Michigan Supreme Court Reinstates Paid Sick Time and Higher Minimum Wage Laws
Earlier today, July 31, 2024, the Michigan Supreme Court issued its opinion in Mothering Justice v. Attorney General, a case challenging the process by which the Michigan Legislature amended the Earned Sick Time Act and the Improved Workforce Opportunity Wage Act. These Acts were adopted to avoid their inclusion as proposed laws on the 2018 ballot and subsequently amended by the Legislature. In a 4-3 decision, the Court held that the Legislature improperly amended the Acts in the same legislative session in which they were adopted. The Court further held that the Acts – as originally passed – shall go into effect on February 21, 2025, being 205 days from July 31, 2024.
The Court’s decision will have a significant impact on Michigan employers, particularly small employers. The Improved Workforce Opportunity Wage Act (“IWOWA”) will increase the standard and tipped minimum wage rates in stages, the first of which will be effective February 21, 2025. The Court’s opinion today instructs the state treasurer to calculate inflation-adjusted wage rates, meaning that the standard and tipped minimum wage rates set forth in the IWOWA will be increased to account for inflation between 2018 and 2024. Accordingly, we do not yet know the exact amount of the minimum wage increases, but employers should expect that minimum wage will rise to approximately $12.50 on February 21, 2025. The tipped minimum wage will increase to 48% of the standard minimum wage, and the IWOWA calls for increasing the tipped minimum wage over multiple years until it eventually matches the standard minimum wage.
The Earned Sick Time Act (“ESTA”), once effective, will apply to all employers with one or more employees, excluding the United States government. The ESTA will replace the Paid Medical Leave Act, which is the Legislature’s amended version of the ESTA ruled improper today. The ESTA will, among other things, require employers with ten (10) or more employees to allow those employees to accrue at least one (1) hour of paid sick time for every thirty (30) hours worked and allow employees to use at least seventy-two (72) hours of paid sick time per year. Small employers (i.e., those with under ten (10) total employees, including part-time and temporary workers), are not exempt from the ESTA. Under the Act, employees of small employers must accrue at least one (1) hour of paid sick time for every thirty (30) hours worked and will be entitled to use up to at least forty (40) hours of paid sick time per year. The ESTA contains additional language governing, among other things, mandated roll over of unused paid sick time and permitting certain small business employees to use additional unpaid sick leave. A December 2022 Client Alert summarizing the IWOWA and ESTA in more detail can be found here: https://bit.ly/3A8iQzS
Employers should examine these Acts and their current wage levels and leave policies to identify changes that should be implemented prior to February 21, 2025. While it is possible that the Legislature could adopt amendments to these Acts prior to the effective date, we do not anticipate that any such legislation will be successfully adopted.
Employers with questions about the Court’s decision, the Earned Sick Time Act, and/or the Improved Workforce Opportunity Act should contact Nikole L. Canute, Nathaniel R. Wolf, Scott E. Dwyer, Dominic T. Clolinger, or Kathryn Z. Stegink.
