Ask the Experts: Minimum Wage & Paid Sick Leave Changes
By: Helen Lizzie Mills | Fahey Schultz Burzych Rhodes PLC
Q: What do I need to know about Michigan's Minimum Wage and Paid Sick Leave Laws?
A: A July 31, 2024 decision of the Michigan Supreme Court is creating a lot of consternation and anxiety for employers. The MRLA is working tirelessly to secure a different outcome, and continues to advocate for a meaningful solution, but the fact of the matter is that the high court’s decision impacts Michigan’s standard minimum wage, will lead to the elimination of the tip credit, and establish significant paid sick leave obligations for all employers, starting in February 2025.
Minimum Wage and Tipped Wages:
On September 18, the Court issued an Order clarifying its position on the timing of the minimum wage increases and the calculation method, further ordering that Treasury must publish their final determination on the minimum wage rates by November 1, 2024. While we await Treasury’s final publication of the rates, it is reasonable to rely on the Court’s affirmation of Treasury’s stated plans increase the minimum wage as follows. Beginning in 2031, we should expect future wage adjustments under the ordinary process to occur on January 1.
A: A July 31, 2024 decision of the Michigan Supreme Court is creating a lot of consternation and anxiety for employers. The MRLA is working tirelessly to secure a different outcome, and continues to advocate for a meaningful solution, but the fact of the matter is that the high court’s decision impacts Michigan’s standard minimum wage, will lead to the elimination of the tip credit, and establish significant paid sick leave obligations for all employers, starting in February 2025.
Minimum Wage and Tipped Wages:
On September 18, the Court issued an Order clarifying its position on the timing of the minimum wage increases and the calculation method, further ordering that Treasury must publish their final determination on the minimum wage rates by November 1, 2024. While we await Treasury’s final publication of the rates, it is reasonable to rely on the Court’s affirmation of Treasury’s stated plans increase the minimum wage as follows. Beginning in 2031, we should expect future wage adjustments under the ordinary process to occur on January 1.
Paid Sick Leave:
Starting February 21, 2025:
Starting February 21, 2025:
- All employees must be permitted to accrue 1 hour of sick leave for every 30 hours worked, regardless of their status (full-time, part-time, seasonal, or temporary)
- Employees may use what time they have accrued for broad, employee-friendly reasons
- Employees may use this leave for time they were scheduled to work. Otherwise, employees must be permitted to use sick time in at least 1-hour increments or whatever portion of an hour you use to track leave time in payroll software
- Leave is paid at the individual employee’s ordinary hourly wage. Treasury indicates that employers can use the minimum wage rate for tipped employees using sick leave.
- If you employ fewer than 10 employees, your employees are entitled to use 40hours of paid sick leave and 32 hours of unpaid sick leave each year. If you employ 10 or more, all employees are permitted to use up to 72 hours of paid sick leave.
- An employer can require notice up to 7 days in advance of a sick time that is foreseeable (like for a pre-scheduled appointment). If the sick time is not foreseeable (like for a sudden illness),the employee must give notice “as soon as practicable.” •Accrued leave rolls over year to year; you cannot force employees to “use it or lose it” or even receive a payout on a regular basis to draw that paid sick leave bank down.
- There are significant limitations on when and what you can ask of employees to substantiate the leave requests: you maynot request documentation unless the individual has been absent for three consecutive scheduled work days and you must pay for out-of-pocket costs associated with getting that documentation. And you must still permit employees to be on paid sick leave while you're awaiting documentation, so long as they have leave available.
- Take extreme care (and consult your attorney!) if you believe there is paid sick leave abuse (by one employee or a group of employees), because the new law prohibits retaliation against employees for using their leave.
- There is a presumption of unlawful retaliation if adverse employment actions are taken within 90 days of an employee: making a complaint, filing suit, informing someone (internally or externally) of a potential violation of this law, opposing any potential violation, or informing any coworkers about their rights regarding paid sick leave. You must be able to demonstrate your legitimate basis to take action against the employee separate from the protected activity. And, of course, there is more beyond that. With statutory permission to use paid sick leave for far-reaching reasons, little to no employer engagement or request for documentation, and a (rebuttable)presumption of retaliation, this paid sick leave obligation is one ripe for abuse and certainly creates administrative challenges.
EDITOR’S NOTE: The MRLA is currently advocating for the retention of the tip credit and to smooth the edges of a rigid paid sick leave law. The current Michigan Legislature is still within its rights to change these laws and operators need to consider potential changes to the ruling before making any major changes to their business model.
The MRLA has partnered with a strong team of law firms that are industry experts, available for counsel on any legal matters affecting the hospitality industry. MRLA Members get exclusive access to legal help from experts like Fahey Schultz Burzych Rhodes, with up to 15 FREE minutes of legal consultations with one of our partnering law firms. Click the link below to learn more!
