After months of uncertainty, the Earned Sick Time Act (ESTA) and minimum wage changes are officially in effect. We know this has been a frustrating process for many employers who tried to prepare without clear guidance. The good news is that we finally have the answers we need to move forward confidently.
KEY UPDATES
Minimum Wage Increases
- Now $12.48/hour (effective immediately)
- Scheduled increases to $13.73 in 2026 and $15 in 2027, with future adjustments tied to inflation.
- Tipped wage remains at 38% of the standard rate, with gradual increases reaching 50% by 2031.
Earned Sick Time Requirements
Accrual Rates: Employees earn 1 hour of sick time per 30 hours worked.
Usage Caps:
- Small Businesses (10 or fewer employees): Up to 40 hours of paid sick time per year
- Large Businesses (More than 10 employees): Up to 72 hours of paid sick time.
Frontloading & Carryover Rules
- Employers can frontload the full amount of required sick time at the beginning of the year to avoid tracking accruals.
- If sick time is accrued, unused hours must carry over to the next year.
- Carryover limits: Employers can cap total accruals at 40 hours (small businesses) or 72 hours (large businesses).
Notice Requirements: Employers now have 30 additional days to post new posters and provide employees with written notice about the amount of time required to be provided under ESTA, the employer's choice of how to calculate a "year", the terms which EST can be used, etc.
Implementation Timeline
- Small Businesses: employers with less than 10 employees have until October 1, 2025, to comply. If a Small Business does not have one employee on February 21, 2025, they have 3 years after the hire date of their first employee to comply.
- Large Businesses: takes effect immediately.
If you have any questions or need guidance on implementation, we're happy to help!
