Advocacy News – July 20, 2022
The Michigan Court of Claims ruled Tuesday that the Michigan Legislature’s “adopt and amend” strategy employed in 2018 to find a workable compromise on 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 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). Here’s what’s at stake:
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.
What’s the Michigan Chamber saying about all of this?
The Michigan Chamber of Commerce released the following statement from Wendy Block, vice president of business advocacy and member engagement, in response to the court’s ruling:
“We are incredibly concerned about the crippling effect this ruling could have on Michigan employers and employees alike. While we are still sorting through the details, we are stunned by this determination and its many varied implications. The talent shortage has employers already paying historic wages and benefits — all while facing rising inflation and supply chain chaos — just to keep the doors open. Employees should be equally concerned about the cost pressures this decision will place on businesses and the impact it could have on employee hours and benefits. We believe time and energy should focus on ways to help job providers fully rebound from COVID impacts and workers overcome barriers to employment like ensuring affordable childcare, housing and transportation. We remain hopeful the Court of Claims decision ultimately will be overturned.”
The Chamber team will be monitoring closely, weighing options moving forward and keeping you informed.
Please contact Wendy Block with questions or concerns at wblock@michamber.com.