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Michigan Update

Unemployment Benefit Amount

 

Effective January 1, 2026, Michigan increases the maximum weekly unemployment benefit amount to $530 per week (increased from $446). The amount increases again on January 1, 2027. 

Previous Updates

Earned Sick Time Act (ESTA)

 

Effective October 1, 2025, small business employers (i.e., 10 or fewer employees) must now comply with Michigan's Earned Sick Time Act (ESTA).
 
The ESTA requires covered employers to provide paid sick and safe leave to eligible employees. Small business employers must provide 40 hours of paid sick and safe leave per year (accrual of 1 hour for every 30 hours worked). Note, the ESTA took effect on February 21, 2025. It was amended the same day to delay small business employer coverage to October 1, 2025, among other amendments.
 
Employers must display a poster. The notice shall be in English, Spanish and any language if it is the first language spoken by at least 10% of the employer’s workforce if the department has translated the notice into that language. Here is the English poster.
 
Employers must also give written notice to each employee at the time of hiring. You can find more information and resources regarding ESTA with these FAQs and at Michigan.gov.
 
Veteran’s Poster

 

Beginning March 31, 2025, all Michigan employers must post a benefits and services poster pertaining to veterans.
The new law, HB-5736, requires posters are available in a downloadable format on the LEO website.
 
Wage Act and Earned Sick Time Act (ESTA)

 

On February 21, 2025, Governor Whitmer signed into law two bills amending the state’s Wage Act and Earned Sick Time Act (ESTA).
 
Michigan’s Department of Labor & Economic Opportunity updated its FAQs to reflect the new changes to the minimum wage and ESTA laws signed into law last week.
 
History
 
In 2019, Michigan’s legislature adopted ballot measures passed by voters regarding the sick time and minimum wage requirements. Then, due to litigation, Michigan’s legislature repealed these ballot measures and enacted different versions of the sick time and minimum wage laws.
 
In July 2024, Michigan’s Supreme Court struck down the amendments made by Michigan’s legislature to the laws and reinstated the original versions that were adopted. Michigan’s Supreme Court set February 21, 2025, for the original versions of these laws to take effect.
 
Last week, Michigan’s legislature passed H.B. 4002 and S.B. 8 at the eleventh hour to clarify and amend these laws.
 
Changes To Minimum Wage
 
Senate Bill 8 (SB 8), the bill that amended the Wage Act, retains the $12.48 per hour minimum wage rate set to take effect February 21. Thereafter, minimum wage will rise again on January 1, 2026 (and on the first of the year annually thereafter) to $13.73, a higher wage rate than the originally scheduled hourly rate of $13.29. The 2027 increase will also be larger than scheduled, jumping to an hourly rate of $15.00.
 
SB 8 will not gradually phase out tip credits, which would have occurred under the state Supreme Court Order. Instead, the proportional maximum credit will diminish by 2% annually through 2031, when a tipped worker’s minimum wage would equal 50% of the full minimum wage.
 
Employers must ensure that tipped workers receive a minimum rate of $4.74, which is 38% of the full minimum wage. Note that this is lower than what the Order required ($6.49 per hour, or 48% of the full minimum wage).
 
Changes to ESTA
 
House Bill 4002 (HB 4002), the bill that amended ESTA, significantly modified the Supreme Court’s Order. Changes include:
 
Accrual of Earned Sick Time
 
Employees must accrue one hour of paid earned sick time for every 30 hours worked, not including hours used as paid time off.
 
Small employers (defined as an employer with up to 10 employees on payroll during at least 20 calendar workweeks in either the current or preceding calendar year) may cap usage of paid earned sick time at 40 hours in one year.
 
All other employers may cap usage of paid earned sick time at 72 hours in one year.
 
Frontloading
 
As an alternative to the accrual of paid earned sick time, an employer may provide an employee not less than 72 hours of paid earned sick time (40 hours for small employers) at the beginning of the year for immediate use. If earned sick time is frontloaded, employers are not required to:
 
  1. Allow an employee to carry over any unused paid earned sick time; 
  2. Calculate and track an employees’ accrual of paid earned sick time; or 
  3. Pay out unused accrued paid earned sick time at the end of the year in which the time was accrued.
 
“Use-it-or-lose-it” applies if time is frontloaded.
 
Carryover
 
Unlike the original ESTA, unlimited carryover of unused paid earned sick time is not required now. Under the amended ESTA, employers may cap carryover of unused paid earned sick time at 72 hours (40 hours for small businesses).
 
