Just hours before the new laws were to take effect on February 21, Michigan passed amendments to both minimum wage and sick leave. They took effect immediately when signed by the governor a few hours later. The key changes and clarifications are noted below. The full-size law alert on the platform has been updated and can be reached by following the Big Red Button at the bottom of this email.

Minimum Wage
The minimum wage that took effect on February 21 did not change—it’s still $12.48 per hour. However, the minimum base wage for tipped employees did change, and went from a planned $5.99 to $4.74 per hour.

The future minimum wage increases are now a little bigger and coming a little sooner. Those rates are:

$13.73 per hour starting January 1, 2026
$15 per hour starting January 1, 2027
And now, instead of fully phasing out the tip credit, it will only be reduced to 50% of minimum wage by 2031. The future base minimum wage increases and tip credit changes are covered in this minimum wage FAQ.

Sick Leave
The legislature did not drastically overhaul the sick leave law (like they did back in 2018), but did make it a little easier to manage for small employers. They also added to or clarified a few aspects of the law.

Key changes:

The definition of “small employer” is now an employer with 10 or fewer employees (instead of nine or fewer)
Small employers don’t have to comply until October 1, 2025
Small employers only need to provide 40 hours of paid sick leave per year (the additional 32 hours of unpaid sick leave is not required)
Employers can make new hires wait until their 120th day of work to use accrued earned sick time (EST) (instead of their 90th day)
Employers now have until March 23 to provide employees with notice of their EST rights (instead of February 21)
Employees who are rehired within two months (instead of six) need to have their unused EST restored, unless it was paid out at termination
Key clarifications—many of these provisions would have been assumed even though they were omitted, but now they are crystal clear:

Frontloading is expressly allowed and alleviates the need for carryover
When EST is used, it should be paid at the employee’s regular hourly rate or minimum wage (whichever is greater)—overtime, commissions, tips, and bonuses are expressly excluded
Employers are expressly allowed to take disciplinary action against employees who use EST for inappropriate purposes
Employers who opt to have a single bank of paid time off only need to treat 72 hours of it like EST (or 40 for small employers)
The notice poster provided by the state has been updated, as have the FAQs.

Next Steps and Action Items
We’re in the process of updating our platform content and handbook policies. If you use our Smart Employee Handbook, you’ll receive a notification to accept an update to the sick leave policy soon.

If you manage your own policies, there may be provisions from the amended law that you’d like to incorporate. However, unless you’re a small employer and planning to take advantage of the delay, you won’t necessarily need to make changes. For instance, you’re welcome to keep the 90-day waiting period instead of 120, and your policy may not even address restoration of EST on rehire.