Advocacy News – Jan. 9, 2025
As the 103rd Michigan Legislature convened for its first day Wednesday, the House and Senate introduced their own versions of bills to fix the onerous earned sick time (ESTA) and minimum wage laws that will go into effect Feb. 21. Because Republicans now control the House, and Democrats the Senate, how and when the two chambers will find common ground or send bills to the Governor’s desk remains unknown, but we’re working tirelessly to ensure quick, commonsense policy changes that protect and work for businesses and workers alike.
Why it matters: With only 43 calendar days to find a landing spot, we were pleased to see that bills were introduced on the first two days of the 2024-25 legislative session. However, the starting details vary significantly, with the House versions being highly preferred.
The details
ESTA Changes
- The House version (HB 4002) includes the following changes:
- Defines which employees are eligible and exempting independent contractors, out of state employees, seasonal workers (25 weeks or less) part-time (25 hours or less per week), variable hour workers.
- Exempts small businesses (50 employee threshold).
- Mirrors the definition of health care provider with the federal Family Medical Leave Act (FMLA).
- Clarifies definition of “retaliatory personnel action.”
- Allows for two options:
- Accrual: 1 hour for every 30 hours worked. An employer can cap usage to 72 hours per year and limit carryover to 72 hours. An employer may payout unused time at the end of the year to avoid carryover.
- Frontloading: Allows employers to frontload 72 hours/year. Allow proration for year one and to account for time already given if mid-benefit year. No carryover with this option. No calculation and tracking for accrual under this option.
- Clarifies that time can be used as accrued AND accounted for in the employer’s payroll system.
- Clarifies that ANY time given (accrued or frontloaded) in a current benefit year can be counted toward the employer’s compliance obligations.
- Allows employers to provide time in a PTO bank and strike the language requiring all time to be able to be used “under the same conditions” as the ESTA.
- Clarifies how the rate of pay is calculated (normal hourly wage or base wage) and clarify what’s not included (overtime pay, holiday pay, bonuses, tips, commissions, etc.).
- Allows employers to set “usual and customary notice, procedure, and documentation requirements” and to take disciplinary personnel action for failure to follow.
- Defaults to one-hour increments for using earned sick time but allowing employers to select a different policy.
- Allows time to run concurrent to FMLA, ADA, etc. and documentation necessary for that leave; allows an employee 15 days to provide documentation; clarifies that the employer is only responsible for the cost of obtaining the documentation.
- Allows for payouts at separation (avoid reinstatement upon return), when there’s a successor employer.
- Strikes the rebuttable presumption and the private right of action.
- The Senate version (SB 15) includes the following changes:
- Sticks with the accrual method of one hour for every 30 hours worked. An employer can cap usage to 72 hours per year and limit carryover to 72 hours. An employer may payout unused time at the end of the year to avoid carryover. Explicitly allows for frontloading 72 hours as an alternative to the accrual method.
- Small businesses (defined as a business those that maintain 25 of more employees on its payroll during 20 or more calendar workweeks in either the current or immediately preceding calendar year) need to provide 40 hours of paid leave, 30 hours of unpaid leave.
- Requires carryover of up to 288 hours, even though an employer may cap usage to 72 hours in a given year. As an alternative, an employer may “pay the employee the value of the employee’s unused earned sick time before the end of the year, not more than 144 hours.”
- Allow allows for a 90 day waiting period for new hires to begin using time that’s accrued if hired “after the effective date of the 2025 amendatory act that amended this section.”
- Keeps the provision that requires employers who offer time in one PTO bank to provide that time “for the same proposes and under the same conditions as provided under this act” – thereby subjecting all PTO time to the increment, documentation, and notification policies specified under the ESTA.
- Retains the ambiguous language related to the calculating wages for employees using ESTA time.
- Retains the language related to notice – 7 days if the time off is foreseeable but “as soon as practicable” if time off is unforeseeable. However, the Senate bill exempts employers “that [have] mandated staffing ratios”. In that case the employer “may require an employee to comply with the employer’s leave policy if the employee’s need for the earned sick time is not foreseeable.”
- Specifies earned sick time “must be used in 1-hour increments” (versus the smallest of increments the employer’s payroll system uses to account for absences of use of other time).
- Strikes the rebuttable presumption.
- Gives employees one year to file a claim with the department and strikes the private right of action (the ability to right to court with a lawsuit).
- Allows the department to assess a $1,000 fine for each violation if an employer that “takes retaliatory personnel action against an employee or former employee”.
- Specifies an employer that “fails to provide earned sick time to an employee in violation of this act is subject to a civil fine of not more than 8 times the employee’s normal hourly wage.”
- Sticks with the accrual method of one hour for every 30 hours worked. An employer can cap usage to 72 hours per year and limit carryover to 72 hours. An employer may payout unused time at the end of the year to avoid carryover. Explicitly allows for frontloading 72 hours as an alternative to the accrual method.
Minimum Wage Changes
- The House version (HB 4001) includes the following changes:
- Increases the minimum wage rate from $10.56/hour (current) to $12 Feb. 21, 2025; $12.50 Jan. 1, 2026; $13 Jan. 1, 2027; $14 Jan. 1, 2028; and $15 Jan. 1, 2029. Inflationary increases would follow in 2030 and each subsequent year.
- Retains the current 38% tipped minimum wage.
- Remember: All employees, even tipped employees are guaranteed to make the full minimum wage. If an employee’s hourly rate does not meet or exceed the full minimum wage when the tipped minimum wage and tips are added together, the employer must pay the difference.
- The Senate version (SB 8) includes the following changes:
- Increases the minimum wage rate from $10.56/hour (current) to $12.48 Feb. 21; $13.73 Jan. 1, 2026; $15 Jan. 1, 2027. Inflationary increases would follow Jan. 1, 2028, and each subsequent year.
- Increases the tipped minimum wage over 10 years from 38% (current) to 40% Jan. 1, 2026; 42% in 2027; 44% in 2028; 46% in 2029; 49% in 2030; 51% in 2031; 53% in 2032; 55% in 2033; 57% in 2034; and 60% in 2035.
What’s next: We expect both chambers to begin considering their versions of the legislation in the coming week or two and hopefully work to find a compromise that can be sent to the Governor’s desk. We will keep members apprised as this breaking story develops. Please contact Wendy Block with questions.
Go deeper: Visit our ESTA and minimum wage update page for the latest news and resources, including important toolkit additions like a sample handbook policy and employee notification.