January 27, 2023

Update: Michigan Court of Appeals Restores More Employer-Friendly Minimum Wage and Paid Sick Time Laws

On July 19, 2022, the Michigan Court of Claims ruled that the “adopt-and-amend” strategy the Michigan Legislature used in 2019 to enact minimum wage and paid sick time laws was unconstitutional. Those laws were regarded as more favorable to businesses, but they amended and substantially differed from the voter-initiated laws the Michigan Legislature adopted earlier in the same legislative session. The laws are known as the Earned Sick Time Act (ESTA), which the legislature amended and renamed the Michigan Paid Medical Leave Act (MPMLA), and the Improved Workforce Opportunity Wage Act (IWOWA), which was amended under the same name.

Under the voter-initiated wage law, the 2023 minimum wage would be $13.03 per hour instead of $10.10 per hour. Under the ESTA, employees would be entitled to accrue one hour of sick leave for every 30 hours worked and use up to 72 hours of sick leave per year (with no cap on accrual or carryover). On the other hand, under the MPMLA (which has been in effect since 2019), eligible employees of covered employers are entitled to accrue one hour of sick leave for every 35 hours worked and use up to 40 hours of sick leave per year, and the employer may cap annual accrual and carryover at 40 hours (and prohibit carryover if it frontloads at least 40 hours of sick leave at the beginning of each year).   

On July 29, 2022, the Michigan Court of Claims issued a stay of its ruling through February 19, 2023 to allow employers and the relevant state agencies time to comply with and enforce the original, reinstituted laws. As a result, the more employer-friendly MPMLA would remain effective only through February 19, 2023, while the more employee-friendly, voter-initiated ESTA was set to become effective February 20, 2023. However, the Michigan Court of Claims’ ruling was appealed last year.

On January 26, 2023, the Michigan Court of Appeals reversed the Michigan Court of Claims and held the “adopt-and-amend” strategy was not unconstitutional. According to the Michigan Court of Appeals, the Michigan Legislature may amend a voter-initiated law just as it may amend any other law. As a result, for the time being, employers may comply with the MPMLA and do not need to start complying with the ESTA effective February 20, 2023, unless a further appeal is filed, and the Michigan Supreme Court reverses the Michigan Court of Appeals or the Michigan Legislature passes new laws similar to the voter-initiated laws. 

Michigan employers are encouraged to contact the authors or their Faegre Drinker employment counsel with questions or concerns about compliance with the Michigan minimum wage and paid medical leave law.

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