Zana Tomich
Dalton Tomich
Dalton Tomich
As of October 1, 2025, Michigan employers with 10 or fewer employees (“small businesses”) must begin providing paid sick time under the Earned Sick Time Act (ESTA). Larger employers (11+ employees) have been covered since February 21, 2025; the small employer effective date was intentionally delayed to give the smallest operations time to prepare.
Who counts toward “10 or fewer”?
Headcount is calculated broadly. Employers must include all employees across the United States and its territories—full-time, part-time, and temporary workers, including those supplied by staffing agencies. Employers who reach 11 or more employees for 20 or more workweeks in the current or prior calendar year are treated as a larger employer through the end of that year and the next.
How sick time accrues and can be used
Under ESTA, employees accrue one hour of paid sick time for every 30 hours worked. Small employers may limit both carryover and use to 40 hours per year (larger employers use a 72-hour cap). Unused paid sick time rolls over year to year, up to 40 hours for small employers.
Alternatively, employers can frontload sick time at the start of each year to avoid tracking accrual and carryover. For small employers, that means providing at least 40 hours up front for full-time employees, with prorated amounts for part-time staff (subject to specific notice and “true-up” requirements).
For small employers, accrual begins the later of October 1, 2025 or the employee’s start date. Employers using the accrual method may impose a waiting period of up to 120 days before new hires (on or after February 21, 2025) can use accrued time; during the waiting period, hours still accrue. Frontloaded time is available for immediate use and may not impose a waiting period.
What counts as “sick time” under the law
ESTA leave is broadly available for an employee’s own illness or preventative care, care for a family member, and certain needs related to domestic violence or sexual assault. Employers may track usage in one-hour increments (or the smallest timekeeping increment) and must compensate time off at the employee’s regular hourly rate (exclusive of overtime premiums, bonuses, commissions, tips, and holiday pay).
PTO policies can satisfy ESTA—if they meet or exceed the law
Employers already offering a paid time off (PTO) bank can use it to comply so long as it is at least as generous as ESTA (for small employers, at least 40 hours per year) and can be used for the same purposes on the same timelines. Many small employers will find this approach simplest, but review accrual, caps, and carryover to ensure alignment.
Required notices and posting
By 30 days after the February 21, 2025 amendments (or at hire, whichever is later), employers must provide written notice describing ESTA rights, the measurement “year,” usage rules, anti-retaliation protections, and the right to file a complaint. Employers must also display the state workplace poster in English, Spanish, and any other language that is the first language for 10% or more of the workforce if the state has provided a translation.
Action checklist for small employers (=10 employees)
1. Confirm headcount status. Count all U.S. employees—including temps and staffing-agency workers—and document weekly totals for the 20-week threshold analysis.
2. Choose your method: accrual (1 per 30 hours, cap/use/rollover at 40) or frontload (40 hours for full-time; prorate part-time). Frontloading simplifies tracking but requires careful onboarding notices and potential true-ups.
3. Align your PTO policy. If you use a general PTO bank, ensure it provides at least 40 hours and can be used for ESTA-covered reasons without extra hurdles.
4. Set a waiting-period rule (optional). If using accrual, decide whether to apply up to 120 days for new hires (who still accrue during that period).
5. Update payroll and timekeeping. Configure accruals or frontloads, carryover limits, and usage caps, and pay at the correct regular rate.
6. Issue required notices and post the state poster in the necessary languages. Train managers on anti-retaliation and consistent administration.
7. Calendar policy start date: If using accrual for eligible employees, employers should have begun no later than October 1, 2025 (or date of hire, if later) and be prepared to accept covered uses immediately if frontloaded.
Michigan’s Department of Labor and Economic Opportunity (LEO) maintains plain-language guidance, including a February 27, 2025 slide deck that summarizes the 40-hour small-employer caps, the October 1, 2025 compliance date, frontloading options, notice requirements, and more. For complex scenarios like fluctuating headcount, multi-state operations, or collective bargaining agreements, employers should seek out legal counsel to tailor a policy and rollout.
