Court expands paid sick time requirements and increases Michigan’s minimum wage

In a major development for Michigan employers, a Michigan Court of Claims ruling has invalidated the Michigan Paid Medical Leave Act (PMLA). It also reinstituted the Improved Workforce Opportunity Wage Act (IWOWA) and the Earned Sick Time Act (ESTA), which were 2018 ballot proposals that were submitted to the Michigan Legislature. The IWOWA proposal increased the state’s minimum wage to $12/hour, including for tipped workers in the service industry. The ESTA proposal required employers of all sizes to provide up to 72 hours of paid sick leave to employees each year.

Facts

The Michigan legislature adopted both proposals “without change or amendment.” Before the IWOWA and the ESTA were signed into law, however, they were both amended. The IWOWA, as amended, called for the minimum wage increase to be phased in, with small annual increases. The ESTA was adopted as the PMLA and called for employers with 50 or more employees to provide 40 hours of paid medical leave annually. Employers have been operating their businesses in compliance with these laws, as amended, since March 2019.

On July 19, 2022, the Michigan Court of Claims ruled that the legislature’s “adopt-and-amend” strategy violated the Michigan Constitution and ordered that the voter-initiated proposals remain in effect, without amendment. Unless the U.S 6th Circuit Court of Appeals or U.S. Supreme Court issues a stay, Michigan employers must pay a minimum wage of $12 per hour and provide paid sick leave as required by ESTA.

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