July 2022: Court Decision Expands Paid Sick Time Requirements and Increases Minimum Wage

26 Jul


Update Applicable to:
All employers in the state of Michigan.

What happened?
On July 19, 2022, the Michigan Court of Claims ruled that the “adopt-and-amend” strategy in the Michigan Paid Medical Leave Act violates the Michigan Constitution and ordered that the voter-initiated proposals remain in effect without amendment.

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What are the details?
Michigan employers would be expected to pay a minimum wage of $12 per hour and provide paid sick leave as required by Earned Sick Time Act (ESTA)1 A non-exhaustive list of some differences between the current Paid Medical Leave Act and ESTA includes:

Paid Medical Leave ActEarned Sick Time
CoverageEmployers with 50 or more employees.Employers with one or more employee.
Definition of EmployeeNumerous exclusions include independent contractors, employees covered by a labor contract, and employees who worked 25 hours or fewer in the preceding year.“An individual engaged in service to an employer in the business of the employer, except that employee does not include an individual employed by the United States government.”
AccrualOne hour accrued for every 35 hours worked, up to 40 hours of paid time.One hour accrued for every 30 hours worked, up to 72 hours of paid time.
Maximum Use/Rollover40 hours of paid time, rollover required unless 40 hours of leave is front-loaded on a calendar/benefit year basis.72 hours of paid time (40 hours for employers with less than 10 workers); all sick time rolls over from year to year.

1 A motion to stay the decision has been filed, and a hearing on the motion is scheduled for August 2, 2022. Unless a stay is granted, the original form of the ballot initiatives, as adopted, are valid and may be enforced as law as early as August 9, 2022, according to Michigan’s Wage & Hour Division. Of course, the original decision may be overturned on appeal, and the legislature may take further action. If this ruling is appealed, a stay may be issued to delay the implementation of the $12/hour minimum wage and ESTA. However, unless and until such a stay is issued, employers must ensure they comply with the Improved Workforce Opportunity Wage Act (IWOWA) and ESTA.

The Department of Labor & Economic Opportunity has not announced any forthcoming guidance, model notices, or enforcement of the reinstated laws. With that said, the laws do allow for private civil action by aggrieved employees.

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For more information, please see the links below:

Article 1Article 2Article 3

What do employers need to do?
Employers should review the links provided above and take a moment to examine their current paid sick leave policies for Michigan employees and assess any necessary modifications that will be needed to be prepared to comply with the expanded paid sick leave and other provisions of the original legislation. Employers may wish to seek legal counsel during this time while the courts make their decision.

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