Waiting Period
 
Employees hired after February 21, 2025, can be required to wait 120 days after beginning employment before using accrued paid earned sick time.
 
Usage Increments
 
Paid earned sick time can be used in either one-hour increments or the smallest increment the employer uses for absences.
 
Notice Requirements
 
If the need for paid earned sick time is foreseeable, employers can require up to seven days’ advanced notice.
 
If unforeseeable, employers may require employees to give notice either:
 
  1. As soon as practicable; or 
  2. In accordance with the employer’s policy on using sick time, if: 
    (a) The employer notifies the employee of their policy in writing after Feb. 21, 2025; and 
    (b) The policy allows employees to provide notice after the employee is aware of the need to use sick time.
 
Employers can require “reasonable documentation” for paid earned sick time of more than three consecutive days. Employers must give employees not more than 15 days to provide such documentation upon request and are required to pay all out-of-pocket expenses the employee incurs to obtain that documentation.
 
The amended ESTA permits employers to take adverse personnel action if employees use paid earned sick time for a purpose other than one allowed under the Act.
 
Rate of Paid Sick Time
 
Employees using paid earned sick time must be paid at a rate equal to the greater of either the normal hourly or base wage for that employee, or the established minimum wage. Employers are not required to include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay, tips, or gratuities in calculating a normal hourly wage or base wage.
 
No Payout Upon Separation
 
Like the original ESTA, the amended ESTA does not require payout of accrued, unused paid earned sick time upon the employee’s separation from employment.
 
No Retaliation
 
The amended ESTA prohibits an employer, or any other person, from interfering with, restraining, or denying the exercise of, or the attempt to exercise, any right protected under the ESTA. It also prohibits an employer from taking retaliatory personnel action or discriminating against an employee because the employee has exercised a right under the ESTA.
 
Required Posters and Notice
 
Employers have 30 days from February 21, 2025, to post posters consistent with the amended ESTA and provide written notice to employees as required by the ESTA.
 
The Department of Labor and Economic Opportunity is required to create and make available to employers notices and posters for employers’ use in complying with the amended ESTA. The Department is required to provide the notices and posters in English, Spanish, and any other language deemed appropriate by the Department. When ready by the Department, you can find notices and posters at the link here.
 
 
The Michigan Earned Sick Time Act (ESTA)

 

The Michigan Earned Sick Time Act (ESTA) is a law the requires all employers with one (1) or more employees, except for those employed by the U.S. Government, to provide paid sick leave to their employees.
 
All employees, including exempt employees, will earn sick time at a rate of 1 hour for every 30 hours worked starting February 21, 2025, or upon hire, whichever is later.
 
Businesses with 10 or more employees must allow at least 72 hours of paid sick time per year, whereas businesses with fewer than 10 employees must allow at least 40 hours of paid sick time, plus an additional 32 hours of unpaid sick time.
 
Unused sick time may be carried over from year to year, however employers can limit annual usage to no more than 72 hours.
 
For review of Frequently Asked Questions regarding ESTA please review Michigan’s Labor and Opportunity site.
 
 
Improved Workforce Opportunity Act
The Improved Workforce Opportunity Act (IWOWA) will go into effect on February 21, 2025, imposing the second minimum increase in 2025. Due to the delay in initiation of the act, the Supreme Court has adopted an amended schedule for the minimum wage increases.

Date

Minimum Wage

Minimum Hourly Rate for Tipped Employees

Minimum Reported Average for Hourly Tips

February 21, 2025

$12.48

$5.99

$6.49

February 21, 2026

$13.29

$7.97

$5.32

February 21, 2027

$14.16

$9.91

$4.25

February 21, 2028

$14.97

$11.98

$2.99

 

For years following 2028, the State Treasurer will review the rate of inflation and calculate an adjusted rate.
 
Next Steps
 
Examine your leave policies Employers should review and update their policies to ensure compliance with ESTA once it goes into effect on February 21, 2025.
 
Post Required State Poster – Michigan employers are required to post Michigan’s Minimum Wage and Overtime Poster and General Requirements – Earned Sick Time Act Poster.
 

Minimum Wage and Overtime Poster – English

Minimum Wage and Overtime Poster - Spanish

Minimum Wage and Overtime Poster - Arabic

 

Earned Sick Time Act Poster – English

 

Michigan has not updated the Spanish nor Arabic posters to reflect the Earned Sick Time Act, please refer to Michigan.gov for updates.

