Michigan Supreme Court Adopt & Amend Decision
PAID SICK LEAVE, MINIMUM WAGE, AND ELIMINATION OF TIPPED WORKER WAGE CREDIT TO GO INTO EFFECT FEBRUARY 21, 2025
Disclaimer: None of the information on this page is to be taken as legal advice. It is strongly encouraged that you consult a labor attorney for questions and implementation. The Charlevoix Area Chamber of Commerce and its staff are not legal experts nor licensed legal professionals.
Since the Supreme Court's decision in July putting these laws into effect, business groups are working diligently through legislative solutions and compliance assistance. Advocacy efforts are underway through multiple coalitions to help soften the impact to businesses.
SUMMARY OF THE DECISION
On July 31st, the Michigan Supreme Court ruled that two ballot proposals from 2018 will take effect February 21, 2025. One proposal raises the minimum wage including that of tipped employees, and the other proposal enacts paid leave benefits for full-time, part-time, and seasonal employees of any business with one or more employee. The Court's ruling means that the two ballot proposals will become law.
The case challenged the Michigan Legislature's handling of these two ballot proposals back in 2018. At the time, after the proposals received the proper number of signatures to go on the state-wide ballot, the Legislature chose to adopt the proposals rather than send them to the ballot. After adopting the proposals, the Legislature made a number of amendments. The process Legislature took back then is now referred to as 'Adopt-and-Amend', and has been found to be unconstitutional by the Michigan Supreme Court.
SUMMARY OF CHANGES GOING INTO EFFECT FEBRUARY 21, 2025
*Not to be taken as legal advice for definitive implementation; summary provided by the Charlevoix Chamber of Commerce staff from the available resources linked on this page
The current Paid Medical Leave Act (PMLA) will be replaced with the Earned Sick Time Act (ESTA):
- Applies to all employers in Michigan with 1 or more employee
PMLA only applies to businesses with 50 or more employees - Includes both full and part-time salary and hourly workers
- Employees accrue sick time at a rate of 1 hour for every 30 hours worked
PMLA allows for employer to provide at least 40 hours of paid leave (vacation, personal days, paid time off, etc); ESTA limits the types of restrictions employers put on leave time and may not allow a single bank of time to be used at employee or employers discretion - Unused sick time must be allowed to carry over
- Businesses with 10 or more employees must allow at least 72 hours of paid sick time per year to be used to the extent it is accrued; businesses with fewer than 10 employees must allow at least 40 hours of paid sick time plus an additional 32 hours of unpaid sick time to the extent it is accrued
- If the need for using earned sick time is foreseeable, an employer may require notice not to exceed 7 days prior to the date leave is to begin; if the need for using earned sick time is not foreseeable, an employer may require notice as soon as practicable
- Employer may require reasonable documentation for earned sick time of more than 3 consecutive days (employer is responsible for paying all out-of-pocket expenses the employee incurs in obtaining the documentation; an employer cannot delay commencement of leave based on failure to received documentation)
PMLA allows employer to require compliance with usual and customary notification, procedural and documentation requirements; ESTA does not allow individual employer requirements and in practice, provides employees no-notice, intermittent leave time each calendar year
State minimum wage will increase according to the following schedule*:
- current (2024) - $10.33
- 2025 - $12.48
- 2026 - $13.29
- 2027 - $14.16
- 2028 - $14.97
The tipped-wage credit will be eliminated; tipped workers minimum wage will increase according to the following schedule*:
- current (2024) - $3.93
- 2025 - $5.99
- 2026 - $7.97
- 2027 - $9.91
- 2028 - $11.97
- 2029 - no adjustment for tipped workers; full minimum wage
*Wages are currently approximations; the Michigan Attorney General's office is seeking clarification from the Michigan Supreme Court regarding inflation calculations. The Court's opinion states that the state treasurer must use their opinion's publication date to calculate for inflation-adjusted rates, recognizing that nearly six years have passed since the 2018 proposals were adopted by Legislature.