A Guide to Employment Law for Northern Michigan Nonprofits
Northern Michigan’s nonprofit organizations play a critical role in enriching communities—from supporting vulnerable populations to preserving natural resources and hosting beloved local events. But to maintain focus on their missions, nonprofits must also navigate the complex landscape of employment law. This guide provides a practical, up-to-date overview of the legal requirements facing nonprofits in 2025, including Michigan’s updated sick leave law, wage and hour rules, worker classification, anti-discrimination protections, and recommended policies.
Michigan’s Earned Sick Time Act (ESTA): What Nonprofits Need to Know
Recent changes to Michigan employment law have a direct impact on nonprofit employers. The state’s new Earned Sick Time Act (House Bill 4002), effective February 21, 2025, requires nearly all employers—including nonprofits—to offer paid sick leave. Whether an organization employs five people or fifty, compliance with these requirements is not optional.
Nonprofits with 11 or more employees must allow staff to accrue one hour of sick leave for every 30 hours worked, with a maximum of 72 hours per year. Those with 10 or fewer employees follow a similar accrual schedule but can cap annual use at 40 hours. In either case, employers can opt to “frontload” the full amount annually rather than track each hour.
The law permits employees to use this time not only for their own illness, but also for preventative care, domestic violence-related absences, and certain school-related events involving their children. Employers are also required to maintain leave records for three years and may not retaliate against employees for using their sick leave. Small employers have until October 1, 2025, to fully implement the law.
Volunteers or Employees? Avoiding Misclassification
Volunteerism is the lifeblood of many Northern Michigan nonprofits, but the line between a “volunteer” and an “employee” is not always clear in the eyes of the law. Misclassification can trigger serious legal and financial consequences, including liability for unpaid wages and overtime.
The Fair Labor Standards Act (FLSA) allows individuals to volunteer for nonprofit organizations, but only if they do so freely, without coercion, and without the expectation of compensation. Moreover, if a volunteer performs the same duties as a paid employee, or displaces someone who would otherwise be compensated, courts may consider them an employee—regardless of intent.
To reduce risk, nonprofits should use clear written agreements with volunteers, limit volunteer roles to non-core functions, and avoid providing anything that could be construed as compensation, such as stipends or bonuses. Where interns or board members take on active roles, it’s especially important to evaluate whether those roles create an employment relationship under the FLSA.
Wage and Hour Requirements
Nonprofits are subject to many of the same wage and hour laws as for-profit businesses. As of February 2025, Michigan’s minimum wage increased to $12.48 per hour and is expected to rise annually until it reaches $15 by 2027. Organizations covered by the FLSA must also pay overtime—time and a half—for any non-exempt employee working more than 40 hours in a week.
Employers must be especially careful when it comes to payroll deductions. Even if employees wish to donate a portion of their pay back to the organization, Michigan law requires written authorization for each type of deduction. That authorization must be specific and kept on file, and employers should not make assumptions about an employee’s willingness to contribute.
Nonprofits that operate with limited administrative capacity should ensure that payroll providers, bookkeepers, and HR professionals are aware of these requirements and tracking them accurately.
Preventing Discrimination and Building Inclusive Workplaces
Michigan’s Elliott-Larsen Civil Rights Act (ELCRA) applies to nonprofits just as it does to other employers. The statute prohibits employment discrimination based on race, religion, national origin, age, sex, gender identity, sexual orientation, marital status, height, weight, disability, and more. These protections apply to hiring, promotions, pay, and termination, among other employment decisions.
Nonprofits, particularly those with public-facing missions or diverse volunteer groups, must take proactive steps to build inclusive workplaces. This includes written non-discrimination policies, regular training for employees and supervisors, and well-defined procedures for reporting and investigating complaints.
In 2023, Michigan formally expanded ELCRA to include protections for LGBTQ+ individuals. That expansion was significant, both legally and culturally, and reflects the growing expectations of employees, donors, and communities alike. Nonprofits that fail to meet these standards risk not only legal liability but reputational harm as well.
Recommended Policies to Include
An effective employee handbook is an essential tool for ensuring legal compliance, setting expectations, and preventing disputes. The following policies are especially important for nonprofits operating in Northern Michigan:
Policy |
Why It Matters |
|---|---|
|
Earned Sick Leave |
Details accrual methods, usage rules, and employer obligations under Michigan law. |
|
Volunteer vs. Employee Distinction |
Clarifies legal boundaries and avoids unintentional wage claims. |
|
Wage & Hour Compliance |
Sets expectations for scheduling, pay periods, and overtime eligibility. |
|
Anti-Discrimination & Harassment |
Outlines protections under ELCRA and provides mechanisms for complaint handling. |
|
Workplace Conduct & Discipline |
Promotes professionalism and outlines steps for addressing misconduct. |
|
Retaliation Prohibition |
Reinforces employee rights and encourages safe reporting. |
|
Recordkeeping & Privacy |
Ensures legal document retention and employee confidentiality. |
Having these policies in place, reviewed by legal counsel, and consistently enforced creates a stable and respectful workplace for staff and volunteers alike.
How True North Legal Group Can Help
At True North Legal Group, we understand the unique challenges Northern Michigan nonprofits face in balancing community missions with employment law compliance. Our team works with nonprofit boards and executive directors to craft clear, enforceable policies that reflect both legal requirements and organizational values.
We offer flat-rate or membership-based subscription services for:
- Policy development, including custom handbooks and sick leave compliance
- FLSA classification reviews for volunteers and employees
- ELCRA-based anti-discrimination training and investigations
- Recordkeeping audits and payroll compliance
- Employment dispute resolution and litigation defense
Our deep local roots and commitment to Northern Michigan’s nonprofit community mean we can provide both legal precision and practical advice. Whether you need a quick policy review or a comprehensive employment compliance overhaul, we’re here to help.
Conclusion
Running a nonprofit is a mission-driven endeavor, but that mission can be compromised if employment laws are overlooked or misunderstood. With recent changes to Michigan’s sick leave requirements, evolving wage standards, and growing expectations around diversity and inclusion, nonprofit leaders have more legal responsibilities than ever before.
Fortunately, with the right legal partner and clear, up-to-date policies, compliance doesn’t have to be overwhelming. Contact True North Legal Group today to learn how we can help your nonprofit thrive while staying firmly on the right side of the law.