Under the Weather? Not Much Time, Clarity on Michigan Paid Sick Leave Changes

By PrismHR

Update: On Feb. 21, 2025, Michigan Gov. Gretchen Whitmer signed HB 4002 into law, which significantly amends the Michigan Earned Sick Time Act. Notably, the start date for small employers was postponed to Oct. 1, 2025, and they are no longer required to offer 32 hours of unpaid leave on top of the 40 paid hours of sick time.

The name Michigan comes from the Chippewa word Michigama, which means great or large lake. When it comes to paid sick leave in the Wolverine State, it’s bigger than a lake and more like a sea of uncertainty for companies and HR outsourcers (HROs) who handle payroll for them.  

It’s hard to go with the flow when no one seems certain which way the potential watershed payroll-related moment is heading.  

Don’t worry: There’s plenty of time to prepare for Michigan’s upcoming paid sick leave changes … as long as your countdown timer uses seconds rather than hours or days. With a Feb. 21, 2025, deadline looming, there’s still no clarity on what exactly is about to happen. 

Taking a Step Back 

In 2018, a voter initiative was intended to appear on the ballot regarding Michigan’s minimum wage and sick-pay requirements. However, the vote, never happened because the Michigan Legislature adopted the proposed requirements before the election.  

The measure would have boosted the minimum wage to $15 per hour by 2027 and upped paid sick-leave time to 72 hours a year for a company with 10 people or more and offered 40 hours of paid sick time and 32 hours of unpaid sick time for employees at smaller companies.  

Almost immediately after the election, the Michigan Legislature gutted these requirements before they took effect, by adding a 50-employee-count threshold to offer any sick leave while reducing the maximum leave to 40 hours a year. However, following years of litigation, last July the Michigan Supreme Court ruled 4-3 that the Legislature acted unconstitutionally in changing a citizen-initiated statute so quickly after the election.   

But wait … that’s not all.  

After the 2024 elections, the Michigan House is now controlled by Republicans with a 58-to-52 majority after being Democratic-controlled from 2023 to 2024. Democrats continue to hold the Michigan Senate, but with a slim 19-18 majority with one vacancy.  

On Feb. 5, a Senate Finance bill was introduced that would change the threshold to 25 employees before the full 72 hours of paid sick time kicked in. Then businesses with fewer than 25 workers would fall under the 40 hours paid/32 hours unpaid requirement. Meanwhile, a competing bill passed by the House would return the state to a 50-employee threshold with businesses under 50 employees not required to offer any leave at all. 

Either change has significant but vastly different implications for small and medium-sized businesses (SMBs) and the HROs managing their sick-leave plans.   

Gov. Gretchen Whitmer, a Democrat, recently told the Detroit Free Press: “They’ve got to work together.” She added, “It’s a Republican-controlled House now and a Democratic-controlled Senate. I think that there probably is common ground to be had, and we’re trying to encourage those conversations to move along.” 

What does this all mean for you and your SMB clients working in Michigan? It’s hard to say. 

What potential legal changes are in store for 2025? Download “25 Payroll & HR Legal Developments to Watch in 2025” to see what we’re keeping an eye on for you and your clients. 

Earned Sick Time Act At-a-Glance

As of Feb. 21, Michigan employers must comply with the upcoming Earned Sick Time Act (ESTA). Here are the key provisions that differ from the Michigan Paid Sick Leave Act:

  • Universal Application: Every employer must provide paid sick time to all Michigan employees as the 50-employee threshold and employee-based restrictions are limited.
  • Increased Accrual Rate: Paid time off (PTO) must accrue at one hour for every 30 hours worked, which is up from the current one hour for 35 hours requirement.
  • Increased Annual Usage Limit: Employees can use 72, instead of 40 hours, annually. Smaller employers can treat hours over 40 as unpaid time off.
  • Unlimited Carryover: No carryover cap applies. Currently employers can limit carryover to 40 hours or provide no carryover if the PTO was frontloaded.
  • Nuanced Rate of Pay: Employees must be paid at their normal hourly rate, which is defined as the average rate in the prior pay period.

Employers should continue following these guidelines unless the legislature passes amendments. Learn more on the Michigan Labor and Economic Opportunity website.

Best Practices for HROs and Their Clients

Given the legal uncertainty, HROs that work with Michigan clients should take a proactive approach to compliance. Consider the following best practices:

  1. Stay Informed: Monitor for quick-moving legal developments in Michigan that could modify the new requirements.
  1. Review Policies Regularly: Ensure your clients’ paid-sick-leave policies comply with current ESTA requirements but remain flexible in case changes are mandated.
  1. Employee Notice: Ensure employees are informed about their rights under existing policies and any potential changes on the horizon.
  1. Update Your HR Information System (HRIS) Configuration: As clients adopt new sick-leave policies, corresponding updates must be made to your payroll platform to ensure proper sick-leave accruals and employee compensation.
  1. Consult Legal and HR Experts: Engage with employment law attorneys and HR compliance specialists to navigate evolving sick-leave regulations—especially if there are midyear changes after a new policy has already been implemented.

Conclusion

The Michigan sick-leave situation remains a moving target, with the potential for major compliance challenges depending on the outcome of pending legislation. HROs should stay alert to potential legal shifts and prepare for possible changes that could significantly expand employer obligations. By staying informed and proactive, HR teams can ensure their organizations remain compliant and ready for whatever comes next.

PrismHR will continue to monitor these and other payroll- and HR-related compliance issues for you and your clients.

There’s no reason to feel under the weather when it comes to compliance.

Note: This blog was compiled for informational purposes only and should not be considered legal advice. If you have specific legal questions, we recommend you contact your legal adviser.