With less than an hour before two laws were scheduled to take effect at midnight on Feb. 21, changes were approved by state Legislature to amend both the Earned Sick Time Act (ESTA) and the minimum wage increase law.

MTA is continuing to work with our legal counsel and state agencies to get questions answered on how the ESTA impacts township-specific roles. We will provide updated guidance and resources as it becomes available. Please consult your local legal counsel on implementation of the act. The following is an overview of the law as passed, and current available information.

Inside the ETSA

House Bill 4002, now Public Act 2 of 2025, amended the ESTA to provide some additional flexibility and clarification on the new law, which requires employers—including all townships—to provide paid sick leave for employees. The ESTA applies to full-time, part-time, temporary and seasonal workers. Independent contractors are not employees, and are not subject to the ESTA.

The ESTA requires paid sick leave to be accrued at a rate of one hour for every 30 hours worked, subject to limitations under the recently passed bill. Per HB 4002, small employers—those with 10 or fewer employees—must provide employees with 40 hours of paid sick time. Small employers have until Oct. 1, 2025, to begin providing these hours. Larger employers—those with more than 10 employees—must provide 72 hours of paid sick time. The ESTA was effective for larger employees on Feb. 21.

Employees exempted from the law include those who work in accordance with an employer policy that allows the individual to schedule his or her own working hours and that prohibits the employer from taking adverse personnel action against the individual if the individual does not schedule a minimum number of working hours. Those employed in accordance with the Youth Employment Standards Act, as well as unpaid trainees or unpaid interns are also exempt.

What about township officials and other township roles?

According to ESTA Frequently Asked Questions from the Michigan Department of Labor and Economic Opportunity (LEO), elected and appointed officials are not subject to the act. Per the FAQs, “Generally, publicly elected officials, members of publicly appointed boards and commissions, and similar public office holders are not considered employees for purposes of ESTA, even if paid or receiving some form of compensation, unless the governing entity treats these individuals as employees.” MTA Legal Counsel believes that deputies would also fall under “appointed officials,” and therefore would not be subject to the ESTA requirements, unless they are treated as a township employee for other purposes. MTA is working to verify LEO’s interpretation of “public office holders.”

MTA has received numerous calls as to whether on-call firefighters are considered employees under the act. Per our Legal Counsel, on-call firefighters do not fall under any kind of exemption and are subject to ESTA Thus, it is recommended that townships track these individuals’ hours as they would any other any other employee. MTA will share any additional guidance that may be released by LEO or another state agency as additional impacts of the law are realized.

Frontloading, notice and other changes

Rather than having employees accrue time, the legislation allows employers to “frontload” sick hours —given at the beginning of the year—with specific requirements for notice. If frontloading, the time could be used immediately. Employers will only need to track paid sick time use, and do not need to calculate and track hours of accrual. Carryover or paying out of unused time would also not be required. For part-time employees, frontloading can be proportional based on an estimate of hours, and adjusted accordingly as needed.

Employees must give seven days’ notice for “foreseeable usage” of paid sick time. For “unforeseeable” use of time, notice must be given “as soon as practicable” or in accordance with employer’s policy on using sick time. Notice of policy must be given to employees in writing, and the policy must allow notice to be given after the employee is aware of the need to use sick time.

Employers may offer a combined leave bank for paid leave; 40 hours (if 10 or fewer employees) or 72 hours (if more than 10 employees) would be subject to the ESTA. Any additional hours could be used according to an employer’s vacation or paid time policies and usage requirements

Additionally:

• Employees hired after Feb. 21, 2025, can be required to wait 120 days after beginning their employment before using accrued sick time.
• Payment of sick time is normal hourly wage or base wage or minimum wage established under the Improved Workforce Opportunity Wage Act. Employers are not required to include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay, tips or gratuities in calculating the employee’s normal hourly wage or base wage.
• Carryover of unused paid sick hours to the subsequent year is capped at 40 hours for small employers and 72 hours for larger employers.
• If separated employees are rehired or reinstated within two months and time off was not previously paid out, the employee must be given previous accrual and allowed immediate use of the accrual.
• There is no requirement to pay out accrued sick time off at termination.
• There is no requirement to allow employees to use more than the applicable amount of paid sick time (40 hours for small employers, 72 hours for larger employers).
• Collective bargaining agreements with a maximum three-year term can continue taking effect if the agreements conflict with the Earned Sick Time Act.

Other changes include documentation requirements (including a workplace poster), adverse personnel action, claim period (not later than three years after violation), civil fines (eight times employee’s hourly wage if employer violates), required employer written notice to employees of act’s guarantees, and removal of private right of action and rebuttable presumption.

Minimum wage schedule adjusted

Under Senate Bill 8, now PA 1 of 2025, the minimum wage rate increased to $12.48 effective Feb. 21, It will increase to $13.73 on Jan. 1, 2026; and $15 on Jan. 1, 2027. Thereafter, the minimum wage will be adjusted for inflation each year, effective Jan. 1, unless the state’s unemployment rate is 8.5% or higher for the preceding year.