When does ESTA take effect?

• Effective October 1, 2025 for Employers with 1-10 employees (defined as “small business”)
• Effective February 21, 2025 for Employers with 11 or more employees.

Employees exempt from ESTA

• US government employees
• Individuals who work under both of the following conditions:
  • Under a policy that allows them to schedule their own working hours
  • Under a policy that prohibits an employer from taking an adverse personnel action of the employee does not schedule a minimum number of working hours (i.e. independent contractors)
• Unpaid trainees/interns
  • Defined as individual who receives training from an employer in accordance with all of the following:
    • Training is similar to the experience provided in a vocational school
    • Training is for the benefit of the individual
    • Individual does not displace the employer’s employees, but works under close supervision
    • Employer receives no immediate advantage from the activities of the individual and, on occasion, the employer’s operations may be impeded by the individual
    • The individual is not entitled to a job at the conclusion of the training
    • The employer and the individual understand that the individual is not entitled to wages for time spent in training.
•  Individual who is employed in accordance with the youth employment standards act (13-17 year olds)

Small Businesses (defined as 10 or fewer employees)

• Employees of a small business must accrue 1 hour of paid earned sick time for every 30 hours worked. They may be limited to use 40 ESTA hours in a year. They no longer must provide an additional 32 hours of unpaid earned sick leave.
• Small Businesses may frontload all 40 hours for immediate use at the start of a year.
• Carryover of unused hours is capped at 40 from 1 year to the next.
• Small Businesses who frontload hours are not required to do the following:
  • Allow an employee to carryover any unused earned sick time from 1 year to the next year.
  • Calculate and track the employee’s accrual of ESTA hours.
  • Pay the employee for any unused ESTA time at the end of the year in which it was accrued.
• Small Businesses are not required to provide paid earned sick leave before 10/1/2025.
• Small Businesses that did not employ an employee before the effective date of this bill will not be subject to ESTA until 3 years after the date that employer first employs an employee.

ESTA Leave for other businesses

• Employees must accrue 1 hour of paid earned sick leave for every 30 hours worked. They may be limited to use 72 ESTA hours in a year.
• Employers may frontload all 72 hours for immediate use at the start of a year.
• Employers who employ part-time employees may provide ESTA hours at the start of a year in accordance with all of the following:
  • Employer must give part-time employee written notice of how many hours part-time employees is expected to work for a year at the time of hire.
  • Amount of ESTA hours provided is, at a minimum, proportional to the ESTA hours that the part-time employee would accrue if they worked all the hours expected in the written notice.
  • If the part-time employee works more than what is expected, the employer must provide them with additional ESTA time in accordance with the accrual requirements.
• Carryover of unused hours is capped at 72 from 1 year to the next.
  • Employers who frontload hours are not required to do the following:
    Allow an employee to carryover any unused earned sick time from 1 year to the next year.
  • Calculate and track the employee’s accrual of ESTA hours.
  • Pay the employee for any unused ESTA time at the end of the year in which it was accrued.
• Employees may require employees to wait 120 days before using ESTA time (was 90 days before)
• Employers who have single PTO banks comply with the act if they provide not less than the same amount of PTO as ESTA requires and allow the PTO to be used for at least the same reasons as ESTA requires. An employer who does this is not required to allow an employee to use PTO for an ESTA reason that exceeds the 40/72 hours required by ESTA.
• Overtime, holiday pay, bonuses, commissions, supplemental pay, piece-rate pay, tips, or gratuities do not have to be factored in an employee’s normal hourly wage/base pay used for ESTA pay.

Notification

• If leave is not foreseeable, employers may require notice in either of the following manners:
  • As soon as practicable.
  • In accordance with employer’s policy related to requesting/using sick time if both of the following are met:
    • On date of hire, effective date of ESTA, or on a date that the employer’s policy takes effect (whichever is later), employer provides a written copy of the policy that includes procedures on how to provide notice.
    • The notice requirement allows employee to provide notice after the employee is aware of the need for sick time.
  • An employer that requires notice for sick time that is not foreseeable shall not deny the leave if either of the following apply:
    • The employer did not provide a written policy of notification procedures.
    • The employer made a change to the policy and did not provide notice of the change in writing within 5 days of the change.
• Employers may take adverse personnel actions against employees who violate notice requirements in the act.

Increments of Time

• ESTA may be used in 1-hour increments or the smallest increment that employer uses for absences or use of other time.

3-days absence

• Employers may ask for documentation and that documentation must be provided not more than 15 days after the employer’s request.

Picking up where employees left off at separation

• Employees who leave and then are re-hired within 2 months must pick up their sick time where they left off (was 6 months).
• This doesn’t apply if the employer pays out unused sick time when employee leaves.

Private Right of Action/Rebuttable Presumption

• Removed from ESTA

Penalties for violations

• Employers who take retaliatory personnel actions against employers who ask/use time is subject to civil fine of not more than $1,000.00.
• Employers who fail to provide ESTA hours is subject to a civil fine of not more than 8 times normal hourly wage.

Written notice to employees 

• Must be given no later than 30 days after the effective date of the bill.

Collective Bargaining Agreements & other contracts

• If employees are under a CBA and the CBA conflicts with ESTA, ESTA applies beginning on the stated expiration date of the CBA.
• If employee is covered under a contract (not including a signed employee policy), the act applies beginning on the stated expiration date of the contract if all of the following apply:
  • Contract was signed before 12/31/24
  • Contract is not effective for more than 3 years
  • Employer notified Department of Labor and Economic Development of the contract.