Late in the evening on February 20, 2025, the Michigan Legislature passed changes the Earned Sick Time Act (ESTA) (House Bill 4002) and minimum wage law (Senate Bill 8). The Governor signed them into law the next day as Public Acts 1 and 2 of 2025. These new laws took effect immediately and affect all Michigan employers.
The Michigan Department of Labor and Economic Opportunity has updated its FAQs on the ESTA and minimum wage requirements on their respective websites. These are good resources to help you understand your obligations as an employer.
Key changes to the ESTA include:
- New businesses will have a three-year grace period after forming to comply with the ESTA.
- Small businesses (less than 10 employees) have until October 1, 2025, to comply with the ESTA requirements.
- Employees are eligible to accrue one hour of earned sick time (EST) for every 30 hours worked. While employees may accrue more than 72 hours annually, employers may cap usage at 72 hours in a given year.
- Employees working for small businesses (less than 10 employees) will accrue at the same rate (1 hour for every 30 hours worked) but will only be eligible for 40 hours of paid leave annually unless the employer selects a higher limit.
- Employers are allowed to frontload at least 40 hours, for small business, and 72 hours, for other employers, at the beginning of a benefit year as an alternative to the accrual method. Employers that adopt this method do not have to allow carry over of unused sick time, calculate and track employee’s accrual, or pay the value of employee’s unused sick time.
- Defines “employer,” “eligible employee,” “earned sick time,” and “family member.”
Regarding the minimum wage, the notable change relevant to physicians who are employers is the incremental increase in the state’s minimum hourly wage rate as follows:
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Minimum Hourly Rate
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Effective Date
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Minimum Hourly Rate
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February 21, 2025
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$12.48
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January 1, 2026
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$13.73
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January 1, 2027
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$15.00
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Beginning January 1, 2028, and each subsequent year, an inflationary rate increase using the Consumer Price Index (CPI) for the Midwest region will be applied. The only exception would be if the state’s unemployment rate is 8.5% or above for the preceding year. Minors under the age of 18 may be paid 85 percent of the minimum hourly wage rate.
Key Resources:
ESTA FAQs
Michigan Minimum Wage and Overtime FAQs
Wage and Hour Poster
House Fiscal Agency Analysis of Enacted HB 4002
House Fiscal Agency Analysis of Enacted SB 8