An Uncertain Future for New Michigan Minimum Wage and Sick Leave Legislation
The Michigan Legislature recently passed two popular, citizen-initiated pieces of legislation—one to raise minimum wage to $12 and the other requiring paid sick leave.
The initiatives were slated to appear on an upcoming ballot; however, the Republican-led Legislature, per Michigan law, chose to adopt the legislation rather than letting it go to vote. They did so not because they support the new acts, but in order to make the laws easier to amend in the future. Amending voter initiative legislation requires a three-fourths legislative majority, while amending laws passed by the legislature only requires a simple majority.
The following is an overview of the new pieces of legislation. Keep in mind that while technically these are scheduled to become law, it is quite possible that they will be amended prior to taking affect next year.
The Improved Workforce Opportunity Wage Act
Developed from the ballot initiative titled Michigan One Fair Wage, this act raises Michigan’s minimum wage via a three-year phase-in process and instates an annual automatic indexing of the wage (cost-of-living adjustment, or COLA) beyond 2022. The act also includes an even more rapid increase in the lower minimum wage that exists for tipped employees, eventually resulting in the elimination of this separate minimum wage.
Here’s a quick overview:
|Phase-in Date||Minimum Wage
|January 1, 2019||$10.00||$4.80|
|January 1, 2020||$10.65||$6.39|
|January 1, 2021||$11.35||$7.95|
|January 1, 2022||$12.00||$9.60|
|January 1, 2023||COLA Increase||90% of General Minimum Wage|
|January 1, 2024||COLA Increase||100% of General Minimum Wage|
The Earned Sick Time Act
Based on the ballot initiative MI Time to Care, this act allows most Michigan employees to earn paid sick time. Requirements vary based on whether an employer has greater than or fewer than 10 employees.
Here’s a quick overview:
|Number of Employees||Paid Sick Leave Earned||Paid Sick Leave Cap|
|10 or less||One hour for every 40 hours worked by an employee.||Employee may use up to 32 hours, annually.|
|More than 10||One hour for every 30 hours worked by an employee.||Employee may use up to 72 hours, annually.|
As mentioned above, these acts were passed by a legislature that was generally not in favor of the included provisions, simply in order to make amending them easier. Potential amendments that have been mentioned include adjusting how the wage increases are phased in, making changes to the automatic minimum wage indexing provision, or even repealing one or both of the new laws.
Groups that advocated to get the initiatives onto the ballot are now shifting their focus to keeping their proposals as written. It is possible that the courts will become involved as the constitutionality of the Michigan Legislature’s strategy comes into question.
For now, Michigan employers should take steps to prepare to comply with the current forms of the laws. Feel free to reach out to your De Boer, Baumann & Company advisor with any questions or concerns about this new legislation.