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For now, employers can continue to rely on Michigan’s adopted and amended paid medical leave and minimum wage laws instead of the voter-initiated versions of the laws. In 2018, the Michigan legislature approved two ballot proposals with revisions. One proposal was the Improved Workforce Opportunity Wage Act (IWOWA) which provided an increase in minimum wage, and the other was the Earned Sick Time Act (ESTA) which became the Paid Medical Leave Act (PMLA) and mandated paid sick leave for a variety of absences.
In the IWOWA, the legislature amended the original ballot proposals to: 1) allow a gradual minimum wage increase of $12 per hour effective in 2030 instead of 2022; 2) remove an additional inflation-based annual minimum wage increase beyond $12 per hour; and 3) eliminate wage increases specific to tipped employees. The changes to the ESTA included: 1) changing the name to the PMLA; 2) exempting employers with less than 50 employees from compliance; 2) lowering the annual leave entitlement to 40 hours from 72 hours; and 3) eliminating employees’ right to claim retaliation for violations of their rights under the law. These two laws as amended went into effect March 29, 2019.
Subsequently, a court case filed challenging the Michigan legislature’s constitutional authority to “adopt” and “amend” these ballot proposals. On July 19, 2022, in Mothering Justice v. Nessel, the Court of Claims agreed that the method used by the Michigan legislature was unconstitutional and immediately nullified the IWOWA and PMLA, making the original ballot initiatives into law. This would have meant Michigan employers would have had to make significant changes to their minimum wage and paid sick leave policies effective August 9, 2022. Following this ruling, the State of Michigan appealed to the Court of Appeals and sought a stay of the decision through all of its potential appeals. A stay was granted on July 29, 2022. This means Michigan employers can continue to rely on the existing laws through February 19, 2023.
In the event the State of Michigan is not successful in its appeal of the decision and the stay is lifted, Michigan employers should be aware of the following most notable potential changes to current minimum wage and paid sick time laws if the lower court’s ruling is upheld.
Potential Changes to Current Paid Sick Leave. Almost all public (except federal) and private employees would be eligible for paid sick leave. The law would cover all employers with at least 1 employee. While small businesses only need to provide up to 40 hours of paid sick leave a year, large employers or those with more than 10 employees must offer up to 72 hours per year. Employees can use paid sick leave to also care for someone who is related by affinity – which has no additional definition. Employers can only request supporting documentation if an employee is absent for more than three days, and the documentation need not be detailed. Employers cannot frontload paid sick leave but must allow for accrual. Employees would have a private right of action with a 3-year statute of limitations for violations of their exercise of rights under the paid sick leave law.
Potential Changes to Minimum Wage. Minimum wage would immediately increase to $12 per hour. The minimum wage rate would be adjusted by the rate of inflation beginning October 2022 and effective January 1 of each succeeding year. Employers with tipped employees would have to increase the minimum wage rate to 80% in 2022, 90% in 2023, and 100% in 2024. This means eventually tipped employees would receive minimum wage in addition to gratuities.
- Monitor the Michigan Department of Labor & Economic Opportunity’s website for updates.
- Evaluate potential administrative and financial impacts if the original ballot proposals are implemented.
- Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2022 ManagEase