ABC Michigan (Western Michigan, Greater Michigan, and Southeastern Michigan) joined a statewide business coalition following the recent Michigan Supreme Court ruling on the Earned Sick Time Act (ESTA). The ESTA changes pose significant challenges and costs for ABC members and their employees.
As state lawmakers address the fallout from this decision, it’s important to point out the main concerns and propose practical solutions to reduce the negative effects of this legislation.
Problem: Disruption for Employers and Employees
The ESTA requires a review of current paid leave policies. Its strict rules on notifications and usage may push many employers to separate sick leave from other types of paid time off (PTO), which goes against employees’ desire for a more unified leave system.
Solution: To tackle these issues, we suggest exempting businesses that already have paid leave policies meeting or exceeding the law’s hourly requirements.
Problem: Hurts Small Businesses, a Key Driver of Economic Opportunity
A key feature of the ESTA is its broad coverage, which grants sick leave rights to all employees, including part-time, seasonal, and independent contractors. This means that every business with even one employee must follow these regulations.
Solution: To ease the burden on small businesses, we suggest creating a small employer exemption for businesses with fewer than 50 employees and adjusting the employee threshold to include only those averaging 20 or more hours per week and exclude seasonal, temporary workers, and independent contractors. Historical examples, like the federal Family Medical Leave Act (FMLA), support this type of distinction.
Problem: Notification Challenges
The Act requires employees to inform their employers about sick leave “as soon as practicable,” which could lead to staffing challenges, allowing for 72 hours of leave without notice each year. This provision is unprecedented and increases the risk of operational disruptions.
Solution: We urge that reasonable limitations be introduced, such as requiring notifications before shifts commence, except in cases of incapacitation.
Problem: Litigation Concerns
The ESTA allows employees to sue their employers for perceived violations and takes the employee’s side in disputes, creating a challenging legal environment for businesses. No other state has established such a rebuttable presumption, which could deter hiring and entrepreneurship in Michigan.
Solution: We strongly suggest eliminating the private right of action and rebuttable presumption, shifting enforcement responsibilities to the state.
Problem: No Frontloading or Flexibility
Another issue with the new law is its rule against frontloading leave time, requiring instead that employees accrue it. This approach can make managing employees more complicated and reduce flexibility.
Solution: Allow employers to frontload time off to simplify accrual processes and empower employees with greater freedom in managing their leave.
A Call to Action
As Michigan’s House and Senate members work together, itβs imperative that they craft pragmatic legislation to address the fallout from the Supreme Court’s ESTA decision.
Michigan is one of 17 states with a paid sick leave law, established in 2018. The new ESTA law, however, is one of the most expansive of its kind, and without amendments, businesses will need to implement sweeping changes to their PTO policies, even if their existing policies meet or exceed the new law’s requirements. This ESTA jeopardizes employee benefits, flexibility, and job security.
We invite lawmakers to collaborate on solutions that safeguard both workers and employers, ensuring a fair and sustainable implementation of paid sick leave in Michigan.
