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Court of Claims Stays Ruling on Michigan’s Paid Sick Leave, Minimum Wage Laws – But Appeal is Anticipated

Advocacy News – July 29, 2022

The Michigan Court of Claims judge who ruled that the Michigan Legislature’s “adopt and amend” 2018 strategy to address two previous ballot initiatives increasing the minimum wage and enacting a paid sick leave law was unconstitutional agreed Friday, July 29 to stay that ruling until February 19, 2023.

The judge granted the stay because “the Court finds that there are justified concerns regarding the ability of employers and the relevant state agencies to immediately accommodate the changes required by [the statute]. … Accordingly, the Court GRANTS a stay … for a period of 205 days, i.e., through February 19, 2023.  Any further stays should be sought at the Court of Appeals and/or Supreme Court.”

It is important to note that this issue is far from over, as we fully expect the plaintiffs to appeal the decision to stay to the Michigan Court of Appeals early next week.

Here’s a summary of what has happened since the Court of Claims first ruled on this issue on July 19:

  • On July 20, the State of Michigan, working with the Michigan Legislature, filed a motion to stay on the Court of Claims judgment while the appeal is pending.
  • Also on July 20, the State formally filed an appeal with the Michigan Court of Appeals.
  • The Michigan Department of Labor and Economic Opportunity (LEO) convened key business community stakeholders July 21 to discuss the status of the law given the stay request and appeal. State officials indicated they will not be enforcing the Court of Claims decision due to the pending appeal. This means that employers can continue as is for now and do not have to make any dramatic decisions until further guidance is received from the courts.
  • NEW!:  On Friday, July 29 the Court of Claims judge who ruled the “adopt and amend” strategy was unconstitutional agreed to stay that ruling until February 19, 2023.  This means that, for now, the current $9.67 per hour minimum wage remains in effect, as well as the current paid medical leave law.  However, we expect the plaintiffs in the case to appeal the ruling on the stay as early as Monday, August 1 in the Michigan Court of Appeals.

If the stay is overturned by a higher court, the minimum wage would rise to $12 per hour, with the tipped wage rising from $3.75 to $9.60 per hour. Additionally, all employees 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.  There is some question as to when this would take effect, given that the original ruling was expected to take effect on August 9, 2022 (within 21 days of the original Court of Claims ruling).

LEO indicated on their call on July 21 that they expect the paid medical leave changes, if allowed to go into effect, to impact somewhere between 1.5 to 1.8 million Michigan workers, largely because the law would be applicable to small businesses and because all employees would be covered (i.e., part-time, seasonal and other specific employees would no longer be exempt). LEO expects the minimum wage change to impact the over 685,000 workers who earn $12 an hour or less today.

The MI Chamber team is closely monitoring the issue and will keep you informed. We have also fielded many media inquiries regarding the ruling and released the following statement:

“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.” – Wendy Block, vice president of business advocacy and member engagement

See below for some highlights of the news coverage. Note that some articles require subscriptions and may not be available for all viewers:

Please contact Wendy Block with questions or concerns at wblock@michamber.com.

 

Advocacy News – July 29, 2022

The Michigan Court of Claims judge who ruled that the Michigan Legislature’s “adopt and amend” 2018 strategy to address two previous ballot initiatives increasing the minimum wage and enacting a paid sick leave law was unconstitutional agreed Friday, July 29 to stay that ruling until February 19, 2023.

The judge granted the stay because “the Court finds that there are justified concerns regarding the ability of employers and the relevant state agencies to immediately accommodate the changes required by [the statute]. … Accordingly, the Court GRANTS a stay … for a period of 205 days, i.e., through February 19, 2023.  Any further stays should be sought at the Court of Appeals and/or Supreme Court.”

It is important to note that this issue is far from over, as we fully expect the plaintiffs to appeal the decision to stay to the Michigan Court of Appeals early next week.

Here’s a summary of what has happened since the Court of Claims first ruled on this issue on July 19:

  • On July 20, the State of Michigan, working with the Michigan Legislature, filed a motion to stay on the Court of Claims judgment while the appeal is pending.
  • Also on July 20, the State formally filed an appeal with the Michigan Court of Appeals.
  • The Michigan Department of Labor and Economic Opportunity (LEO) convened key business community stakeholders July 21 to discuss the status of the law given the stay request and appeal. State officials indicated they will not be enforcing the Court of Claims decision due to the pending appeal. This means that employers can continue as is for now and do not have to make any dramatic decisions until further guidance is received from the courts.
  • NEW!:  On Friday, July 29 the Court of Claims judge who ruled the “adopt and amend” strategy was unconstitutional agreed to stay that ruling until February 19, 2023.  This means that, for now, the current $9.67 per hour minimum wage remains in effect, as well as the current paid medical leave law.  However, we expect the plaintiffs in the case to appeal the ruling on the stay as early as Monday, August 1 in the Michigan Court of Appeals.

If the stay is overturned by a higher court, the minimum wage would rise to $12 per hour, with the tipped wage rising from $3.75 to $9.60 per hour. Additionally, all employees 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.  There is some question as to when this would take effect, given that the original ruling was expected to take effect on August 9, 2022 (within 21 days of the original Court of Claims ruling).

LEO indicated on their call on July 21 that they expect the paid medical leave changes, if allowed to go into effect, to impact somewhere between 1.5 to 1.8 million Michigan workers, largely because the law would be applicable to small businesses and because all employees would be covered (i.e., part-time, seasonal and other specific employees would no longer be exempt). LEO expects the minimum wage change to impact the over 685,000 workers who earn $12 an hour or less today.

The MI Chamber team is closely monitoring the issue and will keep you informed. We have also fielded many media inquiries regarding the ruling and released the following statement:

“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.” – Wendy Block, vice president of business advocacy and member engagement

See below for some highlights of the news coverage. Note that some articles require subscriptions and may not be available for all viewers:

Please contact Wendy Block with questions or concerns at wblock@michamber.com.