaded hours for new hires or part-time employees based on expected hours worked. The streamline effect of frontloading makes it a best practice for those employers looking to simplify their compliance with ESTA. However, frontloading is not without financial risks. For instance, frontloading carries the potential for abuse among employees, in particular, recent hires that may not ultimately earn the full allotment under the incremental accrual method. 

Thus, frontloading is not a panacea, and some employers may prefer incremental accrual of ESTA leave time. The accrual method under Michigan's ESTA requires employees to earn one hour of sick time for every 30 hours worked, with annual usage caps of 40 hours for small businesses and 72 hours for larger employers; unused hours can be carried over to the next year up to these caps. Under this approach, employers must track accruals and carryover for each employee, and employees may only begin using accrued time after a waiting period of up to 120 days from starting employment. The potential benefit of this approach is that employees receive their leave time more gradually, and as a result may be less prone to using it all at once or at the outset of the year.

4. Legal Challenge – Collective Bargaining Agreements

The Michigan Court of Claims resolved the first legal challenge involving ESTA since it went into effect. In Michigan Chapter, National Electrical Contractors Association v. Michigan Department of Labor and Economic Opportunity the Court of Claims held that ESTA applies immediately to Collective Bargaining Agreement (CBA) that are silent on sick time. The court reasoned that the statutory phrase “conflicts with” uses an active verb requiring actual conflict between a CBA and ESTA, and therefore CBAs without sick leave provisions do not conflict with ESTA and must comply immediately. Whereas CBAs with conflicting provisions remain exempt until contract expiration. This first ESTA case upheld LEO’s interpretation and rejected constitutional challenges under contract and equal protection clauses.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.