To: MMA Employment & Workforce Policy Committee Members
Subject: Court of Claims Declares “Adopt and Amend” Minimum Wage / Paid Sick Leave Laws Unconstitutional
This week, Judge Douglas Shapiro of the Michigan Court of Claims ruled that Michigan’s Improved Workforce Opportunity Wage Act (a.k.a. the Minimum Wage law) and the Earned Sick Time Act (a.k.a. the Paid Sick Leave law) that were enacted and later amended in 2018 are unconstitutional. In the case Mothering Justice, et al v. Dana Nessel & the State of Michigan, Judge Shapiro’s opinion declared the “adopt and amend” procedure used by the Michigan Legislature in 2018 was an improper legislative action that thwarted the ability of the people of the state to submit voter-initiated legislation.
Background
MMA members may remember, in 2018, two ballot initiatives were submitted to the Legislature that would increase the minimum wage to $12/hour by 2022 while also eliminating the tipped worker minimum wage so that restaurant workers who typically receive tips would also receive the same minimum wage (in addition to their tips). The language of the initiatives provided no exemptions for small manufacturers and businesses. Additionally, the paid sick time initiative provided a specific structure which all employers would be mandated to follow. Employees of small businesses (those with fewer than 10 employees), would be allowed to accrue and use 40 hours of paid sick time annually. Employees at businesses with 10 or more employees would be allowed to accrue and use 72 hours of paid sick time each year.
Had the initiatives gone to the ballot and been approved by a majority of voters, then the Legislature would only be able to amend the initiative with a three-fourths vote of each legislative chamber. However, the Legislature adopted the initiatives in September 2018. Later that same year, in December, the Legislature enacted two bills (SB 1171 and SB 1175) that made changes to the initiatives to ease the burden they placed on employers. One of the changes made that would be most impactful for manufacturers was the creation of an exemption for businesses with 50 or fewer employees from the Paid Sick Leave act.
MMA spearheaded the efforts to support the work of the Legislature in 2018 and joined with other statewide associations in writing an amicus brief for the Supreme Court regarding the “adopt and amend” strategy’s constitutionality. The Michigan Supreme Court, at the time, declined to review the matter. Shortly thereafter, a coalition of progressive groups filed Mothering Justice, et al v. Dana Nessel in the Court of Claims.
Judge Shapiro’s decision to declare the acts unconstitutional severely damages Michigan’s business climate. The decision is expected to be stayed while an appeal to the Court of Appeals is filed. MMA is beginning our conversations with other business groups to craft a strategy to find a solution that counters the pall this casts over Michigan’s economy.
Impact on MMA Members
In the meantime, until a stay is issued by the Court, MMA members will need to comply with the minimum wage under the original law as it was passed prior to amendment. The minimum wage will jump to $12/hour and will then be adjusted upward by the rate of inflation each year thereafter. Further, paid time leave for employers will increase to one hour given for every 30 hours worked up to a minimum benefit level of 72 hours each year regardless of the size of the employer.
MMA will continue to monitor this situation, keep you apprised of our discussions with other interested parties, and continue our discussions with the Department of Labor and Economic Development (LEO) as they share information on how they will administer the policy impacts of this decision.
For more information, please contact me at worthams@mimfg.org, or 517-487-8511, for questions or additional information.
David
David Quinton Worthams (Dave)|Director of Human Resource Policy|Michigan Manufacturers Association
620 S. Capitol Ave•Lansing Michigan•48933
Tel:517.487.8511 |Fax:517.853.3311|Email:worthams@mimfg.org