News & Media
Deadline Nears for Paid Sick Time and Minimum Wage Changes
Unless changes to Michigan’s “Earned Sick Time Act” (ESTA) and “Improved Workforce Opportunity Wage Act” (IWOWA) are enacted within the next week, employers will need to implement new sick time policies and increase minimum wages. Provisions in both laws are set to take effect on February 21, 2025.
These changes are the result of a July 2024 opinion by the Michigan Supreme Court in Mothering Justice v. Attorney General, which upheld voter initiative petitions on paid sick leave and minimum wage. The Court held the Legislature’s “adopt-and amend” actions on the petitions in 2018 violated the people’s right to propose and enact laws through the initiative process and ordered the proposals take effect as originally adopted.
It should be noted that negotiations are currently underway to amend both statutes. In January, the Michigan House of Representatives passed its wage and leave time proposal (House Bills 4001 and 4002). The Senate has its own package that’s under consideration. The Senate Regulatory Affairs Committee reported Senate Bill 15 (ESTA changes) on February 12 and Senate Bill 8 (Michigan’s minimum wage) on February 13.
MSMS will continue to monitor legislative activity on these bills as the Legislature and Governor’s Office remain in talks about a possible compromise. In the meantime, physicians who are employers should familiarize themselves with the upcoming changes and consult with their labor and employment counsel to prepare for implementation.
ESTA Provisions Currently Scheduled to Take Effect on February 21, 2025
Under the original ESTA ballot initiative set to take effect February 21, all Michigan employers that have one or more employees, regardless of size, will be subject to the Act’s provisions. Additionally, all employees including full-time and part-time employees must be covered. According to the ESTA, “an employee is an individual engaged in service to an employer in the business of the employer, except that employee does not include an individual employed by the United States government.”
Below is an extract from an article published by Kerr Russell, MSMS Legal Counsel:
“The ESTA will entitle all employees to accrue one hour of earned sick time for every thirty hours worked (as opposed to one hour for every 35 hours worked under the PMLA). Further, employers must allow employees to use up to 72 hours of sick time in a given year. For employers with ten (10) or more employees, all 72 hours of sick time must be paid. For employers with fewer than ten (10) employees, only 40 hours of sick time must be paid, but the remaining 32 hours must be allowed to be taken as unpaid sick time.
Employers will need to comply with the numerous other changes required by the Earned Sick Time Act, including the expansion of the reasons for which employees can use paid sick leave, the expanded definition of “family member,” extended retention requirements, additional notice requirements, and changes to when employers can require supporting documentation, among others.”
Additional guidance can be found on the Michigan Department of Labor and Economic Opportunity-Wage and Hour Division’s Earned Sick Time Act website.
Michigan Minimum Wage Schedule Currently Scheduled to Take Effect on February 21, 2025 (Note: The IWOWA covers employers who employ 2 or more employees 16 years of age and older.)
Minors under the age of 18 may be paid 85 percent of the minimum hourly wage rate. Beginning in October 2028, the state treasurer will annually calculate an adjusted minimum wage rate, increasing the minimum wage by the rate of inflation. This increase will take effect beginning on February 21 of the succeeding year.
The IWOWA also includes a minimum wage schedule for tipped employees that is a percentage of the minimum hourly wage rate effective February 21, 2025. The percentage increases incrementally until February 21, 2030 and thereafter; at which time it will be 100 percent of the minimum hourly rate.
Resources
ESTA Website
ESTA FAQs
ESTA Brochure
Michigan Minimum Wage and Overtime Website
Michigan Minimum Wage and Overtime FAQs
Wage and Hour Poster