On Wednesday, July 31, 2024, the Michigan Supreme Court handed down its opinion in Mothering Justice et al. v. Attorney General et al. In this case, community organizations challenged the State Attorney General’s determination that the Michigan Legislature could adopt a citizen initiative ballot proposal and later amend it in the same legislative session. The two laws at issue, the Improved Workforce Opportunity Wage Act (the Wage Act) and the Earned Sick Time Act (the ESTA), were contained in ballot initiatives which were adopted by the Michigan Legislature in September of 2018. The Legislature’s adoption precluded the initiatives from appearing on the November 2018 ballot. The following December, however, the Legislature significantly amended the adopted proposals, including extending the time a new state minimum wage requirement would increase to $12 per hour and reinstating the tip credit at 38 percent of the regular minimum wage.

The Court Reinstates the Initiatives as Adopted in 2018

The Supreme Court found the Legislature’s adopt-and-amend tactic unconstitutional by violating the rights of the citizens who brought the initiative and invalidated the amended Acts. As a result, the initiative was held to be the law of the state. The Court then imposed a remedy that, in its view, considered Michigan employers’ reasonable reliance on the amended Acts over the past five years. The Court held that both the Wage Act and Earned Sick Time Act, as initially adopted by the Legislature, are to go into effect on February 21, 2025, affording employers the same 205-day window to prepare for the change as in the original proposals. As such, employers have only seven months to develop changes to their workplaces and workforces to meet the requirements under these laws.

What Employers Need To Know to Comply

Employers must be aware of the requirements of the newly resurrected Wage Act and Earned Sick Time Act, requirements which require often significant changes to employment policies and practices for all Michigan employers.

A. New Minimum Wages and Tip Credit Amounts

Perhaps most notably, the Supreme Court imposed the following schedule under the Wage Act for increasing the minimum hourly wage and phasing out the tip credit wage:

The state treasurer is expected to publish the new rate for February 2025 within the next few weeks

B.  New Paid Sick Time Requirement

The law vacated by the Supreme Court generally only applied to non-exempt employees not covered by union contracts of employers with 50 or more employees. No more.

The resurrected Earned Sick Time Act allows most Michigan employees to earn paid sick time, as it applies to employers with one or more employees.

• For employers with fewer than 10 employees, full- and part-time, as well as temporary and seasonal, must accrue one hour of earned sick time for every 30 hours of work, but they can use no more than 40 hours of this leave time in a year with pay, and up to another 32 hours of unpaid leave time.
• For all other employers, employees will similarly accrue earned paid sick leave but they will be limited to use no more than 72 hours in a year.
• Further, unused time may carry over from year to year but is subject to the same yearly caps.

Under the Earned Sick Time Act, sick time may be used, in general, for time off needed: 1) due to the employee’s or their family member’s health condition or injury, including preventative care or diagnosis; 2) due to the employee’s or their family member’s treatment, services, relocation, or participating in criminal proceedings, relating to being a victim of domestic violence or sexual assault; 3) due to a meeting at the school or place of care of an employee’s child due to the child’s health or disability, or the effects of domestic violence or sexual assault; or 4) due to the temporary closure of a business or school due to a public health concern. Employees may be required to give employers no more than seven days prior notice of the need to take a leave, if feasible. Documentation with respect to an employee’s health conditions may only be required if the leave taken is for more than three consecutive days, but the provider only will need to indicate the leave was necessary.

To the extent that employees are covered by a collective bargaining agreement, the ESTA will not apply to those employees until the current contract’s expiration without regard to extensions. There are more details employers will have to understand and follow, such as posting requirements and presumptions of retaliation. Also, the law allows for enforcement by the State as well as private lawsuits challenging an employer’s compliance and seeking lost pay, liquidated damages, attorneys’ fees, and civil fines and reinstatements.

Compliance with these laws will be nuanced and complex. There is hope that the Legislature will appreciate that some of obligations are unduly burdensome for both employers and employees and that it will make some adjustments before they go into effect. Employers are encouraged to strongly voice their concerns with legislators and the Governor to better assure that such amendments will become a reality.

The above descriptions are only basic summaries. There are details employers need to appreciate and conform to with respect to each of these laws. For assistance in this regard, contact the authors of this alert or any other member of Dykema’s Labor and Employment Law Practice Group.