Michigan's New Sick-Time & Minimum-Wage Rules: What Every Employer Must Do Now

Two changes, one payroll

Both of these landed because of a 2024 Michigan Supreme Court decision, and both were reshaped by the Legislature in February 2025 — so any version you read a year ago is out of date. In plain terms: a paid-sick-time law now covers almost every Michigan employer, and the minimum wage is climbing on a set schedule. The compliance deadlines are already behind us, which is why this is worth ten minutes now rather than after a complaint lands.

The sick-time law now covers almost everyone

Michigan’s Earned Sick Time Act (ESTA) reaches employers of nearly every size. Businesses with 11 or more employees have been covered since February 21, 2025; small businesses with 10 or fewer employees came under it on October 1, 2025. If you have even one employee on payroll, assume it applies to you. Workers earn paid sick time they can use for their own or a family member’s illness or medical care, and for certain safety situations such as domestic violence — and you can’t punish them for using it.

How much you owe — and the simpler way to handle it

There are two ways to do this. The default is accrual: employees earn one hour of paid sick time for every 30 hours worked. The simpler option is to frontload the whole year at once — 72 hours for a regular employer, 40 hours for a small business (10 or fewer) — which keeps you presumed compliant and saves the tracking. If you use accrual instead, employees carry at least 72 unused hours into the next year; frontloading avoids that carryover entirely. You can also require new hires to wait up to 120 days before they use any of it. Most small employers find frontloading the least headache.

Your to-do list as an employer

None of this is hard, but it has to be done — and documented:

1. Pick accrual or frontload and write it into your handbook or a standalone policy. 2. Post the state’s sick-time notice where employees can see it, and give them the required written notice. 3. Track it — accrual, use, and carryover — and keep the records. 4. Set your waiting period if you want new hires to wait the full 120 days. 5. Don’t retaliate against anyone for using earned time — and if there’s a genuine performance problem, document it carefully and in real time, not after the fact.

The minimum wage is climbing to $15

Michigan’s minimum wage rose to $13.73 an hour on January 1, 2026, and it goes to $15.00 on January 1, 2027, with inflation adjustments after that. (It began this climb at $12.48 back in February 2025.) If you employ tipped staff, there’s a separate, lower cash wage — roughly $5.49 in 2026 — that steps up gradually; if you run a restaurant or bar, confirm your tip-credit math every year so cash wage plus tips clears the full minimum. Build the raises into payroll now so a January paycheck doesn’t catch you short.

Where the real risk is — and what covers it

Here’s the part that matters for your bottom line. The sick-time act itself is enforced by the state: an employee files a complaint with Michigan’s labor department, and penalties run to back pay and civil fines. The amended law is actually friendlier to employers than the original — it dropped the automatic presumption of retaliation and the right for employees to sue you directly under the act. But that is not where the big exposure lives.

The expensive claims happen when a sick-time or pay dispute turns into something bigger — a wrongful-termination, discrimination, or retaliation claim under other state and federal laws. Those land in court, and defending even a weak one runs into five figures fast. That exposure is what Employment Practices Liability Insurance (EPLI) is built for — it pays to defend and resolve employee claims, and many policies add wage-and-hour defense. Paired with a clear written policy, it’s the difference between a bad week and a bad year. EPLI sits inside the management-liability coverage on our commercial side.

The bottom line

These rules aren’t going anywhere, and the deadlines are already behind us. Decide how you’ll handle sick time, put it in writing, build the wage steps into payroll, and make sure you carry the coverage that answers an employee claim. One honest review usually squares all of it away — and it’s a great deal cheaper than the complaint you’re trying to avoid.

Employ people in Michigan? Send us a quick note on your headcount and current policies — Domham reviews your employment-practices and management-liability coverage, flags the gaps a sick-time or wage dispute would open, and makes sure your other core obligation, workers’ compensation, is squared away too.