—————
Zana Tomich is co-founder of Dalton & Tomich, a versatile Detroit-based law firm, where she works with lending institutions and privately held businesses and nonprofits, often in a general counsel capacity.
Who counts toward “10 or fewer”?
Headcount is calculated broadly. Employers must include all employees across the United States and its territories—full-time, part-time, and temporary workers, including those supplied by staffing agencies. Employers who reach 11 or more employees for 20 or more workweeks in the current or prior calendar year are treated as a larger employer through the end of that year and the next.
How sick time accrues and can be used
Under ESTA, employees accrue one hour of paid sick time for every 30 hours worked. Small employers may limit both carryover and use to 40 hours per year (larger employers use a 72-hour cap). Unused paid sick time rolls over year to year, up to 40 hours for small employers.
Alternatively, employers can frontload sick time at the start of each year to avoid tracking accrual and carryover. For small employers, that means providing at least 40 hours up front for full-time employees, with prorated amounts for part-time staff (subject to specific notice and “true-up” requirements).
For small employers, accrual begins the later of October 1, 2025 or the employee’s start date. Employers using the accrual method may impose a waiting period of up to 120 days before new hires (on or after February 21, 2025) can use accrued time; during the waiting period, hours still accrue. Frontloaded time is available for immediate use and may not impose a waiting period.
What counts as “sick time” under the law
ESTA leave is broadly available for an employee’s own illness or preventative care, care for a family member, and certain needs related to domestic violence or sexual assault. Employers may track usage in one-hour increments (or the smallest timekeeping increment) and must compensate time off at the employee’s regular hourly rate (exclusive of overtime premiums, bonuses, commissions, tips, and holiday pay).
PTO policies can satisfy ESTA—if they meet or exceed the law
Employers already offering a paid time off (PTO) bank can use it to comply so long as it is at least as generous as ESTA (for small employers, at least 40 hours per year) and can be used for the same purposes on the same timelines. Many small employers will find this approach simplest, but review accrual, caps, and carryover to ensure alignment.
Required notices and posting
By 30 days after the February 21, 2025 amendments (or at hire, whichever is later), employers must provide written notice describing ESTA rights, the measurement “year,” usage rules, anti-retaliation protections, and the right to file a complaint. Employers must also display the state workplace poster in English, Spanish, and any other language that is the first language for 10% or more of the workforce if the state has provided a translation.
Action checklist for small employers (=10 employees)
1. Confirm headcount status. Count all U.S. employees—including temps and staffing-agency workers—and document weekly totals for the 20-week threshold analysis.
2. Choose your method: accrual (1 per 30 hours, cap/use/rollover at 40) or frontload (40 hours for full-time; prorate part-time). Frontloading simplifies tracking but requires careful onboarding notices and potential true-ups.
3. Align your PTO policy. If you use a general PTO bank, ensure it provides at least 40 hours and can be used for ESTA-covered reasons without extra hurdles.
4. Set a waiting-period rule (optional). If using accrual, decide whether to apply up to 120 days for new hires (who still accrue during that period).
5. Update payroll and timekeeping. Configure accruals or frontloads, carryover limits, and usage caps, and pay at the correct regular rate.
6. Issue required notices and post the state poster in the necessary languages. Train managers on anti-retaliation and consistent administration.
7. Calendar policy start date: If using accrual for eligible employees, employers should have begun no later than October 1, 2025 (or date of hire, if later) and be prepared to accept covered uses immediately if frontloaded.
Michigan’s Department of Labor and Economic Opportunity (LEO) maintains plain-language guidance, including a February 27, 2025 slide deck that summarizes the 40-hour small-employer caps, the October 1, 2025 compliance date, frontloading options, notice requirements, and more. For complex scenarios like fluctuating headcount, multi-state operations, or collective bargaining agreements, employers should seek out legal counsel to tailor a policy and rollout.
—————
Zana Tomich is co-founder of Dalton & Tomich, a versatile Detroit-based law firm, where she works with lending institutions and privately held businesses and nonprofits, often in a general counsel capacity.
