A Court of Claims decision has threatened to strike down legislative changes enacted in 2018 regarding minimum wage and mandatory paid sick time.
In 2018, two petitions were presented to the legislature to place a minimum wage increase and a mandatory paid sick time benefit on the ballot. The legislature instead chose to directly adopt, but then modify both proposals, adding in important protections for small business owners. Today, a decision in a Court of Claims threatens to reverse the legislative changes, re-instituting the more costly provisions outlined in the original ballot proposals.
The original law would have instituted a minimum wage of $12 per hour by 2022. Therefore, if this lower court ruling stands, the minimum wage in Michigan would jump from $9.87/hour to $12/hour and then be adjusted upward by inflation each year thereafter. Additionally, the tipped minimum wage would be increased to match the regular minimum wage by 2024.
Under the 2018 legislative plan (current law), employers with fewer than 50 employees are not subject to mandatory paid sick leave requirements and employers with more than 50 employees have to provide a minimum of 1 hour of sick leave for every 35 hours worked, up to a minimum of 40 hours each year.
If this lower court ruling stands, the mandatory paid sick leave benefit will increase to 1 hour given for every 30 hours worked up to a minimum benefit level of 72 hours each year with the provision applying to all employers of all sizes, including businesses with fewer than 50 employees.
This decision is expected to be appealed.
This poses the question of what do small businesses need to do right now in response to this decision? While the answer to this question is somewhat unclear at the moment, we believe that no changes will be required until the regulatory agency that enforces these areas of law provides some direction to the business community. That agency is the Department of Labor and Economic Opportunity. For reference, here are the current published regulations. SBAM will keep our members informed as we know more.
