Advocacy News – (Updated July 3, 2024 – original recap Dec. 7, 2023)
The Michigan Supreme Court (MSC) wrapped up oral arguments in the Mothering Justice case late last year. The outcome of this litigation – expected anytime between now and the end of July 2024 – will determine the fate of Michigan’s current paid sick leave and minimum wage laws — including that of tipped employees.
Why it matters: In 2018, the Michigan Legislature used what’s now referred to as an “adopt-and-amend process” to address two ballot proposals: one on minimum wage and the other on paid sick leave. The outcome of this ruling could have cascading and costly effects on employers across all industries. The MSC essentially has three options:
- Reverse the clear-cut Court of Appeals’ (COA) decision – This option would invalidate the Legislature’s changes and the law would revert to the original ballot proposal language. Practically speaking, this means Michigan’s minimum wage would raise to $13+/hour in 2024, including for tipped employees, and employers would need to comply with one of most sweeping paid sick leave laws in the country, forcing nearly every business across the state to make significant changes to their paid time off policies (PTO) and procedures. The plaintiffs, including the Office of Attorney General Dana Nessel, argued that the only remedy is to enact the initial proposal.
- Affirm the COA’s decision – This option would continue the status quo, meaning — absent legislative action — nothing would change with the current minimum wage and paid sick leave laws. The defendants, represented by the Office of the Attorney General (representing the Legislature), pointed to the express and unambiguous language in the Michigan Constitution to make their point that the MSC should affirm the COA’s decision.
Net impact: If the MSC were to reverse the COA decision, Michigan law would revert to the ballot proposal language, which was never voted on by the people. Here’s what employers would need to do as a result:
- Sick Time – Under the ballot proposal language, 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. By contrast, Michigan’s existing Paid Medical Leave Act only applies to businesses with 50 or more employees and contains more reasonable and workable provisions.
- Minimum Wage – Under the ballot proposal language, Michigan’s minimum wage would jump to approximately $13 per hour+ in 2024 for both tipped and hourly workers. By contrast, Michigan’s minimum wage rate is currently $10.10 per hour (and is increasingly annually until we reach $12). Employers using tipped employees must pay them at least 38% of the full minimum wage ($3.84 an hour) and may take a “tip credit” of up to $6.26 an hour — so long as the employee makes at least $10.10 an hour with tips. If not, the employer must pay the difference.
Our thought bubble: While it’s impossible to say how the MSC will rule, it did seem there are at least one or two justices who lean in favor of reversing the COA decision. Likewise, it seems there are at least one or two justices who lean in favor of affirming the COA’s decision. There was a fair amount of questions around remedy, specifically what the MSC should do if it rules the Legislature’s actions are invalidated. A number of hypothetical options for how they might rule were outlined:
- Allow the status quo to remain but to prohibit future attempts by the Legislature to “adopt-and-amend”;
- Allow the ballot language to take effect on day one following a ruling;
- Allow for a 90-day delay before the acts take effect (similar to what the Court of Claims ordered); or
- Treat the acts as if were enacted as of the date of the MSC’s ruling, which would phase the acts in similar to how the ballot proposal language proposed doing so (but with different dates).
Go deeper: Read the MI Chamber’s brief in this case, which with filed with the Small Business for a Better Michigan coalition. Check out this recent interview with Michigan Public featuring the MI Chamber’s Senior VP of Business Advocacy Wendy Block covering what’s at stake. Contact Wendy Block with any questions or for more information.