Court of Appeals keeps Michigan Paid Leave Act and Minimum Wage in Place
Posted by kmayberry on Jan. 27, 2023 / Subscribe 0
Court of Appeals keeps Michigan Paid Leave Act and Minimum Wage in Place
By: Miriam L. Rosen, McDonald Hopkins, PLLC
Since last summer, the uncertain status of the Michigan Paid Medical Leave Act and the state’s minimum wage rate has left many employers on pins and needles. Their concerns stemmed from a July 2022 Michigan Court of Claims decision finding that the legislative process used to adopt state-wide paid sick leave and the minimum wage laws was unconstitutional. Employers can now breathe a major sigh of relief with the Michigan Court of Appeals’ January 26, 2023 decision that the process was constitutional and that the paid sick leave and minimum wage laws can remain in effect “as is.”
Background
In 2018, a citizen-led initiative sought to allow voters to decide whether employers should be required to provide employees up to 72 hours of paid sick time and whether to raise Michigan's minimum wage well above the federal requirements for regular and tipped hourly rates. While it appeared that the initiatives would pass with popular support, significant concerns existed over the impact on employers and Michigan’s business environment.
As a result, using a procedure referred to a “adopt and amend,” the Michigan Legislature passed the referendum on their original proposed terms. However, the Republican-led legislature then amended the new laws during the same legislative session to included terms that were considered less onerous on Michigan employers. As amended, the sick time law became the Michigan Paid Medical Leave Act, which requires employers of 50 or more employees to allow hourly employees to accrue up to 40 hours of paid sick leave a year. The minimum wage law amendments provided for more gradual increases to the state’s minimum wage rate.
Legal Challenges
Challenges to the “adopt and amend” procedure have continued since then-Governor Rick Snyder signed the modified laws in December 2018. Most recently, in July 2022, the Court of Claims held that the Michigan Legislature lacked the constitutional authority to amend the initiatives in the same legislative session in which they were adopted. As a result, the original initiatives with more employee-friendly provisions were ordered reinstated. The Court of Claims later issued a stay delaying the reinstatement of the original terms until February 19, 2023 – in part to allow businesses time to prepare and also to allow time for an appeal to proceed.
As expected, the Court of Claims decision was promptly appealed to the Michigan Court of Appeals, which heard arguments on the case in December 2022. With the end of the stay period approaching, anxious employers have contemplated their policy options and how to manage the increased costs in an already tough economic environment.
The Court of Appeals Decision
Employers breathed a collective sigh of relief on January 26, 2023 when the Michigan Court of Appeals overruled the July 2022 Court of Claims decision. The Court of Appeals held that the “adopt and amend” process does meet state constitutional requirements and is, in fact permissible.
This means that the current provisions of the Michigan Paid Leave Act providing up to 40 hours of paid sick time per year and the current Michigan minimum wage, at $10.10/hour and $3.84/hour for tipped employees, will remain in effect and unchanged.
While the Court of Appeals decision settles this matter for the time being, employers should anticipate that this is not the end of the story for these laws. An appeal to the Michigan Supreme Court is expected.
For now, however, employers can breathe a bit easier.
This article was written by Miriam L. Rosen, who is Secretary of Detroit SHRM and Office Managing Member of the Bloomfield Hills office of McDonald Hopkins PLC, a full service law firm. She can be reached at [email protected] or at (248) 220-1342. Additional articles addressing the many employment law issues impacting businesses can be found at: https://mcdonaldhopkins.com/Insights
Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information, is included in the re-post of the article. January 2023.
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