Michigan Minimum Wage and Paid Leave Update

A Michigan minimum wage and paid leave update is at hand, for now, after a decision from a state court.

Employers have been waiting since the summer of 2022 for a decision from the Michigan Court of Appeals regarding potentially significant changes to Michigan’s minimum wage and paid leave laws.

Michigan Minimum Wage and Paid Leave Update

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.

Conclusion

At this time, employers should be aware of the requirements under the PMLA to ensure their paid leave policies are compliant.

Employers may also want to remain aware of the requirements under the original ballot initiatives of the IWOWA and the ESTA. Keep the detail in your back pocket in case further changes occur in this case and the Appellate Court decision is reversed.

As with all litigation, the outcome is never ensured. If the case is appealed to the Michigan Supreme Court as expected, employers will need to be ready to address a reversal in this case if it happens.

GovDocs will keep an eye on the developments in this case as well as any developments under Michigan’s paid leave and minimum wage law and provide updates as they become available.

This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.