Michigan Supreme Court Issues A Decision That Changes Minimum Wage and Paid Sick Leave Requirements

On July 31, 2024, the Michigan Supreme Court issued a decision that changes the state’s current minimum wage and paid sick leave requirements. In Mothering Justice v. Attorney General, the Court reinstated voter-initiated versions of the Improved Workforce Opportunity Wage Act (IWOWA) and the Earned Sick Time Act (ESTA). As a result of the decision, significant new legal requirements will become effective February 21, 2025, including a higher minimum wage and more burdensome employee sick leave obligations.

Most notably, employers must now prepare significant changes in Michigan’s minimum wage laws. The IWOWA outlines a phased increase in the minimum wage, effective February 21, 2025. Current estimates are that this figure will be approximately $12.50 per hour. The Court’s decision also impacts tipped workers. Those workers that are tipped and previously made 38% of the general minimum wage will now have their minimum wage increased to 100% of the non-tipped worker minimum wage by 2029. Other wage payment changes will also apply.

The ESTA will replace the current Paid Medical Leave Act (PMLA) and is more expansive, as it covers all employers. Most notably, under the ESTA, Employers that have 10 employees or less must provide 40 hours of paid time off per year while employers with 10 employees or more must provide 72 hours of paid earned sick leave per year. The rate of pay for this benefit must be equivalent to the normal hourly wage for that employee. Exempt employees must be paid at their normal salaried rate for time off under this law. Employers may not prohibit the carryover or cap the accrual of unused earned sick time, but may limit the use of earned sick time in any year to 72 hours.

By February 21, 2025, employers must ensure compliance with IWOWA and ESTA. Therefore, all employers, big and small, will need to review their current wage and sick time policies to ensure they are providing the minimum amount of earned sick time under the ESTA and to make sure they are properly paying all employees the new minimum wage amounts.

For a more detailed discussion regarding all the new requirements and how they will affect your business, consult with an experienced attorney at Cline, Cline & Griffin.