Not-for-Profits: Stay Compliant with Michigan’s Earned Sick Time Act
On February 21, 2025, Michigan Governor Gretchen Whitmer signed House Bill 4002 into law, amending the state's Earned Sick Time Act (ESTA). These changes have significant implications for not-for-profit organizations operating within Michigan, necessitating a thorough understanding to ensure compliance and effective policy implementation.
Key Provisions of House Bill 4002
House Bill 4002 introduces several critical modifications to the ESTA:
1. Accrual and Usage of Earned Sick Time:
Small Employers (10 or fewer employees):
Employees accrue one hour of paid earned sick time for every 30 hours worked, up to a maximum usage of 40 hours per year. Employers have the option to provide 40 hours of paid sick time at the beginning of the year, allowing immediate use.
Large Employers (more than 10 employees):
Employees accrue one hour of paid earned sick time for every 30 hours worked, with a maximum usage of 72 hours annually. Alternatively, employers can frontload 72 hours of paid sick time at the start of the year.
2. Carryover Provisions:
Small Employers:
Employees may carry over up to 40 hours of unused earned sick time to the following year.
Large Employers:
Employees can carry over up to 72 hours of unused earned sick time annually.
3. Frontloading Option:
Employers choosing to frontload the full allotment of sick time at the year's start are not required to track accruals or allow carryover of unused time.
4. Effective Dates:
The amendments took immediate effect on February 21, 2025. However, small employers have until October 1, 2025, to comply with the paid earned sick time provisions.
Implications for Not-for-Profit Organizations
Not-for-profit organizations in Michigan must assess and adjust their policies to align with the revised ESTA requirements:
Policy Review and Update: Examine existing leave policies to ensure they meet or exceed the new standards. This may involve revising accrual rates, usage caps, and carryover rules.
Record-Keeping Practices: Implement systems to accurately track hours worked, sick time accrued, and used. For organizations opting to frontload sick time, ensure clear documentation of the provided hours and any usage.
Employee Communication: Inform staff about their rights and responsibilities under the updated sick leave policy. Clear communication helps prevent misunderstandings and ensures employees are aware of how to utilize their earned sick time.
Budget Considerations: Anticipate the financial impact of providing additional paid sick time, especially for smaller organizations with limited resources. Planning ahead can help mitigate potential budgetary constraints.
Compliance Timeline: While the law is already in effect, small not-for-profits have until October 1, 2025, to implement the necessary changes. It's crucial to use this time effectively to achieve full compliance.
Ensure Your Organization Stays Compliant
To navigate these changes successfully, not-for-profit organizations should:
Consult Legal Counsel: Seek advice to understand the specific implications of House Bill 4002 on your organization and to ensure that policy revisions comply with the law.
Train Management Personnel: Educate supervisors and HR staff about the new requirements to ensure consistent and fair application across the organization.
Monitor Legislative Updates: Stay informed about any further modifications or guidance related to the ESTA to maintain ongoing compliance.
By proactively addressing these areas, not-for-profit organizations can align with Michigan's updated Earned Sick Time Act, thereby supporting their employees' well-being and adhering to legal obligations. Don't hesitate to reach out to CSH for compliance assistance.
