Introduction
In 2018, the Michigan legislature received two ballot initiatives from Michigan voters regarding paid medical leave and minimum wage. In the past, the legislature had to choose from three options: it could reject an initiative, putting it on the ballot and leaving it to the voters; it could adopt and enact the initiative without changing it; or it could propose an alternative which is put on the ballot with the original and left to the voters to decide. The legislature strayed from these previously permitted options by adopting and almost immediately amending the initiatives in 2018. Now, there is still confusion regarding where the ever-changing law stands.
Brief History
After the legislature’s “adopt and amend” approach, the original initiative petitioners challenged the legislature’s authority to adopt and amend the initiatives. On July 19, 2022, the Michigan Court of Claims held that the legislatures actions were unconstitutional in Mothering Justice v. Nessel. As a result, the original ballot initiative provisions were set to apply February 20, 2023. However, in late January 2023, the Court of Appeals reversed, holding that the legislatures actions were valid. This means that, unless Mothering Justice appeals and the Michigan Supreme Court decides differently, the amended laws will remain in place.
Differences Between the Original and Amended Ballot Initiatives
Paid Sick Leave
When the legislature amended the ballot initiatives, it changed key provisions. Originally, for paid sick time, the voters’ ballot initiative called for one hour of sick leave per every 30 hours worked, requiring 72 hours of paid sick leave for large employers (those with at least 10 employees) and 40 hours for small employers (those with less than 10 employees). Moreover, no employers were exempt.
Under the Paid Medical Leave Act as amended by the legislature, employers with less than 50 employees are exempt from providing paid or sick leave entirely. Non-exempt employers must provide 40 hours of paid sick time annually. Additionally, one hour of sick leave is accrued for every 35 hours worked. Employees may carry over up to 40 hours of unused paid medical leave. Employers, however, do not have to permit employees to carry over unused leave to the next benefit year if they provide at least 40 hours at the beginning of the benefit year or on the date that the individual becomes eligible during the benefit year on a prorated basis.
Minimum Wage
For minimum wage, the original, voters’ ballot initiatives set minimum wage at $12.00 per hour. Minimum wage would increase annually in accordance with inflation. Tipped employee minimum wage, currently set at 38% of standard minimum wage, would increase to at least 80% of standard minimum wage on January 1, 2022, 90% of standard minimum wage on January 1, 2023, and be eliminated by 2024.
Under the PMLA as amended, minimum wage would not be $12.00 until 2031 and would not increase annually with inflation. The amended version included an additional limitation which stated that no minimum wage increase would occur if the unemployment rate exceeded 8.5% for the previous year. Moreover, tipped employee minimum wage remains at 38% throughout 2023 and increase slightly in 2024.
What This Means for Employers
In the Michigan Court of Appeals opinion, the court stated that its opinion is to have immediate effect. This means that the amended ballot initiatives are the current law. In summary, small employers (less than 50 employees) are exempt from providing paid and sick leave entirely. Non-exempt employers must provide 40 hours of paid sick time annually. One hour of paid sick time is accrued every 35 hours worked. Employers may allow employees to carry over up to 40 hours of paid sick leave but can avoid this by providing 40 hours of paid leave at the beginning of the benefit year or on the date that the individual becomes eligible during the benefit year on a prorated basis. Moreover, minimum wage will remain the same for tipped and non-tipped employees at $9.87 per hour or $3.75 per hour respectively.
However, if Mothering Justice Appeals, the Michigan Supreme Court could revert back to the original ballot initiatives once again. Berry Moorman attorneys will continue to monitor the Michigan Supreme Court decision. Please contact a Berry Moorman attorney if you have any questions.
