Michigan Governor Signs Amended Paid Sick Leave and Minimum Wage Laws

UPDATE: On December 28, 2018, the 2018 legislative session adjourned. Both bills take effect on the 91st day after the session adjourned, which will be March 29, 2019.

On December 14, 2018, Michigan’s employment law landscape dramatically changed—again—when Michigan Governor Rick Snyder (R) signed Senate Bills (SB) 1171 and 1175.  These lame duck session bills overhaul the recently revised minimum wage and tip law and newly created paid sick and safe time law, respectively. Earlier this year, the Republican-controlled legislature adopted as law two proposed ballot measures covering these topics. As many expected, the legislature moved swiftly after the election to amend these laws before the changes took effect. This article highlights the more notable changes.

Minimum Wage & Tips: The state minimum wage was scheduled to increase from $9.25 to $10.00 per hour around April 1, 2019, with additional preset increases each January 1 through 2022—at which point it would be $12.00 per hour—with annual adjustments each subsequent year. However, SB 1171 significantly slows the rate of increase to between 21 and 26 cents per hour annually, meaning the minimum wage will reach $12.05 in 2030. Previously, the tip credit was to be phased out and eventually eliminated. However, SB 1171 resets tipped employee standards to their pre-ballot-measure-proposal level, i.e., employers can directly pay covered tipped employees a minimum cash wage that is 38% of the minimum wage if wages plus tips equal at least the minimum wage. Additionally, SB 1171 eliminates any reference to voluntary tip pooling, reverting to standards that applied before the last round of changes.

Paid Sick & Safe Time: SB 1175, the Paid Medical Leave Act (PMLA), made more dramatic changes to the previously enacted law. The scope of coverage changed from all private employers to those with 50 or more employees. The bill carves out other notable coverage exceptions including exempt executive, administrative, professional, and outside sales employees, individuals covered by a collective bargaining agreement in effect, individuals whose primary work location is outside Michigan, and various transportation industry employees. The PMLA creates a rebuttable presumption of compliance if an employer annually provides at least 40 hours of paid leave (e.g., PTO). The accrual rate has also changed from one hour of paid leave for every 30 hours worked to every 35 hours worked. Previously, the law did not set accrual or carryover caps, or allow frontloading. The PMLA permits a 40-hour cap for annual accrual, carryover, and use, and allows employers to avoid carryover by frontloading 40 hours each year. The PMLA uses a straightforward formula to calculate employees' leave pay rate; their normal hourly or base wage or the state minimum wage, whichever is greater. Under the PMLA, employers control when employees must provide notice of their intent to use leave, when employees must provide documentation supporting an absence, in what increment leave must be used, and whether a rehired employee’s previously accrued leave will be reinstated. Finally, the PMLA allows only administrative complaints to be filed with the state labor department within six months after a violation occurs.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.