Protecting You And Your Business

What you need to know about Michigan law changes for paid leave and minimum wage

On Behalf of | Oct 24, 2024 | Wage And Hour

The Michigan Supreme Court in July delivered a decision affecting paid leave policies and minimum wage. This ruling declared the legislative process used to adopt and amend a 2018 proposal as unconstitutional. Unless lawmakers take further action, businesses will need to implement significant changes to sick leave policies and minimum wage, beginning in February 2025.

The court’s order answers the question of when the state treasurer shall publish the new wage rates:

“The state treasurer shall bring the statutory minimum wages in § 4(1) of the Wage Act current to July 31, 2024 through an inflationary catch-up beginning January 1, 2019. By November 1, 2024, moreover, the state treasurer shall publish those amounts.”

Here is the court’s order.

Business leaders and workers alike are wise to make sure they stay abreast of these changes and how they could impact your interests when dealing with an employment law issue. Below are more details.

Paid leave

Arguably the most notable and complex changes stem from the overhaul of Michigan’s Paid Medical Leave Act (PMLA). The new Earned Sick Time Act (ESTA), set to replace PMLA, marks a significant shift in paid leave benefits:

  • Coverage changes: ESTA extends coverage to all employees in Michigan, including temporary, seasonal, and casual workers, and those outside the state who provide services within Michigan.
  • Update to accumulation of benefits: Businesses with 10 or more employees must provide up to a maximum of 72 hours of sick leave annually. Smaller businesses must provide up to 40 hours. ESTA also does not allow for frontloading of sick time.

This expansion of sick leave is one of the most aggressive of its kind in Michigan’s history. It is important for employers to understand these changes to avoid potential legal challenges.

Minimum wage and tipped wage

The Supreme Court’s decision also accelerates changes to the minimum wage and phases out the tipped wage credit, which will impact businesses differently. Starting on February 21, 2025, the minimum wage will increase to $10.00, adjusted for inflation, with subsequent annual increases. Although businesses will know the actual rate in November, it is estimated at $12.50.

The tipped wage credit will also gradually decrease, starting at 48% of the minimum wage in 2025 and ending with the full phase-out by 2029.

These adjustments require businesses, especially in the hospitality industry, to reassess their wage structures to comply with the new regulations. It is also important to note that the changes strengthen anti-retaliation protections. Violations of these provisions carry significant penalties, emphasizing the importance of compliance.

Additional changes possible

Advocates for the proposal above note that it will help the workers that need it most while critics argue the potential damage to businesses is too great to ignore. It is possible lawmakers could modify the rules before they go into effect.

 

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