Small Businesses: Your ESTA Compliance Deadline is October 1, 2025 – Start Preparing Now

If your Michigan business has 10 or fewer employees, you have until October 1, 2025, to fully comply with the Michigan Earned Sick Time Act (ESTA). There are many required updates to consider and prepare for – policy updates, payroll adjustments, and employee communication — starting now will make the transition far smoother.

What ESTA Requires for Small Businesses

Beginning October 1, 2025, eligible employees at small businesses will have the right to accrue and use paid sick time. This means you must have systems in place to:

• Track accrual at a rate of 1 hour for every 30 hours worked (or frontload 40 hours at the start of the benefit year)
• Allow up to 40 hours of paid sick time per year
• Permit carryover of unused hours (if using accrual)
• Pay sick leave at the greater of the employee’s regular rate or Michigan’s minimum wage
• Maintain compliance with recordkeeping and notice requirements

Why You Should Prepare Now

1. Policy Updates – Your employee handbook and PTO policies must be updated to reflect ESTA’s requirements.
2. Payroll & Tracking Systems – Adjust accrual tracking in payroll or HR software to ensure compliance from day one.
3. Employee Communication – Prepare to post required notices and communicate changes to your team in a clear, consistent way.
4. Avoid Penalties – Non-compliance can result in costly fines and legal exposure.

Next Steps for Small Business Owners

1. Review Your Current PTO/Sick Leave Policy – Identify where it falls short of ESTA requirements.
2. Choose Accrual or Frontloading – Decide whether to track hours worked or grant sick leave up front each year.
3. Update Payroll & HR Systems – Ensure systems are ready to track and report correctly.
4. Post Required Notices – Use the state’s official poster and provide notices at hire and as required.
5. Train Managers & Supervisors – Make sure they understand how to approve and track sick leave requests under the new law.

Yeo & Yeo Can Help You Get Ready

Don’t wait until the deadline is looming — take advantage of our complimentary ESTA Readiness Assessment for Michigan businesses with 10 or fewer employees. In just a few quick questions, we’ll help you pinpoint your current compliance status and provide a tailored action plan so you’re fully prepared well before October 1, 2025.

Take the ESTA Readiness Assessment →

To support your preparation, we’ve also developed the Yeo & Yeo ESTA Toolkit — a comprehensive set of resources, guides, checklists, and templates created specifically for Michigan small businesses navigating the new requirements.

Your Yeo & Yeo advisor is here to walk you through the process, answer your questions, and help you implement changes that keep you compliant while supporting your employees.