Inside 208

The Michigan Legislature passed House Bill 4002 this evening, which amends the existing Earned Sick Time Act (ESTA) set to take effect on Friday, February 21^st. With minutes to spare, the House and Senate negotiated their terms that ultimately made significant changes to the existing ESTA provisions.

The following is a list of those changes:

Employers

• 1-10 employees (small employer): must be allowed to accrue 40 hours of paid earned sick time.
  • October 1, 2025 effective date.
  • 40-hour carryover cap.
• 11 employees and above must be allowed to accrue 72 hours paid earned sick time.
  • 72-hour carryover cap.

Employee Exemptions

• Seasonal employee exemption.
  • Can’t use sick time within 120 days of hire, unless sick time is frontloaded (applies to all employees).
  • Employees hired within 2 months recoup previously accrued time, but start over on sick time accrual if more than 2 months (applies to all employees).
• Variable hour employees are exempt if:
  • They are allowed to set their own hours.
  • There is no adverse personnel action taken for failing to meet a minimum number of hours.
• Unpaid trainees and interns are exempt (utilizing Fair Labor Standards Act definition).
• Youth employees are exempt (youth work permit).

Part-Time Employees

• Allows for proportional frontloading based on initial estimate provided by employer at time of hiring.
• If the employee works above this estimate, the hours accrue at normal rate (1 hour/30 hours worked).

Notification Requirements

• 7 days for foreseeable usage
• For unforeseeable usage, EITHER:
  • As soon as practicable, OR
  • In accordance with employer’s policy on using sick time, if the employer notifies the employee of their policy in writing and the policy allows employees to provide notice after the employee is aware of the need to use sick time.

Frontloading Allowance

• Frontloading and employee can use time immediately.
• Frontloading does not require carryover or paying out sick time at end of year.
  • Also does not require calculating and tracking accrual.

Combined leave bank

• 72 hours are subject to ESTA conditions, but anything above that can be used according to employer’s vacation or PTO policies/usage requirements.

Collective Bargaining Agreement Language

• Employer contracts with a maximum three-year term can continue taking effect if they conflict with ESTA.

Base Wage

• Overtime, bonuses, tips, and commissions are not required to be included.

Documentation Requirements

• Employees are required to provide documentation within 15 days after requested by an employer.

Adverse Personnel Action

• Allowed if the employee uses sick time for purposes not allowed by the act or violates notice requirements.

Legal

• Claim Period: not later than three years after the violation.
• Private right of action has been removed.
• Rebuttable presumption has been removed.
• A civil fine of 8 times employee’s hourly wage if an employer violates the act.
• Employers must provide written notice to employees of the act’s guarantees.

It’s important to note that while small employers (1-10 employees) will have a runway of October 1^st to plan for implementation, larger employers (11+ employees) will need to plan for the implementation of HB 4002 immediately as these provisions are in effect as of 12:02a.m. on February 21^st. That said, we do anticipate the Department of Labor and Economic Opportunity will slightly delay enforcement. Municipalities should discuss with their attorneys policies that are appropriate for their community and how to implement them.

Dave Hodgkins is a legislative associate with the League. He may be reached at [email protected]