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BREAKING NEWS: MI Supreme Court issues devastating ruling in paid leave, minimum wage case

Advocacy News July 31, 2024

In a blow to our state’s job providers and economic competitiveness, the Michigan Supreme Court today ruled that two ballot proposals from 2018 will take effect Feb. 21, 2025 – one raising the minimum wage, including that of tipped employees, and the other enacting a one-size-fits-all paid leave benefits for full-time, part-time and seasonal employees.  
 
What happened: By a vote of 4-3, the Michigan Supreme Court overturned a unanimous bipartisan ruling from the Court of Appeals in Mothering Justice v Attorney General. The case challenged the Michigan Legislature’s handling of two ballot proposals going back to 2018: one to increase the minimum wage and the other to enact a one-size-fits-all paid sick leave law. Because that process, now referred to as “adopt-and-amend,” has been found to be unconstitutional by the Michigan Supreme Court, the two 2018 ballot initiatives, which were never voted on by the people, will become law.

The Court said:
  • The Earned Sick Time Act will take effect Feb. 21, 2025.
  • The Improved Workforce Opportunity Wage Act (revised minimum wage provisions) will take effect Feb. 21, 2025.
      • Note about the schedule increase: While the state has yet to release the step increases (it’s expected within two weeks), the Court’s opinion says this: “We are cognizant, after all, that nearly six years have passed since the Legislature adopted the Wage Act and that the $10.00 starting point that the Wage Act envisioned for 2019 is not the same as $10.00 in 2024.  In keeping with the statute’s plan to begin accounting for inflation by 2022, we hold that the state treasurer must use this opinion’s publication date to calculate the inflation-adjusted rates for the minimum hourly wage prescriptions provided in the [Act.] Thereafter, in accordance with the Wage Act’s original design, the state treasurer shall calculate the inflation-adjusted minimum wage as described in [the Act].  Because the minimum wage increases will go into effect in 2025, we will treat the years 2019 to 2022 as the years 2025 to 2028 (plus the necessary inflation adjustment) to reflect the statute’s graduated implementation. The inflation-adjusted minimum wage will commence correspondingly in 2029 (originally 2023) as set forth in [the Act.]” 
What’s next: While the Michigan Chamber fundamentally disagrees with the Court’s ruling and its constitutional interpretation, this decision cannot be appealed. But that doesn’t mean we will stop aggressively advocating for our members on these issues. We are moving to implement a two-pronged strategy: 
  • Compliance  the Michigan Chamber is putting together a series of events and compliance tools to break down businesses’ compliance obligations, including a FAQ and chart comparing the difference between current law and the law the Court put into effect with this ruling. Access this toolkit now.

  • Legislation – With the power of our members and the business community behind us, we believe we can be successful in softening the impact of this adverse Supreme Court ruling via legislative changes. Be on the lookout for additional information about how you can engage and help lawmakers understand how this ruling negatively impacts your business and workers.  Check out this Aug. 14 update.  

The bottom line: The consequences of this decision will be felt by job providers and workers alike, and employers need to take stock of what’s required, regardless of industry or employee count. 

Go deeper: Read the MI Chamber’s response and the full court ruling.  

Qs/assistance:
MI Chamber members with compliance questions are encouraged to reach out to Wendy Block