 

Discrimination Based on Pregnancy Termination

 

Effective March 28, 2024, the Michigan's Elliot-Larsen Civil Rights Act (ELCRA) is amended to prohibit discrimination based on termination of pregnancy.
 
Hairstyle Discrimination Prohibited

On June 15, 2023, Governor Whitmer signed Senate Bill 90, which amended the Elliott-Larsen Civil Rights Act (“ELCRA”) to prohibit discrimination based on traits historically associated with race, such as hair texture and protective hairstyles. 
 
ELCRA already prohibits discrimination based on religion, race, color, national origin, age, sex, height, weight, and marital status. Senate Bill 90 expands the protected class of “race” to be “inclusive of traits historically associated with race, including but not limited to, hair texture and protective hairstyles.” Protective hairstyles include braids, locks, and twists.
Discrimination Prohibitions Expanded

Effective June 14, 2023, Michigan's Elliott-Larsen Civil Rights Act is amended to prohibit discrimination based on sexual orientation, gender identity, and gender expression.
 
The Act applies to any employer in the state with one or more employees. You can learn more here.
Right-to-Work and Prevailing Wage
Michigan has become the first state in decades to repeal a right-to-work law. Governor Whitmire has signed into law legislation repealing Michigan’s right-to-work law for private-sector employees, effective March 30, 2024. When the law takes effect next year, union security clauses – which require employees to pay union dues or a service fee as a condition of employment – will once again be legal in collective bargaining agreements.
Along with repealing the right-to-work law, Michigan has also reinstated the prevailing wage. The law requires union-level pay and benefits for any publicly-funded state construction projects.

 

Paid Adoption Leave Tax Credit
For tax years beginning on or after January 1, 2023, an employer that voluntarily provides paid adoption leave may claim an income tax credit of up to $4,000 per qualified employee for a single adoption leave period.
To qualify, an employer must have a policy that provides at least two weeks of paid parental leave and adoption leave that is compensated at a rate that is at least 50% of the employee's normal wages.
A qualified employee must meet the length of service and compensation requirements.

 

Hazard Pay

 

Michigan Governor signed into law House Bill 4047 (H4047) that appropriates federal funding allocated for coronavirus (COVID-19) relief for the continuance and enhancement of direct-care worker hazard pay. H4047 extends the COVID-19 direct-care worker hazard pay adjustment to September 30, 2021, and increases the amount from $2.00 additional dollars per hour to $2.25 per hour. Eligible worker types have also been expanded to include employees of licensed adult foster-care homes, homes for the aged, direct support employees and job coaches working in supported employment arrangements. Also included is a smaller, $2.00 hazard pay allotment for workers employed in child-caring institutions.

 

October 2020

Michigan just passed four new COVID-19 bills touching on workplace safety, employee protections, and legal immunity for businesses. The bills, passed on October 21 are effective immediately and retroactive to March 1, 2020. 

Employee Protections

House Bill 6032 provides COVID-19 protection for employees. Section 5 of the bill lays out criteria for returning to work after testing positive for COVID-19, displaying principal symptoms of COVID-19, or being in close contact with someone who tests positive or displays principal symptoms. 

Notably, employees lose section 5 protection if an employer requests a COVID-19 test and they fail to do so within three days.

In addition, the bill states that employers shall not take adverse action against employees who comply with section 5, oppose a violation of the bill, or report health violations related to COVID-19. Employers who violate the anti-adverse action provision or require an employee to come to work before the established timeline can be sued and face fines per violation. 

Business Liability Immunity

House Bill 6030 protects businesses from COVID-19 related tort claims (i.e., personal injury) by customers, vendors, and any other person who entered the business after March 1, 2020, but only if the business acted in compliance with all federal, state, and local statutes, rules, regulations, executive orders, and agency orders related to COVID-19 that had not been denied legal effect at the time of the conduct or risk that allegedly caused harm. 

Employer Liability Immunity

House Bills 6101 and 6031 protects employers from liability under the Michigan Occupational Safety and Health Act “for an employee’s exposure to COVID-19 if the employer was operating in compliance with all federal, state, and local statutes, rules, and regulations, executive orders, and agency orders related to COVID 19 that had not been denied legal effect at the time of the exposure.” These bills are retroactive to March 1, 2020. These two bills do not impact employee rights to workers’ compensation benefits under Michigan law.

For a more detailed summary, visit Fisher Phillips.