In July 2022, the Michigan Court of Claims struck down as unconstitutional Michigan’s Paid Medical Leave Act (“PMLA”) and an amended version of the Improved Workplace Opportunity Wage Act (“IWOWA”). The court’s decision had the effect of reinstating the Earned Sick Time Act (“ESTA”), which had been passed by the legislature but which was replaced by PMLA and never went into effect, and the original version of IWOWA.
Citing concerns over giving immediate impact to the changes required by its decision, the Court issued a stay (delay) of its order until February 19, 2023. As a result, employers will be required to comply with the originally passed legislation by that date unless the court’s decision, which is on appeal, is reversed, the effective date is further delayed, or the legislature amends either or both statutes.
Minimum Wage
As a result of the court’s decision, the minimum wage as of February 19 will increase from the current $10.10 to $13.03 an hour. For employees who are partially compensated by tips, the current minimum wage of $3.84 will increase to $11.73. Further, beginning in 2024, a single minimum wage will apply to all employees.
Paid Leave
The effect of the Court of Claims decision is that PMLA, which replaced ESTA, is void. The court’s decision affects all Michigan employers as follows:
- Under PMLA, only employers who had fifty (50) or more employees were required to provide paid sick days. ESTA applies to all employers, regardless of size.
- Under ESTA, small employers (employers with less than 10 employees) must offer 40 hours of paid sick leave and 32 hours of unpaid leave. Those classified as large employers (more than 10 employees) must provide 72 hours of paid sick leave.
- Under ESTA, employees earn (accrue) sick days at a rate of 1 hour for every 30 hours worked, versus 1 hour for every 35 hours worked under PMLA.
- ESTA significantly changes who is eligible for paid sick leave. Under PMLA, part-time employees, exempt (FLSA), or temporary employees did not qualify for paid sick leave. Under ESTA, only federal government employees are ineligible. Thus, employers must now provide paid sick leave to previously ineligible part-time and temporary employees.
- ESTA also differs from PMLA in a number of ways, including:
- Allowable use of leave time
- Family member definition
- Amount of time that can be used per year
- Carryover of unused time from one year to the next
- Employee notice requirements
What has not changed is that if all other requirements under ESTA are met, paid leave provided to employees under an employer’s current policies can be used to satisfy the minimum amount of required leave.
All employers should review current leave policies and be prepared, absent any new developments, to make all necessary changes by February 19, 2023.
For assistance in complying with ESTA and IWOWA, or with other employment-related matters, contact Melvin Muskovitz, a member of Dykema’s Labor and Employment Group, at mmuskovitz@dykema.com.
Also, please join Dykema’s ESTA webinar on January 10th at 12pm EST for more information.
Click here to register.