Amended Michigan Paid Sick Leave Requirements: Considerations Relating to Individuals Who Work for Municipalities
The Michigan Earned Sick Time Act (“ESTA”), an act intended to expand paid sick leave rights for employees, took effect on February 21, 2025. The Michigan Legislature finally compromised on amendments to ESTA very late in the evening of February 20, 2025, which amendments became effective immediately upon Governor Whitmer’s signature on February 21, 2025 (“Amended ESTA”).
Municipalities were required to comply with Amended ESTA immediately. However, one very important change in Amended ESTA was that “small businesses,” which are employers with 10 or fewer employees (including municipalities), are not required to start providing the paid sick leave or to start tracking their employees’ hours to calculate earned paid sick leave until October 1, 2025. This gives smaller municipalities more time to prepare before implementing the new paid sick leave for employees. Mika Meyers recently published a Client Alert that provides a summary of the important changes in Amended ESTA. This article briefly discusses the fast-approaching deadline to comply with Amended ESTA’s notice and posting requirements, and focuses on questions regarding the application of the new paid sick leave requirements to positions specific to municipalities.
Upcoming Deadline for Notice and Posting Requirements
All municipalities, even those with 10 or fewer employees, must provide written notice to their employees with certain information regarding the employees’ rights under Amended ESTA by March 23, 2025, or upon an employee’s date of hire, whichever is later. Amended ESTA does not require the written notice to be in a specific format, and it could be an email or a simple document distributed to employees. In addition, municipalities must post a poster explaining employees’ rights under Amended ESTA in a conspicuous place that is available to employees. The poster is published by the Michigan Department of Labor and Economic Opportunity (“LEO”) and is available on its website. Employers, including municipalities, are required to post the poster in English and Spanish (even if none of its employees speak Spanish), and in any language that is the first spoken language by not less than 10% of their employees if LEO has translated the poster into that language. Currently, LEO has issued English, Spanish, and Arabic versions of the poster.
Application of Amended ESTA to Municipal Positions
Generally, ESTA applies to all full-time, part-time, temporary, and seasonal employees, with very few exceptions. However, the application of Amended ESTA to certain positions that are unique to municipalities is unclear. Municipalities may wish to consider the following before making decisions regarding the application of Amended ESTA to a particular municipal position.
Paid-On-Call Firefighters
There is no specific exception for paid-on-call firefighters under Amended ESTA, but a new statutory exemption may be applied to paid-on-call firefighters, if certain requirements are met. Under the Amended ESTA, the term “employee” does not include an individual who works in accordance with a policy of the employer, if both of the following conditions are met: (1) the employer’s policy allows the individual to schedule their own working hours; and (2) the employer’s policy prohibits the employer from taking adverse personnel action against the individual if the individual does not schedule a minimum number of working hours. Depending on a municipality’s policies, this new exemption could potentially be applied to its paid-on-call firefighters.
It is unclear, however, if this exemption applies to paid-on-call firefighters required to attend certain meetings or training sessions. In those circumstances, a municipality would need to closely review the context and circumstances of those required meetings and whether the requirement could be characterized as requiring a minimum number of working hours, jeopardizing the application of the exemption.
Elected and Appointed Officials
One very common question we have received from municipalities is whether elected or appointed municipal officials are covered by ESTA. Unfortunately, Amended ESTA does not specifically address this issue. The definition of an “employee” remains very broad under the Amended ESTA. Amended ESTA defines “employee” as “an individual engaged in service to an employer in the business of that employer,” with certain limited exceptions. There is no clear answer regarding whether municipal officials are or are not “employees” under Amended ESTA. LEO has provided some direction on its website under the Frequently Asked Questions (“FAQ”) page for the new paid sick leave requirements:
“Generally, publicly elected officials, members of publicly appointed boards and commissions, and similar public office holders are not considered employees for purposes of ESTA, even if paid or receiving some form of compensation, unless the governing entity treats these individuals as employees.”
