As the mandates from the Earned Sick Time Act loom over Michigan’s small businesses, there has never been more urgency around the need to support House Bills 4001 and 4002. These bills offer a lifeline to small businesses and their employees who are at risk of facing severe negative impacts if the new ESTA mandates go into effect unchanged on February 21. 

Without the swift passage of HBs 4001 and 4002, many employees will be worse off. Here’s why:

Brian Calley headshot

Brian Calley is the CEO of the Small Business Association of Michigan, which represents 30,000 small businesses across all 83 counties of Michigan.
  • The financial burden of complying with the small business mandate will force businesses to divert resources from wages and health care benefits. Surveys show employees prioritize wage increases, advancement opportunities, and health insurance over paid sick leave, but this mandate will likely lead to lower compensation for employees due to the cost of ESTA compliance.
  • The mandate’s rigid requirements will result in the loss of flexible leave options, depriving employees of the ability to use their paid leave as they see fit. Employees clearly value flexible paid leave for vacations, personal time, or sick days. 
  • The mandate will put an end to employer flexibility. Small businesses are known for offering flexible work schedules and remote work. It is a competitive advantage in the talent war. This mandate’s complex requirements will necessitate meticulous tracking and control of work hours, reducing the flexibility and autonomy employees currently enjoy. 
  • Employers may no longer be able to provide paid leave up front. Many employers allow employees to use PTO as needed without waiting for accruals to build. The ESTA mandate complicates this practice, making it harder for small businesses to front-load paid time off. Consequently, more employees will have to wait for their leave time to accrue.
  • Lower workplace morale will almost certainly result. While most employees are conscientious, some may abuse the law, leading to no-shows and chronic tardiness. The mandate restricts small businesses’ ability to manage attendance and take corrective action, placing additional burdens on the rest of the team.

We often hear politicians say that “small businesses are the backbone of the Michigan economy.” That’s true, but lately those words ring hollow. Small business owners’ success is rooted in their relationship with their workforce; in fact, these enterprises often operate more like families than companies. Not surprisingly, our member surveys show that most (84%) of small businesses already offer paid time off without a government mandate. It is heartbreaking and discouraging that this law will result in less generous and flexible paid time off for employees who deserve better. 

Michigan’s small businesses, which account for roughly half of the state’s jobs, are under threat. The Earned Sick Time Act puts over 225,000 micro businesses with fewer than 10 employees at risk of scaling back or even shutting down. These businesses are diverse and operate in every community. They face daily struggles to survive, especially in the startup phase. 

Another 38,000 small businesses with fewer than 50 employees are also at risk. The administrative requirements of the Earned Sick Time Act are staggering. Small businesses lack large legal and compliance staffs and are at a major disadvantage in managing this law’s complexities. The mandate makes managing schedules more difficult, is vulnerable to abuse, and diverts business owners’ time away from growing their businesses. This will stunt entrepreneurial growth and the jobs that come along with it.

All jobs spring from small businesses, and these mandates threaten to extinguish them before they have a chance to grow. It is so critical to recognize that small business owners wear multiple hats and often go without pay to ensure that small businesses run smoothly. 

The law puts thousands of jobs at risk and diminishes the pay and benefits that employees prefer. Supporting HBs 4001 and 4002 shows real action behind the sentiment of being “pro-small business.” 

After all, what does a state’s economy look like without its backbone?

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