Publication date: October 2, 2024
As we’ve discussed in our recent blogs, you likely already know that big changes are coming to Michigan’s employment laws. While we still have more questions than answers and eagerly await additional context from the State, it’s time to start preparing for what’s to come! The Earned Sick Time Act (ESTA) and Improved Workforce Opportunity Wage Act (IWOWA or “The Wage Act”) will bring a whole new level of compliance requirements to employers large and small across our state.
Don’t worry, Cooper People Group is right beside you! In this blog, we’ll walk you through what you need to know—and more importantly, what you need to do—so that your organization is ready when these laws take effect in just a few short months. Let’s break it down:
1. Audit Like a Pro: Policies, Practices, and Recordkeeping:
Before you panic, let’s start with a good old-fashioned audit of your current policies. Here’s what you should be asking:
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- How are my wages looking? Minimum wage is going up, especially if tips are involved. IWOWA is raising the bar here. Check out more details in our first blog in this Michigan Compliance Compass series.
- Who’s eligible for time off? ESTA will likely expand eligibility to groups like part-timers, temps, interns, and more. Consider how this affects your workforce.
- Speaking of temps, what about my temporary workers? If you use a staffing agency for temporary employees, make sure that your contracts clearly outline if they will be providing the earned sick time benefits.
- Are my PTO policies in compliance? ESTA’s new no-cap, 72-hour usage requirements, and expanded eligibility rules might be a big change for your company. Does your PTO program need a refresh? Take a look at our second blog in this series which talks all about PTO and the ESTA requirements.
- How will I track earned sick time accruals and usage? ESTA will require you to track earned sick time usage in the smallest increments your payroll system can calculate – think 1 min. 7 min, 10 min. etc. The Act seems to be written this way to ensure that employees aren’t forced to take more time off than necessary. Are you prepared to track time off usage in those small increments and maintain these records for at least 3 years? Make sure you can report on sick time usage in the event of audit.
2. Thought Planning: More Than Just Compliance
These changes aren’t just about jumping through compliance hoops – there are strategic decisions to make about your culture and your policies.
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- One bucket or two? Should all time off be lumped into one centralized time off bucket, or would it make more sense to track vacation and earned sick time separately?
- To accrue or not to accrue? Will employees accrue earned sick time based on actual hours worked? Or will employees’ sick time be front-loaded at the beginning of the benefit year?
- Impacting culture positivity: What kind of policy changes should I make to not only comply with the new laws, but also enhance our company culture? This is a prime opportunity to introduce changes that boost morale, engagement, and retention.
- Timing is everything: Will you implement these changes on 2/21/25 or align the switch with the new year on 1/1/25? Employers can determine the annual leave year, whether it be a calendar, employment anniversary, or fiscal year, to name a few.
3. Financial Planning: Keep the Bottom Line in Mind
Nobody likes surprises when it comes to budgeting, so now’s the time to dig into the financial impact of these new laws.
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- Minimum wage hike, anyone? If IWOWA’s new minimum wage rate affects your employees, have you analyzed how much it will hit your bottom line? It’s time for some financial impact analysis.
- Managing the costs: Have you developed strategies to manage these increased labor costs, such as adjusting pricing, optimizing staffing levels, utilizing technology or re-evaluating business operations? Now’s the time to think about creative solutions that can offset the financial impact without compromising on compliance or the quality of your business operations.
- Is 72-hour usage of earned sick time more than you’re offering now? If so, have you calculated the difference between the current and the potential maximum earned sick time benefit cost (up to 72 hours annually for full-timers), and what the financial impact could be?
4. Get Payroll & Timekeeping Systems Ready
Your payroll and timekeeping systems are going to be the backbone of your compliance efforts. Here’s what to check:
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- Need a payroll technology upgrade? Make sure your system can handle new wage rates, tracking accruals, and sick leave utilization, especially with ESTA’s “normal hourly rate” rule. Otherwise, consider if a new time-tracking system might be in your future if your current setup can’t handle these changes. How much might that cost the business? How soon will you need to start the change?
5. Training & Communications: Getting Everyone On Board
Once the systems and policies are in place, it’s time to train your team and spread the word:
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- Who gets trained first? Decide the training timeline and when each group within your business will receive training – leadership, managers, and front-line staff. You’ll need everyone on the same page before 02/21/2025.
- Have a communication plan: Don’t keep your employees in the dark – start planning how you will roll out the details of these changes. Also, think about where employees can easily reference the notices and updates, whether it’s through an internal portal, email, posted in common areas, or all the above.
Bottom Line: The Earned Sick Time Act (ESTA) and Improved Workforce Opportunity Wage Act (IWOWA) are coming, and they’re bringing changes with them. But with a bit of prep, some smart financial planning, and the right systems in place, you can breeze through this transition and keep your business running smoothly.
At Cooper People Group, we’re here to guide you every step of the way. Keep sending your questions our way and stay tuned for the next post in our Michigan Compliance Compass Blog Series as we continue to break down these legislative updates.
Remember, preparation is key. Compliance doesn’t have to be stressful, and we’re here to help you make sure it’s smooth sailing into 2025! Need an extra set of hands to help your business prepare for these changes? Fill out this form so we can get you on the docket this fall and ensure a consultant is assigned to work with your team, providing personalized support and guidance to navigate these new requirements seamlessly.