The Michigan Supreme Court’s recent decision will significantly impact employers across the state. Understanding these changes is critical for construction professionals, HR managers, and ABC members.
Important Note: Businesses must comply with these new changes by February 21, 2025.
For more detailed guidance and support, consider consulting with legal experts who specialize in labor law. Reach out to Hilger Hammond or Miller Johnson for a consultation on how to align your business practices with the new laws and stay ahead of the curve.
The Court’s Ruling and Its Implications
The Michigan Supreme Court decided 4-3 that the Legislature violated the state’s Constitution by passing and later changing two 2018 ballot initiatives on minimum wage (Wage Act) and paid sick time (Earned Sick Time Act) in a single legislative session. (Miller Johnson, 2024), (Hilger Hammond, 2024)
By striking down the existing minimum wage law and Paid Medical Leave Act, and restoring the 2018 ballot initiatives, the Court has established a precedent with wide-ranging implications for business operations and labor practices.
Paid Sick Leave Provisions
The Earned Sick Time Act (ESTA) expands paid sick leave requirements. Michigan businesses with a single employee must offer paid sick time, with employees earning one hour of sick leave for every 30 hours worked. Key provisions include:
- Definition of Small Business: An employer with fewer than 10 individuals working for compensation in a week.
- Earned Sick Time for Small Businesses:
- Employees accrue 1 hour of sick time for every 30 hours worked.
- Maximum use of 40 hours of paid sick time per year (more if employer allows).
- Accrues additional unpaid sick time after exceeding 40 hours.
- Earned Sick Time for Other Employers:
- Employees accrue 1 hour of paid sick time for every 30 hours worked.
- Maximum use of 72 hours of paid sick time per year (more if employer allows).
- Carryover Policy: Sick time carries over yearly, but limits apply for usage within a year (40/32 hours for small businesses, 72 hours for others).
- Accrual Start Date: Sick time begins to accrue either on the law’s effective date or the employee’s start date.
- “Year” Definition: A regular consecutive twelve-month period set by the employer.
- Compliance for Paid Leave: Employers must provide paid leave equal to or exceeding the sick time amounts as per the act.
- Payment Rate for Sick Time: Must pay the employee’s normal hourly wage or the minimum wage, whichever is higher, for sick time used.
- No Replacement Worker Requirement: Employers cannot force employees to find replacements to use their earned sick time.
- Employers cannot retaliate against employees for using sick leave or exercising rights under the Act. Adverse actions within 90 days of such activities are assumed retaliatory unless proven otherwise.
Minimum Wage Changes
Starting from February 21, 2025, Michigan’s minimum wage will go up to $10 per hour. The State Treasurer will decide on the annual inflation adjustment. The minimum wage will go up each year until it hits $12 by 2028, and then it will be adjusted yearly for inflation.
Tipped employees will also experience changes. Their minimum wage will begin at 48% of the standard minimum wage in 2025 and will rise gradually until 2029 when there will be no more differentiation between tipped and non-tipped employees.
Preparing for Compliance
For ABC members, these changes necessitate careful planning and policy adjustments. Here are some steps to take:
- Review and Update Policies
Review your current compensation and leave policies to ensure compliance with the new regulations. This may involve increasing wages for both regular and tipped employees and adjusting your paid leave policies to meet ESTA requirements. - Educate Your Team
Ensure that your HR team and management are fully informed about these changes. Conduct training sessions to help them understand the new laws and how to implement them effectively. - Adjust Payroll Systems
Make necessary adjustments to your payroll systems to accommodate the accrual and tracking of paid sick leave. Ensure that your systems can handle the new minimum wage rates and the incremental increases over the next few years. - Communicate with Employees
Clearly communicate these changes to your employees. Transparency is vital for upholding trust and ensuring your team understands their rights and benefits under the new laws.
Don’t wait until 2025 to start preparing
Construction professionals, HR managers, and ABC members must take immediate action to comply with the new regulations beginning on February 21, 2025.
For more detailed guidance and support, consider consulting with legal experts who specialize in labor law. Reach out to Hilger Hammond or Miller Johnson for a consultation on how to align your business practices with the new laws and stay ahead of the curve.
By staying informed and proactive, your business can successfully navigate these changes and continue to thrive.
