Michigan: Minimum Wage and Paid Sick Leave Updates
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APPLIES TO All Employers with Employees in MI |
EFFECTIVE February 21, 2025 |
QUESTIONS? Contact HR On-Call |
Quick Look
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Discussion:
There continues to be developments around Michigan’s minimum wage and paid sick leave laws. On July 31, 2024, in Mothering Justice v. Attorney General, the Michigan Supreme Court reinstated the original versions of the 2018 Improved Workforce Opportunity Wage Act (IWOWA) and Earned Sick Time Act (ESTA), replacing the subsequently enacted Paid Medical Leave Act (PMLA). The July 2024 ruling created some confusion around the required minimum wage rates. Following a request for clarification from the State of Michigan and the Attorney General, the Court issued a new order with a specific schedule for the new minimum wage, minimum cash wage, and tip credit rates. Since then, the legislature made even more changes to both Acts.
Minimum Wage Update
Most recently, effective February 21, 2025, the Michigan legislature passed SB 8 which amended the IWOWA’s minimum wage requirements that were previously set by the Michigan Supreme Court.
| Previous Due Date | Previous Court Ordered Min. Wage Rate | Previous Court Ordered Tipped Wage Rate (% of min. wage) | New Due Date | NEW SB 8 Min. Wage Rate | New SB 8 Tipped Wage Rate (% of min. wage) |
| Feb. 21, 2025 | $12.48 | 48% | Feb. 21, 2025 | $12.48 | 38% |
| Feb. 21, 2026 | $13.29 | 60% | Jan. 1, 2026 | $13.73 | 40% |
| Feb. 21, 2027 | $14.16 | 70% | Jan. 1, 2027 | $15.00 | 42% |
| Feb. 21, 2028 | $14.97 | 80% | Jan. 1, 2028 | Based on CPI | 44% |
| Feb. 21, 2029 | TBD | 90% | Jan. 1, 2029 | Based on CPI | 46% |
| Feb. 21, 2030 | TBD | 100% | Jan. 1, 2030 | Based on CPI | 48% |
| Jan. 1, 2031 | Based on CPI | 50% |
Records for compliance with tipped worker pay must be kept for a minimum of three years. Failure to pay the required minimum tipped wage may result in a $2,500 civil penalty. Failure to pay the required minimum wage for non-tipped workers may result in a $1,000 civil penalty.
Paid Sick Leave Update
Effective February 21, 2025, HB 4002 amended the ESTA. Although most changes went into effect immediately, small employers (now defined as 10 or fewer employees) have until October 1, 2025 to comply with the requirements.
| ESTA | ESTA Amendment | |
| Eligibility | All employees and all private employers are subject to the ESTA | All private employers.
All employees except unpaid trainees or unpaid interns and employees who schedule their own working hours (if certain conditions are met). |
| Leave Amounts | Accrual Rate: One hour per 30 hours worked.
Accrual Cap: No annual or overall cap currently indicated. Carryover: All accrued leave carries over from year to year. |
Accrual Rate: No change.
Accrual Cap: No change. Carryover: 72 hours; 40 hours for small employers. |
| Waiting Period | 90 days following employment | Accrual policy: 120 days following employment for employees hired after Feb. 21, 2025.
Frontload policy: No waiting period. |
| Usage | 1-9 Employees: Employees may use up to 40 hours per year, with the remaining 32 hours available as unpaid time off.
10+ Employees: Employees may use up to 72 hours per year. |
1-10 Employees: Employees may use up to 40 hours per year.
11+ Employees: Employees may use up to 72 hours per year. |
| Reasons for Leave | (1) Mental or physical injury or illness of employee or family member; (2) victim of domestic violence or sexual assault; (3) attend specified school or child care meetings; (4) closure of business or school due to public health emergency | No change. |
The pay rate for ESTA leave is now a pay rate equal to the greater of either the normal hourly wage or base wage for that employee, or the minimum wage established under IWOWA, whichever is greater. The pay rate is not required 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. There are also updated requirements for employee notice, leave increments, rehire reinstatement requirements, prorating for part-time employees, civil penalties, among other changes.
Employers have until March 23, 2025 to provide current employees with written notice of: (a) the amount of earned sick time required to be provided; (b) the definition of a year; (c) the terms under which earned sick time may be used; (d) that retaliatory action against eligible employees for requesting or using earned sick time is prohibited; and (e) the employee’s right to file a complaint with the department for any violation of the ESTA. The Department of Labor and Economic Opportunity (LEO) is expected to provide a brochure with the required notice information. According to LEO’s FAQs, the required poster may also serve as notice.
Action Items
- Update minimum wage requirements for tipped workers; prepare to update minimum wage rates for all workers for 2026.
- Update paid sick leave policies.
- Review ESTA FAQs.
- Provide the required notice.
- Display the required ESTA poster.
- Update payroll administration with new requirements.
- Have appropriate personnel trained on requirements.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase