LANSING, Mich. – Governor of Michigan enacted significant revisions to the state’s labor laws on February 21, 2025, with amendments to the Earned Sick Time Act (ESTA) and the Michigan Wage Act, both mandated by the Michigan Supreme Court after it reinstated the original versions overturned by the legislature. These laws, which demand higher minimum wages and revised sick time provisions, take effect immediately as the previous versions were set to activate on the same day.
In a move reflecting ongoing legislative adjustments since 2018, these laws originally came into being as a result of citizen-initiated legislation that aimed to elevate the minimum wage to $12.00 per hour, eventually eliminate tipping credits, and install new sick leave requirements. The legislature’s attempts to modify these voter-driven initiatives were struck down by the Michigan Supreme Court, leading to the re-establishment of the original proposals supposed to commence now.
The newly amended ESTA introduces a delayed enforcement until October 1, 2025, for small businesses with ten or fewer employees, who face reduced requirements of up to 40 hours of sick time use. The law exempts certain groups such as unpaid interns, trainees, youth employees, and those with flexible scheduling from these provisions. Crucially, for employees under existing collective bargaining agreements, the ESTA regulations kick in after the expiration of said agreements, provided they don’t exceed three years.
Further, the ESTA adjustment defines the accrual of sick time more clearly, stipulating that it does not accumulate during periods of employee absence. Employers may now limit both the usage and rollover of sick days to 72 hours annually (40 hours for smaller businesses) and have the option to allocate sick leave upfront, a move which negates the need for carryover. New hires may also be required to wait 120 days before tapping into accrued leave.
Moreover, the ESTA now mandates that employees notify their employer “as soon as practicable” for unforeseen sick leave, following the company’s written policy, which should align with legal standards. Additionally, a maximum of seven days’ notice can be required by employers for foreseeable absences, with large employers provided until March 23 to communicate these updates in their sick leave policy to employees.
On enforcement, the revisions remove the provision for a private right of action, instead granting the Michigan Department of Labor and Economic Opportunity broader authority to implement civil penalties, including fines up to eight times the hourly wage of the affected employee.
Turning to the Wage Act amendments, the new law sets the minimum wage at $12.48 per hour, effective from February 21, 2025. Scheduled increases will raise the minimum wage to $13.73 per hour in 2026 and eventually $15.00 per hour by 2027. Tipped employees, however, will see a gradual reduction in tip credit from a current 62% to 50% by 2031, equating to a minimum wage of $4.72 per hour for tipped workers in 2025 under the new adjustments.
For employers, these legislative changes signify a mix of relaxed and tightened regulations. It is advised that all business operators review and possibly adjust their compensation structures and policy manuals to align with the amended requirements to avoid legal infractions.
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