Michigan has enacted two pieces of legislation that amend the state’s minimum wage and paid sick leave requirements further. The laws (Senate Bill 8 and House Bill 4002) took effect immediately on Feb. 21, 2025.
The Details
Background
As a result of a Michigan Supreme Court decision, Michigan’s minimum wage increased to $12.48 per hour on Feb. 21, 2025, and was scheduled to increase further on Feb. 21, 2026 and again on Feb. 21, 2027. Michigan’s paid sick leave requirements were also set to expand significantly on Feb, 21, 2025.
Additionally, the minimum cash wage for tipped employees was set to increase to 48 percent of general minimum wage on Feb. 21, 2025, and the tip credit was scheduled to be phased out completely by Feb. 21, 2029.
New Changes to Minimum Wage and Tip Credit
Now, under Senate Bill 8, the state’s minimum wage, currently $12.48, will instead increase to:
· $13.73 per hour on January 1, 2026; and
· $15.00 per hour on Jan. 1, 2027.
Thereafter, the minimum wage will be adjusted for inflation annually.
Senate Bill 8 also nullifies the phase out of the tip credit. Instead, the minimum wage for tipped employees will be 38 percent of the state minimum wage from Feb. 21, 2025 through Dec.31, 2025. The minimum cash wage for tipped employees will then increase each year until it reaches 50 percent of the state minimum wage on Jan. 1, 2031.
New Changes to Paid Sick Leave
Effective Feb. 21, 2025, the state’s paid sick leave rules are amended as follows.
Employer Coverage
The state’s paid sick leave requirement covers any person, firm, business, educational institution, corporation, limited liability company, government entity, or other entity that employs one or more individuals. The United States government is excluded from coverage.
Grace Period for Small Businesses
The law gives small businesses (as defined below) until Oct. 1, 2025 to comply with requirements and:
:
· Allow an employee to accrue paid sick leave in accordance with the law.
· Frontload paid sick leave as an alternative to the accrual of paid sick leave.
· Calculate and track an employee's accrual of paid sick leave.
If a small business didn’t employ an employee on or before Feb. 21, 2022, the small employer isn’t required to comply with House Bill 4002 until three years after the date that the employer first employs an employee.
Small Business Defined
The law defines a small business as one for which 10 or fewer individuals work for
compensation during a given week. In determining the number of individuals, all individuals working on a full-time, part-time, or temporary basis must be counted, including individuals made available to work through a temporary services or staffing agency or similar entity. An employer isn’t a small business if it maintained more than 10 employees on its payroll during any 20 or more calendar workweeks in either the current or immediately preceding calendar year.
Employee Coverage
With limited exceptions, the law covers any individual who is employed by a covered employer. The law doesn’t cover:
· An individual employed by the United States government.
· An individual who works in accordance with a policy of an employer if both of the following conditions are met:
o The policy allows the individual to schedule the individual's own working hours.
o The policy prohibits the employer from taking adverse personnel action against the individual if the individual does not schedule a minimum number of working hours.
· An unpaid trainee or unpaid intern.
· An individual who is employed in accordance with the Youth Employment Standards Act.
Accrual
Under House Bill 4002, employees are entitled to accrue one hour of paid sick leave for every 30 hours worked, excluding hours used as paid time off. Paid sick leave begins to accrue on Feb. 21, 2025, or upon commencement of the employee's employment, whichever is later.
Note: An employee who is exempt from overtime is assumed to work 40 hours in each workweek unless the employee's normal workweek is less than 40 hours, in which case paid sick leave accrues based on that normal workweek.
Use
An employee may use accrued paid sick leave as it is accrued, except that an employer may require an employee hired after Feb. 21, 2025 to wait until 120 calendar days after commencing employment before using paid sick leave.
Paid sick leave may be used in one-hour increments or the smallest increment that the employer uses to account for absences of use of other time.
Employees of a small businesses are limited to using 40 hours of paid sick leave in a year, unless the employer selects a higher limit. Other employees are limited to using to 72 hours of paid sick leave in a year, unless the employer selects a higher limit.
