14 December 2018

Michigan Minimum Wage and Paid Medical Leave Update

On December 14, 2018, Michigan Governor Snyder signed two laws to modify the minimum wage and paid sick leave legislation that was enacted this past September.  These new laws significantly impact employers, and both will take effect 91 days after the adjournment of the 2018 regular legislative session, which we anticipate to be in March 2019.

The first law raises the Michigan minimum wage.  The second requires employers with 50 or more employees to grant paid medical leave.

Minimum Wage Increases

Under the new law, Michigan’s minimum wage increases from $9.25 per hour to $9.45 beginning with the amendment’s effective date in 2019.  Additional yearly increases, effective each January 1st, would be as follows: $9.65 in 2020; $9.87 in 2021; $10.10 in 2022; $10.33 in 2023; $10.56 in 2024; $10.80 in 2025; $11.04 in 2026; $11.29 in 2027; $11.54 in 2028; $11.79 in 2029; and $12.05 in 2030.

One important change from the September legislation is that there are no automatic increases tied to the Consumer Price Index.  Each yearly increase also does not take effect if the state unemployment rate is 8.5% or higher for the calendar year preceding the prescribed increase.  The minimum hourly rate for tipped employees will be 38% of the minimum hourly rate.

Paid Medical Leave

The newly enacted “Paid Medical Leave Act” replaces and significantly alters the “Earned Sick Time Act” passed in September.  Here are some highlights under the new paid leave law:

  • It applies to businesses with 50 or more employees
  • Covered “Employers” must provide eligible employees:
    • at least one hour of paid medical leave for every 35 hours worked (but employers are not required to provide more than one hour of paid leave in a calendar week);
    • at least 40 hours of paid medical leave per benefit year; and
    • allow eligible employees to carry over up to 40 hours of unused accrued paid medical leave from one benefit year to another (or, alternatively, may prohibit carry-over if employers provide 40 hours of paid medical leave to an eligible employee at the beginning of the benefit year)
  • Although eligible employees will begin to accrue paid medical leave upon hire, employers may require an employee to wait until the 90th calendar day following employment before using accrued paid medical leave

The term “eligible employees” is defined to include employees for whom employers are required to withhold federal income tax, with several significant exceptions.  For example, the following individuals are excluded and will not be eligible for paid leave under the new law:

  • Individuals exempt from overtime requirements under the FLSA;
  • Individuals who are covered by a collective bargaining agreement, if they are also not employed by a public agency;
  • Individuals employed for 25 weeks or fewer in a calendar year for a job scheduled for 25 weeks or fewer;
  • Certain variable hour employees; and
  • Individuals who worked, on average, fewer than 25 hours per week during the immediately preceding calendar year.

Leave is paid at the normal hourly wage rate and employers must permit eligible employees to use paid medical leave for a variety of reasons, including: the employee’s health; a family member’s health; and the employee or employee’s family member’s need for time to deal with domestic violence including time to relocate or attend court proceedings.

As was the case under the “Earned Sick Time Act,” businesses with other paid leave policies with as good as, or better terms than those required by the Act are not required to develop an additional sick leave policy.  So even paid leave provisions that are not directed at sick time (for example, a paid vacation, paid personal days, or paid time off policies) can satisfy the requirements of the new law as long as employees have the same amount of paid leave and can use that paid time off for purposes identified in the new law.

Employers must display a poster at the employer’s place of business that includes information on the amount of paid medical leave required under the Act, the terms under which paid medical leave may be used, and a statement that employees may file an administrative complaint for violation of the new law. Official posters will be provided by the Department of Licensing and Regulatory Affairs at no cost to employers, prior to the Act’s effective date.

Please contact the authors or your Miller Johnson attorney with any questions and to discuss how to implement or modify your existing policies to ensure compliance