EMPLOYMENT LAW NEWS
Michigan Minimum Wage and Paid Leave Update: 2024 Supreme Court Decision
The 2024 court decision concludes what has become a long-running story on Michigan minimum wage and paid leave requirements, as well as voter rights.
On July 31, 2024, the Michigan Supreme Court issued its much-anticipated final opinion on what has turned into a minimum wage and paid sick leave saga spanning almost six years in the state.
2024 Michigan Supreme Court Decision
In a 4-3 vote, the Michigan Supreme Court found that the state legislature violated the constitutional rights of Michiganders by adopting two ballot initiatives, the Improved Workforce Opportunity Wage Act (IWOWA) and the Earned Sick Time Act (ESTA), then significantly amending the new laws without allowing voters to decide whether to adopt the ballot initiatives in their original form during the November 2018 general election.
The Michigan Supreme Court held:
“[T]his decision to adopt the initiatives and then later amend them in the same legislative session (what has been referred to as “adopt-and-amend”) violated the people’s constitutionally guaranteed right to propose and enact laws through the initiative process. We therefore reverse the Court of Appeals’ judgment and reinstate 2018 PA 337 and 2018 PA 338 as set forth in this opinion.”
The IWOWA and ESTA will go into effect on February 21, 2025. Accordingly, employers will now see changes to the minimum wage rates and paid sick leave requirements next year.
Per the Supreme Court, the minimum hourly wage in 2025 will be $10.00, or the original rate from 2019, plus the state treasurer’s inflation adjustment, using July 31, 2024 as the endpoint for the calculation. As the inflation increase will be calculated using a range from 2019 to 2024, it is projected that the minimum wage will be above $12.00 per hour next year, a significant increase compared to the current rate of $10.33 per hour. The tipped employee wage will then be 52% of the minimum wage.
In addition, the Supreme Court restored the previous, more generous paid sick leave requirements, which include, among other changes, increases to the accrual rate, the max amount of paid sick leave an employee may use per year, and the max accrual cap. It also expands the paid sick leave requirements to all employers instead of employers with 50 or more employees.
Danielle Atkinson, the Founding Director of Mothering Justice – the non-profit organization that originally filed the lawsuit against the state – shared her support for the state’s ruling, stating, “As a lead sponsor of the initiative, we applaud the Michigan Supreme Court on its decision to adopt the original ballot initiatives. This decision puts the power back in the hands of the voters and impacts the lives of hundreds of thousands of workers.”
What’s Next in Michigan?
Now that the decision is in the books, employers should review the requirements under the original ballot initiatives of the IWOWA and the ESTA in anticipation for next year. Employers need to confirm that their paid leave policies are in compliance with the newly reinstated paid sick leave provisions and also plan for a minimum wage hike for employees working in the state. These updates will also likely impact the corresponding labor law posters, which GovDocs will supply to customers when released.
For one centralized solution covering labor law postings, minimum wage, and paid leave requirements across the United States, check out the GovDocs Employment Law Compliance Platform.
**Please note that the content above details the conclusion to the long-running story of minimum wage and paid leave in Michigan. Continue reading for the additional context of our most recent blog post on the subject.
Michigan Minimum Wage and Paid Leave Update from 2023
As a refresher, at issue were amended versions of the Michigan Improved Workforce Opportunity Wage Act (IWOWA) and the Michigan Earned Sick Time Act (ESTA).
Both these laws were originally introduced via ballot initiatives.
The IWOWA would have increased the minimum wage to $12 by 2022, with yearly increases based on inflation.
Meanwhile, the ESTA required all employees to receive 72 hours of annual leave. Employers with 10 or more employees must provide 72 hours paid leave; employers with fewer than 10 employees would have been required to provide 40 hours of paid leave and 32 hours unpaid leave to employees.
Action from the Legislature
Instead of allowing the voters to decide on these initiatives, the Michigan Legislature adopted these initiatives as proposed. But then, before they became effective, lawmakers amended the IWOWA and the ESTA, which was renamed the Michigan Paid Medical Leave Act (PMLA).
The amended IWOWA delayed the wage increase, with incremental increases to reach $12 by 2030, and removed the subsequent increases based on inflation and the tip credit elimination by 2024.
For paid leave, the PMLA applied only to employers with 50 or more employees and only required 40 hours of paid leave annually, among other amendments.
Lawsuit on Michigan Minimum Wage and Paid Leave
A lawsuit was filed in May 2021 in the Michigan Court of Claims to invalidate the amended IWOWA and the PMLA.
See previous Employment Law News posts:
- Michigan Court Voids State’s Minimum Wage Act
- Court Voids Michigan Paid Sick Leave Law, Original Reinstated
The Court of Claims ruled in July 2022 that the legislature violated the Michigan Constitution when it adopted and amended the ballot initiatives. This decision meant the original versions of the IWOWA and ESTA would become immediately effective.
Michigan officials, however, appealed the decision and the Court of Claims delayed enforcement of its ruling until Feb. 19, 2023.
On Jan. 26, 2023, the Michigan Court of Appeals issued its decision in this appeal.
The court reversed the Court of Claims decision and determined the amended versions of the IWOWA and PMLA are valid and enforceable. Therefore, there are no changes to Michigan’s current minimum wage or its paid medical leave laws. It is expected that the plaintiffs will appeal the Court of Appeals decision to the Michigan Supreme Court.
The upshot? Stay tuned.
2024 Conclusion
Finally, on July 31, 2024, the Michigan Supreme Court reversed the Michigan Court of Appeals. Accordingly, the original IWOWA and the ESTA are reinstated, effective February 21, 2025.
This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.
Keep Informed
with GovDocs Employment Law News
Who is GovDocs?
GovDocs simplifies employment law compliance for large, multi-jurisdiction employers in the U.S. and Canada. The GovDocs software platform integrates three solutions in one convenient place to help you master the employment laws impacting your business. Whether you manage a postings, minimum wage or paid leave program, our products cut through research time, provide proactive insights into the everchanging landscape of employment laws and reduce the risk of noncompliance. The company is headquartered in Eagan, Minn.
The GovDocs Poster Store simplifies posting compliance for employers with less than 30 locations across all industries, offering a variety of posting products to meet your labor law compliance needs.