New and Updated Michigan Labor Laws for 2025–2026
Michigan employers are entering a major transition period as both state and federal labor laws evolve through 2025 and into 2026. From paid leave updates and minimum-wage increases to changing overtime and worker-classification standards. UAP can help you understand what’s ahead, and what will be key to staying compliant and avoiding penalties.
Michigan Paid Leave (ESTA)
The Earned Sick Time Act (ESTA) took effect on February 21, 2025, replacing the prior Paid Medical Leave Act.
Under ESTA:
- Employees accrue 1 hour of paid sick time for every 30 hours worked.
- Employers with more than 10 employees must allow up to 72 hours of paid sick time per year; smaller employers may cap usage at 40 hours.
- Time may be used for personal illness, caring for family, or issues related to domestic violence or sexual assault.
Employers should update leave-tracking systems, carryover rules, and handbook language to match these new requirements.
Minimum-Wage and Tipped-Wage Increases
Under the Improved Workforce Opportunity Wage Act, Michigan’s minimum wage rose to $12.48/hour in 2025 and will increase to $13.73/hour in 2026.
Tipped employees will see gradual increases as well, rising to 38% of the standard minimum in 2025 and 40% in 2026, moving toward 50% by 2031. Companies should audit payroll and point-of-sale systems to ensure accurate calculations.
Unemployment and Youth Employment Updates
Michigan’s unemployment benefits increased to a 26-week maximum and a maximum weekly benefit of $446 (2025), rising to $530 (2026).
Additionally, new youth-employment rules taking effect October 1, 2026, will revise work-permit requirements and wage standards for minors, an important change for seasonal and hospitality employers.
Federal Labor Law Developments
While Michigan updates its own employment laws, several federal changes also affect how local businesses manage payroll and HR:
FLSA Overtime Threshold Vacated
A federal rule to raise the salary threshold for exempt employees (to $1,128/week) was vacated in 2025, delaying nationwide implementation. UAP monitors new guidance from the U.S. Department of Labor and reviews exempt vs non-exempt classifications to make sure your company stays compliant.
Contractor & Joint-Employer Standards
The National Labor Relations Board and DOL are reconsidering definitions that affect when contractors or staffing-agency workers count as employees. Companies using subcontractors or leased workers should stay alert for further clarification.
Pay-Transparency and AI in Hiring
Emerging federal initiatives may soon require greater transparency in job postings and oversight of automated hiring systems. Employers should begin documenting pay ranges and reviewing algorithmic or AI-driven hiring tools for compliance.
Preparing for 2026 and Beyond
The 2025–2026 period brings one of the most comprehensive shifts in Michigan employment law in years. By aligning state and federal compliance efforts now, UAP can help employers avoid costly corrections later and start the new year with confidence.
UAP can help with this by:
- Auditing payroll to ensure accurate calculations for over-time and tipped employees.
- Reviewing employee classifications and contractor agreements.
- Updating PTO and Sick Leave-tracking systems and handbook language to match these new requirements.
- Keeping you updated on federal and state laws to ensure compliance ahead of time.
