Employers Must Prepare for Impending Changes to Michigan’s Paid Leave and Minimum Wage Laws

In July, the Michigan Court of Claims restored the Earned Sick Time Act (ESTA), as well as an earlier version of the minimum wage legislation, when it ruled that the manner in which the legislature enacted the Paid Medical Leave Act (PMLA) and the Improved Workforce Opportunity Wage Act (IWOWA) in December 2018 was unconstitutional. The Court’s decision is currently on appeal to the Michigan Court of Appeals and has been stayed until February 19, 2023.

Oral argument on this appeal was heard earlier today. The litigants focused on the constitutional argument and only alluded to the practical impact on the state’s employers by requesting an expedited written opinion by February 1, 2023. All parties agreed that the Court of Appeals’ opinion will be appealed to the Michigan Supreme Court, and urged entry of a further stay. The panel, however, did not indicate whether it would expedite its opinion and did not promise that the statutes would be stayed past the current February 19 date. Therefore, while it is possible that the effective date of PMLA and IWOWA will be further delayed as this matter works its way through the Courts, employers must be prepared to implement updated policies to ensure compliance with ESTA and IWOWA should such a stay not be entered.

If ESTA and IWOWA go into effect in mid-February, it will have a major impact on all employers in the state, no matter how small. These laws mandate a $13.03 minimum wage, as well as paid leaves of absence for all employees, even part-time, temporary, or small business employees. The methods of accruing leaves, as well as the manner in which employers may require employees to request/report leaves they are taking and the carryover of unused leave periods from year to year are highly complex and will require employers to balance existing policies against these laws’ newfound requirements.

Dykema will continue to report developments as they occur that may change employer obligations under these new laws. To assist employers in preparing to implement ESTA and IWOWA, and to describe in greater detail the changes that these laws will impose upon Michigan Employers, Dykema’s Labor and Employment attorneys will be hold a complimentary webinar on January 10, 2023, at 12 p.m. If you are interested in joining us, please register here.