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New Updates on Court Decision Impacting Michigan’s Paid Sick Leave, Minimum Wage Laws

Advocacy News – July 21, 2022

 

Late Tuesday, July 19, the MI Court of Claims 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. A number of key actions have been taken since:

  • On Wednesday, 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. A response date of Aug. 2 was requested, but parties remain hopeful a decision will come sooner.
  • Also on Wednesday, 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 Thursday 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.

However, if the ruling holds (meaning a stay is granted and the decision is not reversed by a higher court), the minimum wage would rise to $12 per hour Aug. 9, 2022 (within 21 days of the ruling), 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.

LEO indicated on their call 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 21, 2022

 

Late Tuesday, July 19, the MI Court of Claims 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. A number of key actions have been taken since:

  • On Wednesday, 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. A response date of Aug. 2 was requested, but parties remain hopeful a decision will come sooner.
  • Also on Wednesday, 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 Thursday 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.

However, if the ruling holds (meaning a stay is granted and the decision is not reversed by a higher court), the minimum wage would rise to $12 per hour Aug. 9, 2022 (within 21 days of the ruling), 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.

LEO indicated on their call 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.