Rate of Pay
Employers must pay each employee using paid sick leave at a pay rate equal to the greater of either the normal hourly wage or base wage for that employee or the minimum wage. The law doesn’t require an employer to include overtime pay, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay, tips, or gratuities in the calculation of an employee's normal hourly wage or base wage.
Carryover
Unused paid sick leave must be carried over from year to year, subject to a cap of 40 hours for employees of small businesses and a cap of 72 hours for other employees.
If the employer frontloads paid sick leave at the beginning of the year (see below), carryover isn’t required.
Frontloading
As an alternative to the accrual of paid sick leave, employers may provide employees with their full paid sick leave entitlement (40 hours/72 hours) at the beginning of a year for immediate use.
To do so for part-time employees, the employer must also:
· Provide the part-time employee with a written notice of how many hours the part-time employee is expected to work for a year at the time of hire.
· Ensure that the amount of paid sick leave provided to the part-time employee at the beginning of the year is, at a minimum, proportional to the paid sick leave that the part-time employee would accrue if the part-time employee worked all of the hours expected as provided in the written notice.
If the part-time employee works more hours than what is expected as provided in the written notice, the employer must provide the part-time employee with additional paid sick leave accordance with the accrual requirements above.
Reasons for Sick Leave
Employees may use the leave for the following purposes.
· The employee's or family member’s mental or physical illness, injury, or health condition; medical diagnosis, care, or treatment of the employee's mental or physical illness, injury, or health condition; or preventative medical care.
· If the employee or the employee's family member is a victim of domestic violence or sexual assault, for medical care or psychological or other counseling for physical or psychological injury or disability, to obtain services from a victim services organization, to relocate due to domestic violence or sexual assault, to obtain legal services, or to participate in any civil or criminal proceedings related to or resulting from the domestic violence or sexual assault.
· For meetings at a child's school or place of care related to the child's health or disability, or the effects of domestic violence or sexual assault on the child.
· For closure of the employee's place of business by order of a public official due to a public health emergency, for an employee's need to care for a child whose school or place of care has been closed by order of a public official due to a public health emergency, or when it has been determined by the health authorities having jurisdiction or by a health care provider that the employee's or employee's family member's presence in the community would jeopardize the health of others because of the employee's or family member's exposure to a communicable disease, whether or not the employee or family member has actually contracted the communicable disease.
Under the law, a family member is defined as:
· A biological, adopted or foster child, stepchild or legal ward, a child of a domestic partner, or a child to whom the employee stands in loco parentis
· A biological parent, foster parent, stepparent, or adoptive parent or a legal guardian of an employee or an employee's spouse or domestic partner or an individual who stood in loco parentis when the employee was a minor child
· An individual to whom the employee is legally married under the laws of any state or a domestic partner
· A grandparent
· A grandchild
· A biological, foster, or adopted sibling
· An individual related by blood to the employee
· An individual whose close association with the employee is the equivalent of a family relationship
Employee Notice and Documentation Requirements
If the employee's need to use paid sick leave is foreseeable, an employer may require advance notice, not to exceed seven days before the date the paid sick leave is to begin.
If the employee's need for the paid sick leave isn’t foreseeable, an employer may require the employee to give notice in either of the following manners:
· As soon as practical.
· In accordance with the employer's policy related to requesting or using sick time or leave if both of the following are met:
o On the date of the employee's hire, Feb. 21, 2025, or on the date that the employer's policy takes effect, whichever is latest, the employer provides the employee with a written copy of the policy that includes procedures for how the employee must provide notice.
o The employer's notice requirement allows the employee to provide notice after the employee is aware of the need for the paid sick leave.
An employer that requires notice for sick time that isn’t foreseeable is prohibited from denying an employee's use of paid sick leave if either of the following conditions applies:
· The employer did not provide a written policy to the employee as required.
· The employer made a change to the written policy and didn’t provide notice of the change to the employee within five days after the change.
