Michigan Earned Sick Time Act: What Small Business Owners Need to Know in 2026

If you've been putting off updating your handbook because you figured Michigan's Earned Sick Time Act would sort itself out, I want to be straight with you: it didn't. The law changed again in early 2025, and most of the small businesses I talk to are still running on a policy that doesn't reflect what's actually required in 2026.

This isn't the kind of gap you get to discover on your own schedule. You find out about it when an employee calls out sick and asks about their accrued time, and your handbook has nothing to say. Or when the state comes asking.

Here's what ESTA requires right now and where I see small businesses get it wrong.

What ESTA Actually Requires

Michigan's Earned Sick Time Act replaced the old Paid Medical Leave Act, and it applies to every employer with at least one employee working in Michigan. There's no small-business exemption in the sense most owners hope for. What you get instead is a delayed start date.

Employees accrue one hour of paid sick time for every 30 hours worked, whether they're full-time, part-time, or remote. That accrual has to live somewhere real: payroll, a time-tracking system, a spreadsheet you're actually keeping current. "We'll figure it out if someone asks" is not a system.

The Small Business Timeline, and Why October 1, 2025, Still Matters

Employers with 11 or more employees had to comply starting February 21, 2025. If you have 10 or fewer employees nationwide, not just in Michigan, you got a longer runway: your compliance date was October 1, 2025.

That date has already passed. If your handbook, payroll system, and posted notices still reflect the old rules or nothing at all, you're out of compliance right now, not eventually.

Your headcount for this test includes employees outside Michigan. A 12-person company with 8 in Michigan and 4 in Ohio is a large employer under ESTA, not a small one.

How Much Sick Time Employees Are Owed

Small employers (10 or fewer nationwide) must allow employees to use at least 40 hours of paid sick time per year. Large employers (11 or more) must allow at least 72 hours. You can frontload the full amount at the start of the year instead of accruing it, but if you frontload, the hours have to be available immediately, not phased in.

Unused time carries over into the next year, up to those same caps, unless you frontload. Skipping carryover when you're on an accrual model is one of the more common violations I see, and it's an easy one to fix once you know it's happening.

The Compliance Gaps I See Most Often

●        Handbooks still reference the old Paid Medical Leave Act instead of ESTA

●        New hires never received written notice of their ESTA rights

●        The required poster isn't displayed, or isn't provided electronically to remote employees

●        Payroll tracks PTO generally but doesn't separately track ESTA accrual and use

●        Managers handle sick time requests informally instead of through a documented process

Any one of these is fixable in an afternoon. All of them together is a pattern, and it's the kind of pattern that gets expensive if an employee ever files a complaint. ESTA includes a 90-day rebuttable presumption of retaliation: if you take any adverse action against an employee within 90 days of them using or requesting sick time, the law assumes retaliation, and you have to prove otherwise.

What to Do This Week

●        Pull your current handbook and check whether it mentions ESTA by name

●        Confirm payroll or time-tracking is accruing and tracking sick time separately from general PTO

●        Verify new hires get written notice of their rights at time of hire

●        Check that the ESTA poster is displayed, or sent electronically to remote staff

●        Count your full nationwide headcount to confirm which threshold applies to you

None of this requires a legal team. It requires an hour, a checklist, and someone willing to look honestly at the gaps.

The Bottom Line

Michigan's sick time law isn't going away, and it isn't getting simpler. But most of what it asks of a small business is administrative, not complicated: track the hours, tell people their rights, keep the paperwork current. The businesses that struggle with ESTA are almost never the ones that don't care about their people. They're the ones that never had anyone walk them through what the law actually requires.

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