Michigan: 2018 Wage Act and Earned Sick Time Act Reinstated in 2025

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All Employers with Employees in MI

EFFECTIVE

February 21, 2025

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Quick Look

  • The state legislature acted unconstitutionally when it adopted voter initiatives and later amended them in the same legislative session.
  • The original 2018 version of the Earned Sick Time Act will go into effect February 21, 2025.
  • The original 2018 version of the Wage Act will have the minimum wage increases updated by the state treasurer by November 1, 2024, and will also go into effect February 21, 2025.

Discussion

On July 31, 2024, in Mothering Justice v. Attorney General, the Michigan Supreme Court reinstated the original versions of the 2018 Wage Act and Earned Sick Time Act (ESTA), replacing the current Paid Medical Leave Act (PMLA). The Wage Act and ESTA were passed in 2018, but have been the subject of ongoing litigation ever since. The Court said that the legislature’s decision to adopt voter initiatives and then later amend them in the same legislative session violated the people’s constitutionally guaranteed right to propose and enact laws through the initiative process.  Ultimately, the Court reinstated the original versions of 2018 PA 337 and 2018 PA 338.

 

The Court also applied the original 205-day delay between the laws’ enactment and their effective dates, a presumed transition period for employers, to the date of this ruling. This means that the Wage Act and ESTA will not be effective until February 21, 2025, giving employers time to make the adjustment. Importantly, because the legislature was deemed at fault, the Court said that employers cannot be held liable for their reasonable reliance upon the state government’s assurances that the Amended Wage Act and the Amended Earned Sick Time Act were good law.

 

Because the Wage Act implemented minimum wage increases in the past, the Court sought to use the same level increases in the future but adjusted for inflation. As a result, the state treasurer must use the July 31, 2024 opinion publication date to calculate the inflation-adjusted rates for the minimum hourly wage requirements provided in the Wage Act. The treasurer has until November 1st to announce the adjusted rates. The Wage Act’s timeline for years 2019 to 2022 will be treated the same for years 2025 to 2028.

 

The original version of the ESTA is significantly different from the PMLA. Here are key notable differences.

 

  PMLA ESTA
Eligibility Employees: Non-exempt employees; part-time employees who worked 25 hours or more per week the preceding calendar year.

Employers: Employers with 50 or more employees.

 All employees and all private employers are subject to the ESTA
Leave Amounts Accrual Rate: One hour for every 35 hours worked.

Cap: Accrual can be capped at one hour per week and 40 hours in a benefit year.

Carryover: Employers can cap carryover at 40 hours per year or avoid carryover by granting 40 hours at the beginning of each benefit year.

 Accrual Rate: One hour per 30 hours worked.

Cap: No annual or overall cap currently indicated.

Carryover: All accrued leave carries over from year to year.
Usage Employers can cap usage at 40 hours per benefit year. 1-9 Employees: Employees may use up to 40 hours per year, with the remaining 32 hours available as unpaid time off.

10+ Employees: Employees may use up to 72 hours per year.
Reasons for Leave (1) Mental or physical injury or illness of employee or family member; (2) victim of domestic violence or sexual assault; (3) closure of business or school due to public health emergency (1) Mental or physical injury or illness of employee or family member; (2) victim of domestic violence or sexual assault; (3) attend specified school or child care meetings; (4) closure of business or school due to public health emergency

 

Action Items

  1. Review the Court’s ruling here.
  2. Prepare for implementation of the new paid sick leave requirements, including having employee handbooks, policies, and payroll practices updated.
  3. Have managers trained on paid sick leave use and notice requirements.
  4. Review payroll procedures and labor budgeting for increased minimum wage.

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. © 2024 ManagEase