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Michigan adopts Paid Sick Leave and Raises Minimum Wage

With several controversial proposals appearing on the ballot for the November election, on Election Day this past Tuesday, voters probably did not notice two missing proposed ballot measures.

Two proposed ballot initiatives titled “Michigan Earned Sick Time Act” and the “Improved Workforce Opportunity Wage Act” were adopted as law by the Michigan Legislature on September 5, 2018.

Voters may wonder why the state legislature chose to adopt the proposal instead of having voters determine their fate. The Michigan State Constitution requires that all ballot proposals be presented and considered by the state legislature before being placed on the ballot.  The legislature can adopt a proposal as is, reject the measure and/or propose different versions to be presented on the ballot. Since the legislature chose to adopt the two proposals as is, they were most likely anticipating that voters would pass the proposals in the November election.  This potentially would leave employers scrambling to comply with the new law, which would have become effective 10 days after passing through the ballot initiative. Instead, since approved through the legislature, the effective date will be 90 days after the current legislative session ends.  Additionally by passing the measures through the legislature, Michigan lawmakers have the ability to amend and clarify the law before it becomes effective.

So what are the current provisions of these new laws and how might they affect your company?

Michigan’s Earned Sick Time Act (ESTA)

This will apply to all private employers with one or more employees. There are different standards and annual caps that apply depending on whether you are considered a small employer (fewer than 10 employees) or a large employer. In general, most employers must provide paid sick leave at a rate of at least one leave hour for every 30 hours worked. To comply with ESTA, an employee must be able to use sick leave for a variety of conditions and not only for the employee, but also for family members. In some situations, the employer can require that the employee provide documentation that leave time has been used for covered purposes. There are numerous rules for employers to satisfy relating to notices of policy and recordkeeping. If the employer already grants employees paid leave (vacation, personal, etc.) it can comply with ESTA if the time earned accrues at a rate greater or equal to what ESTA requires and the leave time can be used under the same conditions.

Improved Workforce Opportunity Wage  Act (IWOWA)

This act raises the Michigan minimum hourly wage every year so that by January 1, 2022, the minimum wage will be $12.00/hour. The minimum wage is currently $9.25. Additionally, the act includes a phase-out of the lower minimum wage paid to tipped employees. The minimum hourly wage paid to these workers will increase each year and will match the regular minimum wage by January 1, 2024.

Next Steps to Take

Lawmakers could make several changes to the laws before they go into effect. Additionally, lawsuits may potentially be filed against the state legislature, delaying and/or impacting the laws even further. We will keep you apprised of future developments.