If you’re an employer in Michigan, Michigan Labor Laws 2025 are something you can’t afford to skip. From sweeping changes in sick leave to steeper minimum wage hikes and revamped unemployment rules, these updates will affect how you run your business, manage payroll, and remain compliant.
Below is a breakdown of the key changes, what you need to do, and risks of noncompliance.
What’s New Under Michigan Labor Laws 2025
Here are the major changes under Michigan Labor Laws 2025 that every employer should know and act on:
1. Minimum Wage Increase & Tipped-Wage Adjustments
Under the reinstated Improved Workforce Opportunity Wage Act (IWOWA), the minimum wage jumps to $12.48/hour, effective February 21, 2025.
Further increases are scheduled:
- January 1, 2026: $13.73/hour.
- January 1, 2027: $15.00/hour.
Tipped workers’ wage rules also change. In 2025, tipped minimum wage will be 38% of the regular minimum wage and will gradually increase until reaching 50% by 2031.
Employers must ensure that base wage plus tips meet the full minimum wage.
2. Earned Sick Time Act (ESTA) Reinstated
One of the most impactful updates under Michigan Labor Laws 2025 is the reinstatement of the Earned Sick Time Act (ESTA), effective February 21, 2025.
Key provisions under ESTA:
- Coverage: Applies to virtually all employers (small and large), replacing the older Paid Medical Leave Act (which applied only to large employers).
- Accrual: Employees accrue 1 hour of earned sick time for every 30 hours worked.
- Usage caps by employer size:
• Employers with 10 or more employees: up to 72 hours paid per year.
• Employers with fewer than 10 employees: up to 40 hours paid, plus 32 hours unpaid per year. - Carryover: Unused earned sick time must carry over to the next year (though usage may be capped).
- Permitted uses: Covered reasons include the employee’s own illness, medical care, family member’s illness, domestic violence, school closures, or caregiving duties.
- Documentation: Employers can require documentation only if leave extends beyond three consecutive days, and then only a simple statement from a provider is required.
- Notice / procedural rules: ESTA allows employers to require reasonable notice (as soon as practicable) for unforeseeable leave, so long as the notice policy is shared with employees.
- Small business delay: Some provisions for small employers (10 or fewer employees) may begin October 1, 2025, not immediately.
3. Overtime & Wage Posting Rules
Under Michigan Labor Laws 2025, employers subject to the IWOWA must continue paying 1.5× the regular rate for hours beyond 40 in a workweek.
Certain classes of employees remain exempt (executive, administrative, professional, agricultural) as per usual rules.
Places of employment must post updated wage and hour, and sick leave notices (posted in English, Spanish, Arabic).
4. Unemployment Benefits: Expanded Coverage
On April 1, 2025, revisions to the Michigan Employment Security Act under the new Michigan Labor Laws 2025 will take effect.
- Maximum weeks extended from 20 to 26 weeks.
- Weekly benefit capped increase:
• 2025: $446
• 2026: $530
• 2027: $614
These increases will raise employer obligations in terms of unemployment insurance contributions and claims handling.
5. Right-to-Work Repeal & Union Impacts
An important but sometimes overlooked shift under Michigan Labor Laws 2025 is that the state’s right-to-work law was repealed in 2024.
This change restores the ability of labor unions to require membership or dues (in contexts allowed by law) in unionized shops. Employers with collective bargaining agreements or unionized employees need to reassess their labor practices under this new environment.
Why These Changes Matter (and What Risks You Face)
- Cost pressure: Higher wages, required paid sick leave, and expanded unemployment benefits raise labor costs.
- Operational complexity: Small employers will especially feel the burden of new leave tracking and compliance.
- Legal risk & penalties: Noncompliance with ESTA, IWOWA, or unemployment laws may lead to fines, back pay, litigation, or administrative penalties.
- Employee relations: Mismanaging these changes (or being late to implement them) can cause morale issues and harm your reputation.
What Employers Must Do: A Compliance Checklist
Below is a to-do list to help you prepare for Michigan Labor Laws 2025:
| Action | Details / Tips |
| Update pay rates | Adjust your payroll systems so that on Feb 21, 2025, eligible employees receive the new $12.48 minimum wage (and correct tipped wage). |
| Revise sick leave policy | Draft an Earned Sick Time policy (for both small and larger employers) reflecting accrual, use limits, carryover, and notice rules. |
| Notify employees | Distribute the new policy to all workers and provide training or info sessions as needed. |
| Revise employee handbook | Update your handbook to incorporate the changes to leave, wages, overtime, and unemployment benefits. |
| Post required notices | Obtain and post updated posters showing wage / sick leave laws in conspicuous places (English, Spanish, Arabic). |
| Track accruals | Set up tracking (pay period–by–pay period) of hours worked and sick time accrued and used. |
| Budget adjustments | Project increased labor costs, possibly adjust pricing or staffing plans accordingly. |
| Review union contracts | If you have unionized employees, review how repeal of right-to-work may affect your obligations or contract terms. |
| Stay alert for legislative changes | The Legislature may amend or tweak these laws; stay informed through legal counsel or HR advisories. |
Sample Narrative
From the start to the end, “Michigan Labor Laws 2025” is central:
Michigan Labor Laws 2025 introduce sweeping reforms that shift how employers must treat wages, sick leave, and benefits. Employers should not ignore these changes—failure to comply may lead to serious legal and financial consequences. By the end of this year, your policies, payroll systems, and employee handbook must fully align with Michigan Labor Laws 2025.
Final Thoughts
Michigan Labor Laws 2025 are not incremental tweaks—they are transformative. Whether your business is small or large, the changes to minimum wage, sick leave, and unemployment will affect your bottom line, operations, and risk profile.
Don’t wait until February 2025. Start today: update your policies, revise your payroll, train your team, and engage legal or HR counsel if needed. If you’d like, I can help you draft a sample sick leave policy, or walk you through steps for small businesses.
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