Advocacy News – Sept. 30, 2022
The Michigan Chamber, along with the Small Business for a Better Michigan coalition, filed an amicus brief with the Michigan Court of Appeals (“court”) this week in support of the constitutionality of Michigan’s existing paid sick leave and minimum wage laws. There’s a lot at stake in this case because, if the lower court’s ruling on this issue is left to stand, it could have dire consequences on Michigan’s job providers, overall business climate and economy – all at a time when our state, communities and families can least afford it.
Here’s What Has Happened:
In July, the Michigan Court of Claims (COC) ruled that the Michigan Legislature’s 2018 “adopt and amend” 2018 strategy to address two previous ballot initiatives increasing the minimum wage and enacting a paid sick leave law was unconstitutional.
In the COC ruling, the judge voided the Legislature’s amended version of the laws, which have been in effect since March 29, 2019. He ordered that the standards as initially proposed via ballot proposal and adopted be deemed the law. If the decision stands upon appeal and the stay is lifted, it will have a significant impact on the policies, procedures and bottom line of most businesses operating in Michigan.
It is important to note that the COC judge subsequently issued a stay of his ruling until Feb. 19, 2023, because “there are justified concerns regarding the ability of employers and the relevant state agencies to immediately accommodate the changes required by [the statute].”
After a Motion to Expedite the case was filed by attorneys on both sides of the issue, the Michigan Court of Appeals agreed to take the case and set the matter for first available case call – which would be November – to enable the court to issue a decision before Feb. 1, 2023, which is 18 days in advance of the expiration of the stay period created by the Court of Claims. This would enable the parties the opportunity to file any further necessary actions in advance of that deadline. Regardless of the outcome, the Chamber fully anticipated this decision will go all the way to the Michigan Supreme Court.
Some Specific Details
The Court of Claims voided the amended paid sick leave and minimum wage laws as unconstitutional and found that the original language of the initiated laws must be given effect. The court held that article 2, section 9 of the Michigan Constitution “does not permit the Legislature to adopt a proposed law (i.e., initiated petition/ballot proposal), and in the same legislative session, subsequently amend or repeal it.” However, the Michigan Constitution provides the Legislature three options it may take within 40 days when faced with an initiated petition — adopt it, reject it, or propose an alternative.
In its ruling, Court of Claims held that the Legislature does not have the ability to adopt and amend an initiated petition in the same legislative session. However, the Chamber and Coalition argues this finding is supported by the plain language of the Michigan Constitution. We also argue that the Court of Claims relied heavily on selected constitutional history and former Attorney General Kelley’s 1964 advisory opinion, despite a 2018 superseding opinion by Attorney General Schuette finding. The Schuette opinion found the Constitution permits the Legislature to enact a law proposed by the people through the initiative process and subsequently amend that law during the same session.
As this issue advances to the Michigan Court of Appeals, there are two key questions for the court:
- “Because the Legislature has plenary authority (i.e., power that is wide-ranging, broadly construed, and often limitless for all practical purposes), did the Legislature lawfully enact the paid sick leave and minimum wage laws and then amend these laws in the same legislative session?” and,
- “Were these enacted in accordance with … the Michigan Constitution?”
The State of Michigan and this amicus brief, answers “yes” to these questions, while the Court of Claims and the plaintiffs (Mothering Justice, Michigan One Fair Wage, Michigan Time to Care, Restaurant Opportunities Center of Michigan, etc.) answer “no.”
What’s at Stake:
While it might be tempting to look at this issue and think the court’s decision probably doesn’t apply to your business either way, we’d encourage all businesses operating in Michigan to take a close look at the details. If left to stand, the Court of Claims ruling could force many Michigan businesses to make significant changes to their paid time off policies (PTO) and procedures — even those who offer generous benefits today. The same is true for wages. Although it is worth noting that many employers are currently paying entry-level wages above and beyond $12 an hour, it is highly expected that the change would create a new “floor” and push up wages for all hourly employees. It is also expected that an overnight elimination of the tip credit, which is a 156% labor cost inflation, will put the restaurant industry into a tailspin.
Here’s a summary of what would need to change if the Court of Claims decision is left to stand.
The full amicus brief can be read here.
Please contact Wendy Block, vice president of business advocacy and member engagement, with questions at wblock@michamber.com.