Earned Sick Time Act (ESTA) Update for Small Businesses
Deadline: October 1, 2025
What’s happening by October 1, 2025
- Under Michigan law, small businesses (10 or fewer employees) must begin complying with ESTA as of October 1, 2025.
- Until that date, small employers have some transitional relief: they are not yet required to accrue, track, or provide paid sick time under the small-employer rules.
- As of October 1, small employers must provide at least 40 hours of paid earned sick time per year, either via accrual or via frontloading.
- Under the accrual model, employees accrue 1 hour of earned sick time per 30 hours worked.
- Employers may cap how much paid sick time an employee can use in a year (for small employers, up to 40 hours unless the employer opts for a higher amount).
- Employers also must comply with notice, documentation, and anti-retaliation requirements as set by the law.
- Some substantive changes were adopted in HB 4002 (effective Feb 21, 2025) to clarify and moderate the original ESTA mandate.
What’s changed or clarified under the 2025 amendments
| Topic | Key Provision / Change |
|---|---|
| Small-employer relief period | Small businesses are exempt from ESTA accrual, tracking, or providing paid sick leave until October 1, 2025. |
| Cap for small employers | 40 hours per “year” for use (unless employer opts for more). |
| Carryover / frontloading | Employers may choose to frontload and thereby relieve themselves of accrual tracking; frontloaded hours need not carry over; unused time with accrual may carry over up to 40 hours for small employers. |
| Waiting period for new hires | Employers may impose a 120-day waiting period before use for new employees (unless sick time is frontloaded). |
| Documentation & notice rules | For leave spanning more than 3 consecutive days, employers may request reasonable documentation within 15 days. For foreseeable absences, employers may require up to 7 days advance notice; for unforeseeable, as soon as practicable or under policy. |
| Anti-retaliation & enforcement changes | The amendments removed some of the stronger prescriptive enforcement tools (such as rebuttable presumptions) and removed employees’ private right of action, replacing them with civil fines. |
Key steps small employers should take now
- Audit your headcount to confirm 1–10 employees.
- Decide whether you’ll use accrual or frontloading.
- Update policies and employee handbooks.
- Provide notices and post the required state poster.
- Update payroll or HR systems.
- Train managers and supervisors on compliance and retaliation rules.
- Prepare for enforcement after October 1, 2025.
Need more information? Please contact LRCC SVP of Public Affairs Steve Japinga at sjapinga@lansingchamber.org.