For paid sick leave of more than three consecutive days, an employer may require reasonable documentation that the paid sick leave has been used for a permitted purpose. If an employer chooses to require documentation for paid sick leave, the employer is responsible for paying all out-of-pocket expenses the employee incurs in obtaining the documentation. If the employee does have health insurance, the employer is responsible for paying any costs charged to the employee by the healthcare provider for providing the specific documentation required by the employer.
The employee must provide the documentation to the employer no more than 15 days after the employer’s request, but the employer is prohibited from delaying the commencement of paid sick leave on the basis that the employer has not yet received documentation.
Under the law, documentation signed by a healthcare professional indicating that paid sick leave is necessary is reasonable documentation. In cases of domestic violence or sexual assault, any of the following types of documentation selected by the employee are considered reasonable documentation:
· A police report indicating that the employee or the employee's family member was a victim of domestic violence or sexual assault.
· A signed statement from a victim and witness advocate affirming that the employee or employee's family member is receiving services from a victim services organization.
· A court document indicating that the employee or employee's family member is involved in legal action related to domestic violence or sexual assault.
An employer is prohibited from requiring that the documentation explain the nature of the illness or the details of the violence.
Use of Existing Policies
An employer may comply with the law by providing employees with paid time off in no less than the same amounts of time off as provided House Bill 4002 that may be used for the same purposes described above.
Recordkeeping/Pay Statement Requirements
Covered employers must retain records documenting the hours worked and paid sick leave taken by employees for at least three years. There are no pay statement requirements.
Employer Notice/Poster Requirements
Covered employers must provide written notice about the law to each employee at the time of hiring or within 30 days of Feb. 21, 2025, whichever is later. The notice must include all of the following:
· The amount of paid sick leave required to be provided to an employee under the law.
· The employer's choice of how to calculate a year (under the law, "year" means a regular and consecutive 12-month period, as determined by an employer).
· The terms under which paid sick leave may be used.
· That retaliatory personnel action taken by the employer against an employee for requesting or using paid sick leave for which the employee is eligible is prohibited.
· The employee's right to file a complaint with the Department of Labor and Economic Opportunity for any violation the law.
The notice must be in English, Spanish, and any language that is the first language spoken by at least 10 percent of the employer's workforce, if the Department of Labor and Economic Opportunity has translated the notice into that language. Distributing a copy of the poster referenced below to employees (with the employee’s “year” information completed) satisfies the written notice requirement.
Covered employers must also display a poster at their place of business, in a conspicuous place that is accessible to employees, that contains the required elements. The poster displayed must be in English, Spanish, and any language that is the first language spoken by at least 10 percent of the employer's workforce, if the Department of Labor and Economic Opportunity has translated the notice into that language.
Payout of Leave Upon Termination
The law doesn’t require an employer to provide financial or other reimbursement to an employee for accrued paid sick leave that was not used upon the employee's termination, resignation, retirement, or other separation from employment.
Reinstatement of Leave Upon Rehire
If an employee is transferred to a separate division, entity, or location, but remains employed by the same employer, the employee retains all paid sick leave that was accrued at the prior division, entity, or location and may use all accrued paid sick leave.
If an employee separates from employment and is rehired by the same employer no more than two months after the separation, the employer must reinstate previously accrued, unused paid sick leave and must allow the reinstated employee to use that paid sick leave and accrue additional paid sick leave upon reinstatement. This provision doesn’t apply if an employer pays an employee the value of the employee's unused accrued paid sick leave at the time of a transfer or separation.
If a different employer succeeds or takes the place of an existing employer, the successor employer assumes the responsibility for the paid sick leave rights that employees who remain employed by the successor employer accrued under the original employer. Those employees are entitled to use paid sick leave previously accrued on the terms provided in the law. This provision doesn’t apply if an employer pays an employee the value of the employee's unused accrued paid sick leave at the time of a succession.
Next Steps
Michigan employers should ensure compliance with the amended minimum wage and paid sick leave requirements and distribute and post updated notices.