Michigan Supreme Court Voids Current Minimum Wage and Paid Medical Leave Law and Reinstates 2018 Ballot Initiatives
Today the Michigan Supreme Court issued an Opinion holding that the Legislature violated Michigan’s Constitution when it adopted and then amended two 2018 ballot petition initiatives regarding the minimum wage (the Wage Act) and paid sick time (the Earned Sick Time Act) during the same legislative session.
The Michigan Supreme Court’s Opinion voids the state’s current minimum wage law (called the Improved Workforce Opportunity Act) and the current Michigan Paid Medical Leave Act and reinstates the Wage Act and the Earned Sick Time Act as they were originally adopted by the Michigan Legislature in September 2018 (with adjustments for inflation).
The Court’s Opinion also provides for a 205-day period of transition to allow employers to prepare for and comply with these new laws. This means that Michigan businesses will be required to begin complying with the Wage Act and the Earned Sick Time Act on February 21, 2025.
Minimum Wage Changes Starting February 21, 2025
The Wage Act will mean significant changes to the Michigan minimum wage (including the lower minimum wage for tipped workers). The Wage Act established a gradual phase-in of changes to the minimum wage, and the Opinion provides for a gradual phase-in intended to mirror the structure of the original Wage Act. This means that the changes originally intended to take effect starting on January 1, 2019 will effectively be delayed until February 21, 2025.
Thereafter, the following schedule will apply:
Paid Sick Time Requirements on February 21, 2025
The Earned Sick Time Act differs greatly from the Michigan Paid Medical Leave Act and will require all Michigan businesses with at least 1 employee to provide some amount of paid sick time to all employees.
Importantly, Michigan business can use existing paid time off benefits to comply with the Earned Sick Time Act. However, we anticipate that changes to written policies will be necessary to achieve compliance using existing paid time off benefits.
Some highlights of the Earned Sick Time Act are as follows:
- Applies to employers with at least 1 employee;
- Does not exempt any employee (i.e., exempt, part-time, temporary, etc.) from paid sick time eligibility;
- Mandates that employees accrue 1 hour of sick leave for every 30 hours worked;
- Requires employers to allow employees to use up to 72 hours of earned sick leave per year unless they are a “small business” with less than 10 employees, in which case they may allow only 40 hours of paid leave, but must also allow 32 additional hours of unpaid leave;
- Mandates that employers allow use of sick leave in increments of no greater than 1 hour or the smallest increment otherwise available in the employer’s payroll system;
- Requires employers to allow carry over of unused leave from year to year;
- Expressly prohibits retaliation against an employee who uses paid sick time or otherwise exercises rights under the Act;
- Creates a “rebuttable presumption” of retaliation if adverse action is taken against an employee within 90 days of various “protected activity” including if an employee informs anyone of their rights under the Act; and
- Allows employees to file a civil action directly against the employer for violations of the Act within 3 years of the alleged violation and entitles employees to liquidated damages plus costs and attorneys’ fees if they prevail.
Getting Prepared
All Michigan business should begin preparing to comply with the Wage Act and the Earned Sick Time Act. Miller Johnson will be offering educational opportunities and resources to assist, with details coming very soon.
In the meantime, businesses should contact their Miller Johnson attorney with specific questions about the impact of this decision on their compensation and paid leave policies and practices.
On-Demand Training & Tools
Training now available for purchase. In this workshop, Sandy Andre, Leigh Schultz and Brett Swearingen provide employers with real, practical guidance about the ESTA and our training materials includes a sample ESTA-compliant policy and a reference flowchart of the interaction between ESTA, FMLA, PWFA, ADA, etc. Learn more.