Big Changes to Minimum Wage and Paid Sick Leave Coming Soon in Michigan
Author: Michael Cardman, Brightmine Senior Legal Editor
July 31, 2024
More employee-friendly paid sick leave and minimum wage laws are coming to Michigan in February.
In a ruling issued today, the Michigan Supreme Court struck down the state's current minimum wage and paid sick leave laws. In their place, the high court reinstated earlier versions of the laws enacted by voter initiatives in 2018, which are significantly more beneficial to employees.
To give employers time to prepare to comply, the court ordered that the restored laws will take effect February 21, 2025. It chose this date because it is 205 days from today - the same amount of time between the laws' original enactment in September 2018 and their original effective date in March 2019.
Although the decision cannot be appealed, the Michigan Chamber of Commerce plans to lobby for amendments. In a statement, the group said, "[W]e believe we can be successful in softening the impact of this adverse Supreme Court ruling via legislative changes."
What's Changing
The tables below provide a side-by-side view of what's changing from the laws that are currently in effect to the restored laws that will take effect February 21, 2025.
Notable changes to the new minimum wage law include:
- A more aggressive timeline for increasing the minimum wage;
- Annual inflation adjustments in later years; and
- A gradual phasing out of the tip credit, which would have remained in place indefinitely under the current law.
The updated schedule is essentially the original schedule enacted in 2018 moved forward by about six years. Because "the $10.00 starting point that the Wage Act envisioned for 2019 is not the same as $10.00 in 2024," the ruling orders the state treasurer to adjust the minimum wage rates for inflation.
Notable changes to the current paid sick leave law (dubbed the Paid Medical Leave Act) to the restored law (known as the Earned Sick Time Act) include:
- A repeal of the exemption for employers with fewer than 50 employees;
- An increase in the rates of accrual; and
- A restoration of retaliation protections.
How We Got Here
Michigan is one of several states that allow voters to initiate legislation via petitions. In 2018, a coalition of advocacy groups gathered signatures and successfully petitioned to add initiatives to raise Michigan's minimum wage and require employers to offer paid sick leave.
At this point, the state legislature had three options:
- Adopt the proposals as is, without change;
- Reject the proposals, meaning they would then be placed on the fall ballot and could either be accepted or rejected by voters (and, if adopted by voters, the legislation could then have been amended only with a three-quarters majority in the legislature); or
- Propose an alternative version for voters to also consider.
The legislature chose option one and adopted the proposals as is. However, later that session, the legislature passed amendments that significantly watered down the original versions.
In 2022, a lower court struck down the amended laws and restored the earlier versions. But, noting there were "justified concerns regarding the ability of employers and the relevant state agencies to immediately accommodate the changes," the court temporarily paused its decision.
The State of Michigan appealed, and in 2023, the Michigan Court of Appeals reversed the lower court's ruling.
The worker groups that filed the original lawsuit appealed to the Michigan Supreme Court, which ruled that the amendments were unconstitutional because the state legislature may not adopt an initiative petition and then later amend it in the same legislative session.