The Michigan Court of Claims ruled late Tuesday that the Michigan Legislature’s 2018 “adopt and amend” strategy employed to find a workable compromise to two ballot initiatives increasing the minimum wage and enacting a paid sick leave law was unconstitutional. The Legislature is expected to appeal the decision in the Michigan Court of Appeals and request a stay.
Unless a stay is granted and the decision is ultimately reversed by a higher court, the ruling states the law would immediately revert back to the 2018 ballot language. This means Michigan’s paid medical leave law will require virtually every size and type of business, and class of employee, to receive 72 hours per year of paid sick leave and the state’s minimum wage will increase to $12 an hour (and a large increase for tipped employees).
Paid Sick Leave
Under the compromise adopted by the Michigan Legislature in 2018, Michigan’s Paid Medical Leave Act (PMLA) applies to employers employing 50 or more employees but exempts certain employees including independent contractors, employees exempt from overtime under the Fair Labor Standards Act (FLSA), private sector employees covered by a collective bargaining agreement, temporary workers, variable hour employees, certain part-time employees and seasonal employees. It entitles eligible employees to receive and use one hour of paid sick leave for every 35 hours worked, or 40 hours per year. It permits employers to require documentation and advance notice and opt to offer one bank of paid time off (PTO) that can include paid vacation days, paid personal days, paid medical leave and/or paid time off.
Under the ballot proposal language (what’s now pending), all employees (full-time, part-time, temporary and independent contractors) would be entitled to receive and use one hour of paid medical leave for every 30 hours worked, up to 72 hours per year (Small businesses with less than 10 employees would be required to grant 40 hours paid leave, 32 hours unpaid.) It would require for this time to be separated from other PTO banks and places severe compliance burdens on employers, including those with paid leave policies currently in place. It limits the ability of employers to exercise notification procedures and require doctor’s notes and allows time to be used in as little as six-minute increments.
Minimum Wage
Under the compromise adopted by the Michigan Legislature in 2018, Michigan’s minimum wage is slated to increase in responsible increments to $12.05 by 2030. Tipped employees may be paid 38% of the minimum hourly wage rate provided: employees are informed of the tip provisions, employees receive and report tips, the tips received plus the wages paid equal to or exceed the minimum hourly wage rate and if not, the employer pays the shortfall.
Under the ballot proposal (what’s now pending), the minimum wage would rise to $12 per hour by 2022 with the tipped minimum wage rising from $3.75 to $9.60 per hour and up to the regular minimum wage by 2024. Both would move upward at the rate of inflation after reaching their maximums.
We will continue to update you. Nothing is 'expected' to happen immediately. The Department of Labor and Economic Opportunity is responsible for implementation, and should be offering guidance.