LEO’s FAQ page does not act as official guidance or rule, but it does provide insight into LEO’s current position on the issue. LEO is the agency charged with receiving and investigating ESTA violation complaints, making that insight particularly helpful for employers. Because Amended ESTA does not provide a clear answer, LEO’s position on the FAQ page could be helpful to support a defense against a claim that a municipal official should have been treated as an “employee” under Amended ESTA.
It should be noted, however, that LEO’s general statement that municipal officials are not employees does not apply if the municipality “treats those individuals as employees.” LEO has not explained that statement or provided any examples of what “treating an individual as an employee” would look like. It is very likely that LEO would not consider an elected or appointed municipal official whose duties are typically limited to attending public meetings to be an “employee” for Amended ESTA purposes. At the other end of the spectrum, LEO would likely consider a municipal official who is technically appointed but works for the municipality in a capacity similar to a full-time or part-time job to be an “employee.” Municipalities should be careful when considering whether municipal officials who do more than attend public meetings but do not work for the municipality as their regular job are “employees” for purposes of Amended ESTA. We recommend that those officials be considered on a case-by-case basis. Although there is no official test under Amended ESTA, LEO’s FAQ page notes that Michigan case law uses the “economic reality test” to determine whether an individual is an employee. The “economic reality test” uses a number of factors to determine if an employment relationship exists, and requires a detailed analysis of an individual’s relationship with the alleged employer.
This can be used to help a municipality consider if a particular position is akin to an employment relationship.
We are available to assist municipalities with questions regarding whether particular municipal officials should be treated as “employees” under Amended ESTA.
Election Workers
Typically, election workers are temporary employees who work for a municipality for the duration of an election, and who may or may not return and work during a subsequent election. Temporary employees are covered under Amended ESTA and must accrue one hour of paid sick leave for every 30 hours worked. To ensure election workers receive the appropriate amount of paid sick leave, municipalities are required to track election workers’ hours worked and the amount of paid sick leave they accrue. However, as a practical matter, depending on the terms of a municipality’s sick leave policy, election workers may not be able to use accrued paid sick leave.
Municipalities are not required to indefinitely keep a bank of earned paid sick leave for employees who separate from employment, including for election workers who leave and return to a municipality’s employment for a number of elections. Under Amended ESTA, if an employee separates from employment and is rehired less than two months after the separation, the employer must reinstate previously accrued but unused paid sick leave. Employers are not required to reinstate paid sick leave for employees that return to work more than two months after the separation. If a municipality ends election workers’ employment between elections, most election workers would have more than a two-month gap in employment between elections, meaning that any paid sick leave previously accrued by the election workers would be forfeited and their accrual would start over upon rehire.
Amended ESTA also allows employers to adopt a waiting period before accrued paid sick time may be used by new employees. Municipalities may require employees hired after February 21, 2025, including their election workers, to wait up to 120 days after commencing employment to use accrued paid sick leave. A municipality could choose a shorter waiting period, such as 90 days, if it wishes. Amended ESTA only limits the maximum waiting period. During the waiting period, new employees would still need to accrue at least one hour of paid sick leave for every 30 hours worked, but the municipality is not required to allow the employee to use accrued paid sick leave. Municipalities who wish to adopt a waiting period for new employees should include the specific waiting period (120 days or less) in a written policy. LEO has not issued any guidance confirming that the waiting period “resets” and could be used each time an employee returns to work for a municipality after leaving, but has stated in its FAQs that employees who are rehired within two months are considered to be continuously employed for ESTA purposes and the waiting period cannot be imposed again. Municipalities should also be aware that LEO has recently taken the position in its FAQs that employers who frontload employees’ sick leave for ESTA purposes cannot impose a waiting period on those employees’ use of that leave.
Before municipalities make changes to their leave policies in the wake of the Amended ESTA, they should be aware of the issues and uncertainty surrounding the application of Amended ESTA to certain municipal positions. If you have questions about the application of Amended ESTA to one or more of your municipality’s positions, or any other questions about the Amended ESTA, please contact a lawyer in our Municipal Practice Group or our Labor and Employment Practice Group.
