Effective February 21, 2025, Michigan’s Earned Sick Time Act will replace the Paid Medical Leave Act, following the Michigan Supreme Court’s July 2024 ruling. As a result, small businesses with fewer than 50 employees, which make up the vast majority of businesses in the state, face significant changes to their operations that, ultimately, impact employees the most. While previously exempt from certain mandates, these employers will now need to navigate new regulations while continuing to support local economies and workforces.
The Removal of Exemptions for Small Businesses
Under the new sick leave laws, the most substantial change is the removal of exemptions for small businesses. Previously, companies with fewer than 50 employees were not required to provide paid sick leave under the Paid Medical Leave Act. The upcoming changes now place nearly all Michigan employers, regardless of size, under the same requirements. This means that businesses with as few as one employee will need to provide up to 72 hours of paid sick leave annually—a major shift in policy—starting in February 2025.
For small businesses, which often operate with limited margins and resources, these new mandates present both financial and operational challenges. The removal of exemptions means that even businesses with just a handful of employees will face increased costs associated with providing paid sick leave, potentially pushing businesses towards automation and creating fewer jobs. Many small businesses rely on flexible work environments where informal or ad-hoc leave arrangements have worked well for both employers and employees. Formalizing these arrangements under strict regulations adds administrative complexity and tracking requirements, increasing the strain on small businesses and their workforces as they navigate efficiently managing compliance.
Tailored Solutions to Mitigate Impact
To alleviate these pressures on small businesses and employees, advocates, including the West Michigan Policy Forum, have urged legislators to consider tailored solutions that could reduce the law’s burden on businesses without compromising workers’ rights. For example, one suggestion is to exempt businesses that already offer benefits exceeding the 72-hour sick leave requirement. By doing so, Michigan can encourage companies to maintain or enhance their existing benefits without imposing further regulations.
Moreover, exempting the smallest businesses altogether could protect their ability to thrive and continue their growth. Many small businesses contribute significantly to their communities, not just through employment but also as a resource and service to their neighbors. Tailored solutions that give these businesses the flexibility to manage their own operations will ultimately safeguard jobs and ensure they can continue contributing to their community.
Balancing Flexibility with Employee Protections
Of course, any solution will require a careful balance between business and employee protections. For instance, requiring sick leave to be taken in full- or half-day increments and requiring advance notice would help small businesses forecast operational needs. While workers still gain the security of paid sick leave, businesses would have the ability to plan for absences more effectively. This structured approach benefits both employers and employees, preventing last-minute disruptions while offering a fair leave policy.
Additionally, reforms such as allowing businesses to frontload 72 hours of sick leave at the start of the year simplify the policy and free up administrative resources by easing the tracking burden for small businesses. This approach gives employees immediate access to their leave, empowering them to better manage their health and family responsibilities.
Why Clearly Defined Fixes Are Needed Now
With the new sick leave regulations set to take effect in just a few months, employers are already spending time, money and effort to plan on compliance, despite not having all the necessary details on amendments and exemptions. The sooner businesses have clarity, the better they can prepare for compliance without compromising service quality, risking financial instability or adding yet another policy they need to navigate to their already full plates. Delays beyond this date could lead to rushed implementations, creating confusion and potential compliance issues that could negatively impact both employers and employees.
Supporting Jobs and Small Businesses
While Michigan’s new paid sick leave law aims to enhance worker protections, the impact on small businesses and employees cannot be ignored. Tailored reforms and solutions could help mitigate these effects, ensuring that these vital employers can continue to operate without sacrificing the job opportunities they create. By striking a balance between flexibility and fairness, Michigan’s legislature can support both its workers and the small businesses that are the backbone of its economy—a backbone that is anxiously anticipating the strain of increased regulations and costs that could have been avoided with a more thoughtful approach.
As the state moves toward the 2025 implementation of this law, among others, ongoing dialogue between the West Michigan Policy Forum advocates, policymakers and business owners will be critical to ensure that the legislation achieves its intended goals without unintended consequences.
Learn more about the West Michigan Policy Forum and its three-tiered approach to addressing its priorities.
