Michigan Supreme Court Revives Previously Nullified Earned Sick Time and Wage Laws

In 2018, the Michigan Legislature adopted proposed ballot initiatives that would have required employers to provide generous paid sick leave to employees through the Earned Sick Time Act (ESTA), and scheduled substantial raises to Michigan’s general minimum wage and minimum wage for tipped employees. Doing so avoided having the initiatives put on the ballot.  If enacted through a ballot procedure, then the Legislature would have needed a supermajority vote to amend them. After adopting the initiatives, the Legislature amended the laws through a simple majority vote, reducing the paid sick leave requirements to what is now known as the Paid Medical Leave Act (PMLA) and amending the minimum wage increases. On July 31, 2024, the Michigan Supreme Court held that the Legislature’s “adopt-and-amend” procedure violated the Michigan Constitution. As a result, the Court revived the original ESTA and minimum wage increases, and invalidated the amendments the Legislature made to those laws.

The Court further held that its ruling would not take immediate effect so that employers have time to prepare. Specifically, the Earned Sick Time Act will take effect on February 21, 2025. The increases to the minimum wage and the tipped minimum wage will occur on a phased schedule as set forth below:

The ESTA is substantially different and more expansive than the PMLA.  The key changes to paid sick leave requirements under the ESTA include:

• All employers are covered, regardless of size, whereas the PMLA applied only to companies with 50 or more employees.
• All employees are entitled to sick leave, regardless of whether they are part-time, temporary, exempt, or non-exempt.
• Employees will accrue 1 hour of earned sick time for every 30 hours worked, versus 1 hour for every 35 hours worked under the PMLA.
• Employees may use up to 72 hours of earned sick time per year, versus 40 hours per year under the PMLA. For large employers (i.e., those with 10 or more employees), all 72 hours must be paid. For employers with less than 10 employees, only 40 hours must be paid.
• All earned sick time rolls over to the next year, subject to the usage cap.
• Employees may use leave in the smaller of hourly increments or the smallest increment the employer’s payroll system uses to account for absences or use of other time.
• Employers may request documentation to substantiate the need for earned sick leave only if the absence is for 4 or more consecutive days.
• Posters will need to be updated, and employers must provide a notice of rights to new hires and current employees.
• The ESTA provides employees with a private right of action against an employer who interferes with or retaliates because of use of earned sick time.

It is possible that the Legislature and Governor will work together to amend these statutes prior to the February 21, 2025 effective date. If the changes go forward as planned, nearly all Michigan employers will need to update their paid sick leave policies and ensure minimum wage compliance before the effective date of the ESTA and minimum wage law’s implementations. If you have any questions about these laws and their potential effects, please contact one of Honigman’s Labor and Employment attorneys.